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?

 

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Renewable energy in Panama

Introduction:

Panama is blessed with an abundance of sunshine and rain, allowing it to entertain renewable energy sources as the sole source of it’s electric supply.  Nonetheless, it continues to depend on a couple of carbon-based plants for its electrical demands, and the local energy authorities are under fire for proposed taxes and charges on solar power producers.

In late May, the headlines regarding the ASEP decision were all along these lines:  “While the rest of the world looks to consume and produce clean energy, the Panamanian Government – through ASEP – is trying to PUNISH anyone who installs solar panels or other clean energy generators in their homes or businesses.”  

Mientras el mundo apunta al mayor consumo y producción de ENERGÍAS LIMPIAS, en Panamá el Gobierno Nacional —a través de la ASEP— busca CASTIGAR a las personas que instalen paneles solares u otros generadores de energías limpias en sus hogares o negocios. #COMPARTEpic.twitter.com/JR0sC2bzgd

— ClaraMENTE (@ClaraMENTE507) May 26, 2018

At the beginning of June, ASEP opened the dialogue, indicating that they did not intend to penalise those who had solar panels for personal consumption, but that they were looking to ensure that anyone that was connected to the electrical network and infrastructure was paying appropriately for the infrastructure, and not simply getting a free ride simply because they principally had solar panels or other self-generating systems.  There was also criticism because of the pricing suggested out the outset for those who were generating more than they needed and were feeding this excess into the general network.  This ignores, in part, that since February of 2017, Panama has had its first commercial solar power plant “Central Fotovoltaica Bugaba“.

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The National Energy Plan – 2015-2050

In April 2015, the Panamanian Government published the 2015-2050 National Energy Plan which sought to place a new focus on solar and wind sources, rather than the traditional sources of hydro and carbon generators.  By 2050 it is hoped that Panama will rely, 70% on renewable energy (primarily wind & solar).  The move away from hydroelectric power comes after serious confrontations with indigenous groups and communities over the devastation and changes to the ecosystem.

For example, if you have a quick look at the following video, you can appreciate the Tabasará river during a normal rainy season (before the hydroelectric plant was built).

The two videos that follow are during the construction of the power plant on the Tabasará river, where you can appreciate the devastation down-river to the entire ecosystem and the change that this has generated for all of the communities that depend on the river.  Obviously, the videos of the construction are during the dry season, rather than rainy season (so it is no longer a raging river in full flood), but as you will see in the second video, the communities downstream from the project were left with almost stagnant water.

The communities also denounced and complained that they were being displaced from their homes and communities. Obviously, this had economic repercussions for these communities, as they lose their farm lands.  Even those who previously used the river for rafting and outdoor adventures during the dry season have said that they have totally closed down the Tabasará option and have had to find other rivers for rafting and adventure.

In a similar manner, Nata & Aguadulce were left without a drinking water supply when the local hydroelectric plant shut off their access to water during the summer of 2016, because the 2015 rains were not enough to fill up all of the reserves.

Support for private solar panels

In 2016, the ASEP took steps to support and promote solar panels in homes and projects.  At this time, ASEP promised users that they could reduce their consumption by 50% or even up to 100% through the installation of solar panels on the roofs of their homes or businesses.  Nevertheless, there were requirements for this, which involved the local electric companies:

  1. approval by the competent authorities (fire brigade, city council)
  2. design of the system and technical details regarding output and capacity, and all of this with
  3. a letter to the electric distribution company, requesting the installation of a bi-directional metre.

The electric company was then to install the bi-directional metre, (not to be charged to the consumer) which would compensate the output and input, measuring the net usage of the client of electricity and that produced by their system.  In these cases, the homes were not installing batteries or storage units, as the excess of their production was pushed back into the system for usage by others in the network, and then they consumed electricity when their solar system was not producing.  These were not stand-alone or self-sufficient units.

Regulation of self-production

Later in 2016, the ASEP informed that it might consider a limit of 500kW for residential production of solar power and then (after consulting the public and users) notified that it would not be doing so, but rather it would be leaving that to each homeowner to decide what production and consumption they required.

