Panama, traffic jams, car, cars, transport, network, train, metro, bus, buses, quality, life, work, employment, jobs, commute, commuting, driving, riding, stuck

Traffic jams

It’s 4.44 a.m. and I am awake with my hot chocolate. This, for me, is quite a normal time to be awake and up.  But that’s just my body clock – that loves getting up hours before dawn to welcome the day!  I love the quiet morning – no interruptions – just to sit and write.

Most Panamanians, however, have a waking time similar to this – with alarm clocks and a commute that I do not envy!  One friend tells me she leaves home before 5.50 a.m., otherwise she will be stuck in traffic for 2 hours.  If she leaves before then, it only takes 30 minutes.  So, she gets to work at 6.30 a.m. every morning!  But it’s better to be at work than stuck in traffic for hours!

Another lady in my office leaves home (Chorrera) every day before 5.20, so that she has a “hope” of getting on the unlicensed buses (known here as bus pirata), because at least then she can come with air-conditioning and sitting down.   All in order to get to the office before 8.00 a.m.  Most people that live in Chorrera are awake at 4.00 a.m. to get to work by 8.00 – to me that is simply unimaginable!

It’s quite normal for a Panamanian to spend 4 to 5 hours a day stuck in traffic on their way to and from work!  Imagine the quality of life they could have if they could recover 3-4 hours a day!

While it’s true that the Metro train runs from Los Andes to Albrook Mall in 20 minutes, that’s only a partial solution to Panama’s commuting problem!  Panama has built suburbs in three directions:

  1. Los Andes / Milla 8 / San Miguelito
  2. Tocumen / Pacora / 24 de diciembre
  3. Arraijan (pop. 300,000)  / Chorrera (pop 200,00)

Of these three areas, the current metro line only services the first of these.  The second metro line – under construction but “almost finished” will cover Tocumen, 24 de diciembre & Pacora – but will not actually go to the airport!  So, for now, we can forget about the option of coming into the airport and just catching the metro home!  Once again, I see no plans for any parking at the final station.

And the third line of the metro – that will take care of commuters from Chorrera & Arraijan, is still in planning phases – with the largest part of the plan being the bridge across the Canal for the train & more traffic.  Chorrera and Arraijan used to be in the same Province as Panama City – until the populations grew so much, that the west side of the bridge was divided off into a new province: Panamá Oeste.  Chorrera is now the capital of that province!  But it doesn’t “act” like a provincial capital in many ways.  It continues in its role of sleeping & housing satellite for Panama City.

As Ursula Kiener stated earlier this year in a tweet – building 20 bridges across the Canal isn’t going to solve the problem – the issue lies with having Chorrera & Arraijan simply as dormitory cities.  We need to start developing the rest of the country and creating jobs there.

But even if I look at New Zealand – and their commuting problem for Auckland’s central business district – is it really all that different? Twelve KM from New Lynn to CBD in about an hour – which is half the distance that commutes have from Tocumen or a third from Chorrera (34km) into Panama City’s CBD.

Panama attempts to solve the commuting issue by having all of the lanes of the Interamerican highway coming INTO town from 4.00 to 8.00 a.m. – meaning that if you want to go out of Panama City, you take the Puente Centenario!

Basic culture – driving:

And that’s without even talking about the traffic in downtown Panama City!  Unfortunately, Panamanians do not appear to have learned the basics of how to handle intersections – exacerbating the traffic jams and frustration for other drivers.

What’s worse — you watch the traffic cops telling drivers to pull up over the intersection while they wait in line… doing nothing to help in the education of drivers who are respecting an intersection.

 

Pet peeve # 2 – Panamanians do not seem to have learnt the correct way to use a roundabout!  Panama would be a slice closer to Utopia, if every driver would just follow the simple etiquette and rules for using a roundabout.

Part of the solution lies in a complete education of Panamanians regarding regard to the driving rules – not driving on the shoulder and creating a third lane when there are only two, not driving down a one-way street the wrong way to avoid the queue in the other street, and respect for fellow drivers.  Everyone is heading the same direction – getting to work.

Transport solutions

Public transport

The options in Panama at the moment are limited:

  1. Buses, including metro buses & “piratas” – referring to the unlicensed buses that run daily (who when they are deemed illegal actually protest and block the roads)
  2. Metro system – line 1 – running North-South – only available at the moment from San Isidro to Albrook Mall
  3. Taxis – which used to be relatively safe and comfortable – are now often not air-conditioned and people are concerned about their safety
  4. Uber & other apps – a better option, as long as you have a credit card for payment, since they are phasing out cash payments (although in today’s headlines – this is being extended again)
  5. Walking
  6. Cycling

I don’t know anyone in Panama that would cycle to work – especially since upon arriving at work they would need somewhere to shower.  The heat & humidity of the tropics does not make this a cool morning ride to work – and the fumes from the traffic are asphyxiating!  Not to mention the complete lack of cycle-friendly cars that would push you off the road in their angst to get to work “on time”.

Uber & taxis are certainly not options for a long commute – such as from Chorrera or Pacora, because they would break a hole in your pocket if you did that daily!

And so commuters are left only with walking (fine for short distances as long as there isn’t a tropical downpour), buses or their private vehicles.

Car-pooling or ride sharing

Car-pooling would seem like one obvious solutions to Panama’s public transport crisis more than one person travels in a car, and prevents the need for others to have to drive  themselves. Ride-sharing reduces each person’s travel costs such as: fuel costs, tolls, and the stress of driving.

While to me it may seem crazy – Panama prohibits carpooling or ride-sharing to work – unless you’ve registered for it!  The taxis and public transport didn’t want people to be able to do this, because they said that the driver would charge others for the ride (i.e. gas money) and that was taking money out of the pocket of public transport.

Really?

Seriously?

Would you LOOK at the transport problem that Panama has?

And you want to legislate carpooling & ride-sharing so that it’s done properly???

While every other country simply has a rule that there are carpooling lanes (i.e. if there are two or more people in a car they get a special fast lane) – Panama is sitting here complaining about the traffic problem without really solving it!

Rant over.

Parking for at Metro Stations

One of my pet peeves is the LACK of parking at the final metro stations – I’m talking Pacora (when they finish line 2), San Isidro (out past Los Andes) and whatever the plans are for the last station in Chorrera.  I understand that there is no parking at the station on Vía España or even San Miguelito’s “La Gran Estación”.

But I don’t understand the lack of planning of not ending the final station with a car park, so people can drive to the station, leave their car and hop on the train! So you don’t want to have security looking after the cars? Put a sign up – “leave cars at your own risk”.

But the reality of Panama’s situation – especially in a country where it rains 8-10 months of the year – people need a way to get from their home to the train station.  How do we expect commuters to get from their homes (often in suburbs and gated communities) to the train station to start the commute? They are not going to pay a taxi and most likely not going to walk 3 km to the train station!

Implementing solutions

While I agree that it would be fabulous if some of the companies and jobs were available in Chorrera, rather than everyone commuting into Panama City – I don’t realistically see that happening within the short term.

Headquarters for multinationals are already “out of town” – in the sense that they are not central business district – either in Panama Pacifico, ciudad del Saber or Costa del Este. Processing zones are constantly being developed in Don Bosco, Tocumen and Transistmica – areas which are highly industrial and strategically located for logistics between Colon and the airport.

But Panama needs to find that perfect mix between investing more heavily in public transport (buses, not just the metro) and offering commuters options of how to get from their homes onto the public transport network.  They need to make sure that walking to a bus stop is actually an option, not an obstacle course.  I am constantly amazed at how sidewalks simply “end”, leaving you in the middle of an overgrown or muddy patch of mire.