Is it really worth it?

Costs in 2016-2017 were still prohibitive – for a home consuming 500kW hours/month, the cost of installation would be approximately $9,800.00, which meant that the investment would be paid off in about 7-8 years. In 2018 we see the costs for a home consuming 400kW hours/month having installation costs of $4-5,000, almost half of the cost for 2016!  However, as many of those living in Panama know, our electric bills are quite high, so as those costs of installation come down (which they have over the past 24 months), solar power becomes more attractive as a residential alternative.  This is especially the case with those companies that are providing a 25-year guarantee on their panels!

Throughout 2017, ASEP continued to promote solar power for residential use, touting the benefits of being able to hook into the distribution system and get paid for any over-production.  And so we now (Feb 2018) find Provivienda (one of Panama’s real estate developers) offering a subdivision in Arraijan in which all homes come with their solar panels installed and connected to the system. This subdivision is expected to be completely self-sufficient to the needs of each home.

The regulations provide that where the consumer is using no more than they are producing (and supplying into the network), then there is no charge to them. Where their solar plant provides more electricity than what they have consumed, then they can expect to receive a payment from the electric company for up to 25% of their consumption (but no more).  So, for example – you produce 500kW/hours, but you only consume 400 – you will get paid on that 20% extra that you produced.  You consume 500kw/hour and you only produced 400 – you will have to pay the electric company for the consumption!

Commercial projects:

Smaller companies have already begun to invest in solar power plants, for commercial purposes, such as “Central Fotovoltaica Bugaba“.  2017 say some 72.4MW come online and 2018 some 78.8MW are expected to receive their commercial licenses and approvals for production.  For 2019-2021, a further 200MW have provisional licenses to build and come online.  There are already mini solar plants in Azuero, Llano Sánchez and Chiriqui.  If with all of these projects, they generate the estimated 383MW (with an investment of $422M over this period 2017-2021), this would be more than the production of Fortuna (which produces 300MW and is the largest in Panama so far).  The issue for Panama is the rainy season, because this brings down production to almost 20-40%, with a higher production during the dry season.  Therefore, most of the solar farms are located in the “arco seco” – the “dry arch” – in the Azuero Peninsula.

Wind Farms

Anyone who has driven out to Penonome from Panama City has appreciated the wind farm on the left-hand side of the highway.  As of March 2018, construction of a second windfarm in Cocle is under way, this one in Taobré.  This wind farm will have 20 Vestas turbines and 2 substations, and is expected to be built in 22 months.

Changes in Public Bids

Roll forward to February 2018 – and the ASEP announces that all bids for energy projects “from now on” will be on an equal footing – with no special exceptions being given for clean energy.  That means that the gas / thermo plants (such as those in Colon) will be competing cheek-to-cheek with solar and wind farms.  It would seem that this gives the thermo/carbon/gas projects an upper-hand as they are less capital intensive.  But the ASEP assures that this is not the case, because they will have to quantify and provide a bond covering the possibilities of contamination. So, while a solar plant will have a low contamination factor, the gas or thermo plants will have to adjust theirs costs to include for accidents and liabilities.

And then…

Roll forward to May 27, 2018, and everyone is in an uproar because it seems that ASEP now wants to start TAXING residences and businesses that have installed solar panels (connected into the system and producing energy for the system). On May 27th, they indicate that they are considering an “additional charge” to anyone that has solar panels on their home or business.  However, they didn’t go into what this “additional charge” was, which caused a massive back-lash as I mentioned at the very beginning of this article.

Given the reaction from the public and from conservation groups, ASEP took a step back, defending itself with “you didn’t understand what I said”.  They never did quite clarify what it was that they had said!  On the 1st of June, this then rolled into “we are not going to make any decisions on this until we have reached a consensus with all of the parties involved”.