There has been a lot of criticism these last two years about how the walking infrastructure (foot paths & walkways) has taken away what little parking there was in the central business district.  Not to mention the horrendous flooding that badly planned and executed works have caused!  The current river flowing down Vía Argentina each time it rains has become a sad parody of  wake-boarding!

That aside – if we really want to improve the quality of life for Panamanians – we need to accept that public transport is what will provide that.  This means more trains & a metro system that allows people to get home within 30-40 minutes, rather than 2 hours, more buses (especially shorter routes that go through neighbourhoods) and taxis or Uber.

If we are going to go with more public transport – Panama needs bus stops that actually keep the water out when it’s raining – not tiny little roofs for a spring shower!  And the public foot paths need to be walkable – rather than dangerous obstacle courses!

Building more roads (corredores or bridges across the Canal) will not solve the problem – this requires a change of culture & expectations.  And this means – the solution will take a generation to re-educate!

So – when do we start?

 

Advertisements
Panama politicians, politics, promises, electoral promises, needs, community, communities, identify, coach, coaching

Promises Panama needs

Last week I published a post regarding my “wish list” for Panamanian politicians – what I wanted them to demonstrate in their character – compassion, creativity & courage.

André Conte responded that while he enjoyed it, more than “what do you want” he wanted the question to address “what do we all need?”

https://platform.twitter.com/widgets.js

So, while I’m not entirely sure that I have managed to truly answer his question, here is my attempt at responding to the issues that I think our 2019 elected politicians need to seriously address.

Many of these issues will not fall upon the legislators to respond – but rather upon the President, Cabinet, individual Ministers and heads of Government Departments.

Some will require incredible courage, such as the head of the Caja de Seguro Social – a crisis which I have been hearing about the past 25 years. And yet, it’s still in crisis! The leadership required here is one of an appointee – not an elected official!

And yet, here’s hoping that they step forward with compassion – the ability to connect to all the interested parties; creativity – to be able to draw upon all the solutions from all interested parties to solve the crisis; and courage – to confront the many interests that arise and actually implement a solution after having heard all interests, identified the needs of the institution and the public, and work to a long-term solution for the institution once and for all.  I maintain my opinion that every single politician and director or Minister needs coaching & mentoring in order to truly be effective in their roles with adequate support!

What I’ve seen of politicians so far

Unfortunately, my opinion of politicians is not very favourable.

It’s my belief that they are driven by their need for “job security” – which means that they are looking solely for reelection (to the same post or a “better” one), rather than driven by the needs of their communities.

Typically, this means that they are always looking for a building or project with their name on it – it’s irrelevant whether the community really needed it or not. They want something that they can point to and say “look what I did for you”.  Most constituents will look at that and think “wow, they built something”, without actually asking whether that was the priority of the community.

Bureaucrats, similarly, are driven by promotion & job security. This means that they will not do anything risky – even if change is needed – because that could get you fired. Likewise, in a situation of cronyism, they are unlikely to oppose elected politicians, because that will get you fired.  This means that they will simply toe the line – even if the line isn’t going anywhere!

Community interests & needs

Unfortunately, this typically means that neither the elected politicians nor the bureaucrats are studying the interests of the communities that they serve. And moreover, it means that no one is thinking or evaluating the long-term needs of the community or society as a whole.

For some areas of Panama’s political plans, I am aware that there have been agreements reached between political parties & bureaucrats regarding long-term plans. But this is the exception, rather than the rule.  Unless politicians are willing to give up their aspirations for reelection – focusing instead on the long-term needs of society, instead of a building with their name on it or hams for Christmas – what will be done?

How will projects actually be completed if there is not complete “buy-in” from all interested parties? Solutions that are reached by the different interest groups – and not simply decided by politicians with a 5-year plan.  This is one of the primary reasons why I will harp on, over and over, about the need for compassion (connection), creativity (the ability to brainstorm with all interested parties solutions – outside the box), and courage (motivation to move forward and overcome obstacles that arise along the way) for the leaders in driving a solution forward!

Because – if for once – someone were able to get all of the interest parties to agree upon the solution, which takes longer than 5 years to implement – it wouldn’t matter that the government changes.  The interest groups themselves would keep the projects and solutions on track through the change of government. But I haven’t seen a government yet capable of pulling off a solution of this magnitude!

So, what do I think we need?

Where do I start?  Which of all of the needs of Panama is clamouring the most for attention?  If we solved one of the problems, would that solve all the rest?  I know that O’Neill in Alcoa found a keystone problem, which when he solved then solved by itself all the rest of the problems within the company, but I am really hesitant to take a guess which one of the areas of government might have the biggest impact on all the rest of the areas!

Presidency

For want of a better place to start, I will start at the top!  And I will admit – this being PanUtopia – the size of the issues to be addressed overwhelms me as to who the right person for this job might be.  Because, in utopia… this person would be capable of handling a Cabinet of Ministers and keeping each one of them, and their respective subordinates, focused on the goals at hand and putting each of the areas I will touch upon in order!

Qualities I want in a President:

  1. compassionate – able to connect with empathy and understanding with communities and their leaders; able to connect with each member of the Cabinet and empower them to effectively do their jobs, because it’s not the President’s job to fix each of the problems that I will identify below; diplomatic – able to command a room and speak from the heart, capturing the attention and connecting with the audience;
  2. creative – able to sit down at a table with 15 people + assistants, and brainstorm solutions – calling in all the talents & abilities of those present – to create solutions that no one person individually could possibly come up with; analytical & logical – able to look through the numbers and lists and come up with priorities and rationally decide the most efficient course of action; well-read & educated – to learn from the experiences and draw from the experience of others that are not even in the room through extrapolation;
  3. courageous – secure enough in their identity to speak their truth and present their ideas and solutions; motivated to see the solution through any obstacles, knowing from the very beginning that obstacles would arise and that they would need to create solutions for those, and being willing to do the hard work consistently to see it through to completion.  Motivated to push through the days when things appear to be going wrong, not simply waiting until “things feel right”.

Looking at that list… it’s kind of what I want in every Minister & Director of Government Agencies as well!  It’s not enough that it only be at the level of the President!

As you will see from the issues below – many of these issues are actually in the hands of bureaucrats – Ministers appointed by the President (not publicly elected officials) and heads of Departments.  While there will be necessary work with publicly elected officials (mayors, representatives and legislators), the majority of “decision making” and implementation will be effectively be within the executive branch of government!

How important is it, over the next 5 years, to legislate in theses matters (other than budget constraints) versus implementation of the decision-making?

Education

Unfortunately, earlier this year I wrote about the challenges facing Panama’s education system, and many of those challenges are still unattended.  Of the 1300+ schools without walls (just the roof held up on posts), there are more than 700 still outstanding. In a recent study of the 3rd grade education level, 1/3 can’t write, 50% can’t read and 60% don’t have requisite basic math skills expected!  That’s without even addressing the issues of modernisation of the system to meet the constantly changing global climate and advances in technology and work environments!

The biggest challenge, however, that I see — what is the vision that guides Panama’s education policies? How will the Minister of Education reach consensus with the educators and other interested parties (including even future employers and entrepreneurship opportunities) to establish the road map that will guide decision making in coming years?  What is the first and primary issue that should be dealt with in the education system that would work towards solving the myriad of issues that need to be faced: preparation of the teachers, infrastructure, participation in growth of the economy, technology?

This one area alone requires someone at its head that truly can get to the bottom of the issues within the Ministry and set a plan of action with the buy-in of the teachers & educators to achieve at least one phase of the plan by 2024!

Health

While I accept that the health issues are actually 2 separate issues, one being the Ministry of Health (and approval of imports of medication, as well as the State health network), there is the more pressing crisis of the CSS (Social Security).  This is a challenge from within as well as from the outside!  The competing interests are tearing it apart, as they have been doing for the past 30+ years!

There are issues regarding their finances & assets, issues with respect to the services (or failure) offered, the infighting and power struggles (national as well as regional and within hospitals), and the competing interests of the doctors, nurses, technicians, suppliers & patients.

This is definitely a scenario where I could see the identification of keystone habit (such as that described by O’Neill in his experience at Alcoa) would actually make a monumental difference to the whole organisation and could be the beginning of a solution!  However, O’Neill was lucky that he counted with the support of his Board – the ones responsible for bringing him on to solve the problem!  In the case of the CSS – this need for support from the Board would need to be addressed!

Housing

Panama currently faces the challenge of needing 200,000+ housing units – but the construction industry is faced with rising labour & material costs.  Construction permits dropped 50% in 2018, and while the country needs 15-16,000 additional homes each year, only some 14-15,000 a year were being built (before the drop in permits!).  Of the 100,000 homes promised by the current government during their term, some 45,000 have been built.

The head of housing will need to balance the interests & needs of the community (for housing) against those of the construction companies, infrastructure needs, and environmental concerns.

Infrastructure

Closely related to the need for housing are other infrastructure needs – even though in 2018-2019 some $2 billion of projects are underway.  This includes finishing line 2 of the Metro and starting line 3 to Arraijan & Chorrera.  But one of the questions being regularly asked is why Chorrera is merely a satellite of Panama City, rather than being designed and built as a separate center that provides employment and not merely sleeping quarters to workers for Panama City!

Two thousand km of roads were promised by the government and claimed to have been built, although it was later clarified that this was really only some 355 km that were completed.

The government also promised to eradicate latrines – but while 200,000 were promised, the results remain unknown.  Likewise, running water has not been installed to all communities in Panama, and many communities still find themselves off the electric grid and mobile phone coverage.

Energy

Closely related to the foregoing issues are the myriad of issues tied up in the energy sector.  I wrote about these issues a number of months ago.  The interest groups here are varied and with conflicting interests.  Needs include:

  • a long-term maintenance plan
  • transmission line #4
  • pricing
  • environmental policies and policing.

The sectors that are affected by energy include: construction, commerce, industry & consumers.

If Panama wants 75% renewable energy by 2050, it needs to change the legal framework and confront the investments recently made into gas-based energy projects, rather than green energy projects such as wind farms or solar power.  In 2016, 60% of the electricity produced in Panama was through hydroelectric plants (which while a renewable source, create significant environmental damage in large areas), 32% thermal, 7% wind and only 1% solar.  What is curious to note is that worldwide, countries with much less sunshine (take for example – Germany) have a much higher rate of solar power than our tropical nation!  Go figure!

Fiscal Policy

Panama’s current fiscal policy requires an overhaul – in order to:

  1. attract investment
  2. be fair on all the players in the market (including small & medium enterprises)
  3. tax monies should not be “lost” through poor management and corruption/theft
  4. in order to “balance the books” – decisions may need to be made to cut government overhead
  5. it may be necessary to down-size government offices, irrespective of how unpopular that may make government members!

Economy

Where to start?

Panama currently faces more unemployment, less investment, less loans being granted and less sales in commerce.  In 2018, the unemployment rate increased for the fifth consecutive year.

There is a serious lack of equality within the country, with many areas still in subsistence farming and well below the poverty line.  Only a few sectors are actually benefited by the current economic growth that is touted internationally.

Financing is barely available for the business sector, particularly small to medium enterprises.  Policies do not support or encourage growth, investment or expansion of companies.

Unemployment

Forty percent of the workforce is currently listed as “self-employed”, “on contract” or “part time” – with no stability.  The results in lower productivity and inability to participate in bank financing and other needs.

Special Zones

While the special zones were thriving, with global changes, they are failing to create a significant difference to the economy and generate employment. Policy changes and focus are necessary.

Tourism

While tourism generates about 10% of GDP and 130,000 jobs in the economy, hotels are currently suffering with a 46% occupancy rate. Once again, a concerted plan and creativity – from public and private sector together – is required to change the situation.

Agriculture

It would appear that the agricultural sector has been abandoned to subsistence farming – with not much technological or educational assistance to the sector.  Exceptions to this are the farms owned and operated by the major supermarkets, who basically produce exclusively for their own consumption.  But many areas of the country are abandoned, with little or no interest in exchanges of technology between countries and participation in projects for learning in the alienated communities that are relegated to subsistence.

Another concern, in the commercial enterprises of farming, is long-term sustainability and environmental accountability for farming methods – particularly long-term effects of runoff from the farms and damage to the surrounding environment.

Justice & Security

I can’t close without mentioning the concerns about the justice system and security issues in Panama.  There are many jokes and memes about “perception” – we “perceive” that there is a problem.  But let’s get real – there is a problem! Not a perception!

Security of citizens and tourists needs to be addressed not only in Panama City or Colon, but in the entire country. Gangs & drug trafficking need to be addressed, as do home invasions and robberies.

In the justice system, attention should be given to the Sistema Penal Accusatorio – which was introduced over the past few years.  It’s not that the system should be reverted to the previous system, which was full of its own flaws – but attention needs to be given to the concerns of the police force and prosecutors regarding their experience within the system. These concerns needs to be addressed across the board.

  • What needs to be fixed?
  • What simply needs to be tweaked?
  • How can members of the police force be educated and prepared better to work within the system?
  • Where are different parties frustrated by the process?

Change is never comfortable, but concerns should also be addressed.

Drawing this to a close

As I look at all of these needs, I recognise that Panama needs well-prepared teams within each area.  This is not an issue for “the President” to fix. I admit, I am sick of people saying “The President needs to come here and solve this problem”.  A country’s problems cannot depend solely on one person to solve them!

This is something that will require not just Ministers that are prepared to sit down at tables, but all interest groups that are well-versed in the myriad of issues and concerns of their specific industry and that are open to brain-storming solutions that take into account all of the interests in the matter, rather than simply being closed to “this is my position”.

Experienced negotiators and mediators – that are able to delve into the needs and interests of all parties will be required at each table – that can identify the need that lies below the stated position.  People that know how to ask questions and are willing to continue asking until truly connecting with the source of the interest, rather than accepting on face value a projected position at the negotiating table.

If any one of these problems is truly to be addressed and a solution found – all parties have to be prepared to see all sides of the issue and begin to accept that the solution may only truly be found by everyone working together to build a better country!

Communities themselves will need to start to believe that they possibly have a role to play in solving the problem, and actually in carrying the solution into effect.

This may require that everyone stops looking at their belly button and “what’s in it for me?” – and actually starts to look at

“how do we all participate in fixing these problems?”

Well, as always, this is PanUtopia!

Panama, economic growth, Panama Canal, economy, industries, public debt, private investment, employment, laid off, lay offs, agriculture, infrastructure

Where did the economic growth go?

A few days ago Standard & Poor’s improved Panama’s risk rating to BBB – indicating that Panama has shown consistent economic growth and a stable fiscal policy.  This is in line with the rating which Panama has by Fitch. Nevertheless, this rating comes on the heels of news that Panama’s foreign investment dropped by 17% in the first quarter of 2018, compared to the same period in 2017.

A lot of people in Panama are asking themselves – where did the economic growth go?

Shops are closing.
People are getting laid off.
And what about the 30 days of strike by the construction workers and the millions that were lost by construction companies during those days that turned into weeks?

But the cost of living in Panama City is the highest in Latin America.

How do they measure risk?

What many fail to understand regarding this risk rating is that it takes into account global factors such as:  international debt management (with the World Bank), GDP, government fiscal policies, banking and financial transparency, and even private investment in infrastructure projects.

Panama, shipping, transportation, logisticsMany of these aspects are out of the reach of the average consumer on the streets in Panama.  They are not seeing in their pockets (no trickle down here), the efforts from the expansion of the Panama Canal and the ports. No one is talking about all the development that is happening on the Caribbean Coast since opening up the third bridge across the Canal in Colon.  And no one believes that corruption is truly being addressed, as mentioned in the S&P report.

But, the S&P takes into account international aspects, such as exchange of information policies, which have changed substantially over the past 5 years.  They also take into account the new regulations for stopping money laundering and the supervision of previously unregulated business areas (real estate, casinos, and even accountants and lawyers).

All these things that the little man on the street has no real interest in.

Addressing poverty:

In formal circles, there is talk about how this government has addressed poverty, and especially criticism of the report that “150,000 have now moved above the poverty line.” But, as many point out, this is simply because of an increase in welfare subsidies – it is not actually because of increased employment!   The poverty line in Panama is a mere $60.00 a month, and so with the subsidies introduced by this government, they have “effectively” moved people out from below this poverty line.

Panama, poverty, economy, economic growth, trickle downUnfortunately, however, they haven’t actually solved the problem.  They simply moved it to a different place!  While these families are now receiving the welfare subsidy, no new policies, training, education or other measures are being introduced to break the poverty cycle in these communities.  They are simply depending on welfare!

The perception (i.e. the reality of the common man on the street) is that unemployment has increased.

There are more people “camaroneando” – which is basically picking up odd jobs wherever they can!  The Panamanian word “camarón” apparently has it’s origins in “come around” – like “why don’t you come around on Saturday and mow the lawn for me?”

So, while on the one hand you have official government figures saying that they are making headway in addressing poverty, the average worker on the street would disagree.  If unemployment has increased and relying on odd-jobs has become a way of life for many more people, then “how is it that we are better off now than before?”

A more real criticism that I see is that most countries don’t establish an arbitrary figure to calculate their poverty line.  They use their GDP as a measure – anyone that is getting LESS than half of the GDP would be considered to be under the poverty line.  Assuming that Panama’s GDP is still somewhere around $14,000 a year, that means that anyone earning less than $600/month is under the poverty line.  How many people does THIS leave in “poverty”?  In other countries, they will call these the “working poor”.  How are Panama’s “working poor” doing?

And let’s be real: one of the World Bank’s criticisms of Panama in its recent visit was that Government (i.e. size) was growing faster than the economy and the taxable income.  In other words, our government is getting too big for the country – it’s costing more than it receives in taxes!

A $300M injection into the economy

One solution for this situation is a $300 million injection that the Government has requested (taking from Peter to pay Paul), by authorising an increase in the budget deficit.  This is apparently to assist businesses that were hardest hit by the construction strike earlier this year.

The sole purpose of this cash injection (they haven’t actually said what they will spend the money on other than “investment projects”) is to help the struggling economy.  Unfortunately, however, what is true is that the strike did affect two major infrastructure projects – the finishing of the expansion of the Tocumen International Airport and the Metro Line #2.

The government needs to have both of these megaprojects finished by January 2019, because of the World Youth Day celebrations that will take place in Panama!

Looking back over recent years

But, even if we look back at 2015, where Panama was still doing quite well in terms of growth (at least, it hadn’t slowed down as much as we are now seeing in 2018), we are still left with questions.  Where has this economic growth gone? Who is receiving all the money? Where is it going?

If the man on the street is saying we’re in recession – why are official figures still showing national growth?  Car sales have dropped by 9%. Foreign investment drops 17% in the first quarter.  But we’re still fine.  Panama is still growing.

Where?

If we look at 2015, foreign investment was about $5 billion.  For Panama, that means we’re flying! And yet, in 2015 unemployment was already starting to increase and we were already starting to see some shops closing or reducing their sizes.

dollar-1319600_640One reason for this change is the change in ownership of local businesses – Panamanians that owned Café Duran, Cervecería Nacional, the mills, the sugar mills, the milk companies, etc., all sold out for a profit.  They then took those profits and moved to Florida (or wherever).  That’s to say – they cashed out.  Now foreign companies own the production.   Add to that, foreign companies own all the major infrastructure (telephone, electricity, etc.), at least in partnership with the National Government (state owned enterprises).

So, if you took a look at the daily life of Panama – about 95% of the profits of any company in Panama are now headed overseas.  Twenty years ago, although we had none of the infrastructure that we have today (because of all the foreign investment that made this possible), all the profits remained in Panama.

All major infrastructure projects undertaken now in Panama are all foreign investors.  In fact, 45% of all foreign investment into Central America actually comes to Panama – not to the rest of the Central American countries!  But as soon as the project is finished, the company and all its capital leave Panama.  Panama gets the debt and the infrastructure it had built, but all the profits head back overseas.

Let’s blame the Venezuelan crisis

It’s really easy in Panama to fall into the game of just blaming all these woes on those foreigners that come to steal our jobs!  And yes, Panama has received thousands upon thousands of displaced Venezuelans over the past 10 years, and in recent years it has gotten considerably worse.  Yes, there are Venezuelans sending money home every week to their families in Venezuela, trying to keep them alive.  They are working in bars and beauty salons, they are picking up odd jobs anywhere that they can get them. And yes, it is true that violence has increased in Panama, as it has throughout all of Central America!

But really? We’re going to blame it on them?
For me, that fails to address deeper issues!

Panama has so much to offer but at the same time seems to be damned to be just another Latin American country.

So… where is the economic growth in Panama going?  I see it being sent back overseas… the money comes in as foreign investment, bribes are paid, an infrastructure project is built… and the money flows right back out again!

Hopefully I’m wrong!

What now?

I’m no economist and no expert in any of these matters.  I can only speak from where I am seated and what I see.

But I do notice some things that have solution:

  • addressing corruption – let’s stop the bleeding! You can’t save the patient on the operating table if you don’t stop the bleeding. It doesn’t matter how much money you pour into Panama, if we don’t stop the bleeding we have going on, the patient will die on the table!  Is this the biggest problem? Yes, probably!  The corrupt politicians.  The corrupt companies that participate with the bribes and kick backs.
  • addressing the lack of preparation for the new economy.  Panamanians are not ready for the new economy that is taking over world-wide.  Our education system is not up to date. The very mentality in the schools & universities is out-dated.  They are preparing everyone for an economy that existed 30 years ago, and in my personal opinion, not doing a very good job at that, either.
  • agriculture & production – Panama needs a local production and a pride in its own produce. Yes, we want variety & options – but so many countries have established home country brands that its nationals are proud to purchase “made in …”.  That doesn’t seem to exist here in Panama. And we are seeing less and less produced in Panama, and even tradesmen and artisans are shutting down as they cannot compete with the prices of imported goods.
  • science and innovation – related to the last two points – one of the things that I worry about the most in Panama is the lack of innovation and entrepreneurship in Panama.  I don’t see any biotech, a whole lot of clean energy, technology based companies – and especially not owned, operated and run by Panamanians.
  • Why is everyone so scared of entrepreneurship and dependent on someone else being the employer?  Where are all the entrepreneurs?
  • banking and finance – hand in hand with my last question – Panamanians will not change jobs and certainly will not go independent if they haven’t already purchased a home and car, because if they do, they will not qualify for financing from any financial institutions.  The banks will only lend you money if you have a check stub that you can show you receive your fortnightly check from a company and are on payroll.  You are considered “high risk” if you are independent, even if you have your tax returns to show.