Eventually, what came out was the following explanation:  if you have solar panels and are self-sufficient but you are still connected to the network, the distributor must have available at any and all times enough electricity for your home/business.  So, let’s say you need 400kW hours/month – they must produce enough for that.  But, since you have your solar panels, you aren’t actually using it and are not paying for it.  They want to charge for having it available to you, but you not using it!

Putting a tax on the sun

The reaction from some of the players (particularly owners of companies installing solar panels) was that the government was looking to put a tax on the sun!  Others point out that this clearly is a dis-incentive towards clean energy and favors the production of cheap oil/gas-based thermo electricity, rather than making the long-term investment into solar panels and self-production.  If the government wants private persons and companies to make the capital investment into solar power, then they cannot consider putting an additional tax on it.

The ASEP justifies their proposal as being simply a charge on those who are producing energy and pumping it into the network (and getting paid by the electric company for this).  But that’s not what they said they were going to tax. I’m still waiting for the dust to settle (maybe after the world cup fever has subsided next week), to find out what ASEP has really decided or whether the “let’s reach a consensus” is underway.

Reaching Utopia

With a new Metro line being finished in 2019, more electricity will be needed to run that! More buildings = more air-conditioners running. In a country in which 35% of the electricity goes towards air-conditioning, maybe it’s time for Panama to look not only at how it produces electricity, but how it can reduce wastage or improve geothermal covering of buildings to harness the energy!

Maybe it’s time to explore alternative options like turbines that create electricity simply from moving traffic (of course, that would mean that Panama’s traffic would need to move!).
https://www.facebook.com/plugins/video.php?href=https%3A%2F%2Fwww.facebook.com%2FInTheKnowWanderlustByAOL%2Fvideos%2F463043554144777%2F&show_text=0&width=476

There are few voices (and even less articles) discussing the alternatives for the central business district, hotels and banks to contribute to the solution to the needs over the coming years.

  • There are many options for windows on buildings to generate electricity through special coverings.
  • There are green buildings, which are growing more plants to battle CO2 emissions.
  • There are options for paint and finishing on buildings which will assist in making them cooler and not using as much electricity and air-conditioning.

But there is so much to learn and there are no tax incentives for businesses to make these capital expenditures on long-term returns.

If there are less than 250 residences in all of Panama (in 2018) with solar panels, can I really expect that people will be forward thinking about what we need to do in order to work towards a solution?

Fighting the waste in Panama

As the tropical rain pours down outside, I am sitting here hoping that the tide is out. Otherwise, tomorrow morning we are going to wake up to news and images of the flooding throughout the lower parts of Panama City.

Unfortunately, Panama City has not done a great job of “city planning”, especially in respect to natural runoffs and areas of watershed. As the population and housing needs expand, the city has expanded. Encroaching on tidelands and mangrove forests. Though there has been a move now to curb the expansion into the mangroves, there has still been a lot of land-fill of the tidelands that were once the watersheds of the river basin. So, areas which were built 40-50 years ago, which have never flooded before, now flood regularly when the high tide and tropical rain meet.

Many people accuse the government of failing to deal with the issue of waste and rubbish blocking the sewage and storm water drains. But the issue is much bigger than this; there are

  • The typical issues of rubbish bags being opened by stray dogs, cats or vultures.
  • Failure to collect rubbish regularly (most weeks our rubbish is collected on a Sunday, or not). Sometimes we simply have to call and beg them to send a special truck to pick up because it’s been so long.
  • Homes here don’t have gardens and composting: and most people don’t even know what compost is anyway.
  • This is the tropics – you can’t just leave rubbish out for more than a day without it starting to turn rancid.
  • Re-cycling is virtually non-existent here and there is only a small culture of reuse and recycle.

I’m aware of this every Saturday when I go to the market with my own bags and I still have to refuse the offer of a plastic bag at each stall. I’m aware of this when I go to the supermarket and I see that most people are not carrying their own bags. And I’m aware of it when I see the rubbish on the sides of the streets.

This issue has not been addressed by recycling stations at the primary schools or outside supermarkets or gas stations.  Even trying to recycle paper and cardboard in Panama seems to be hard work! They don’t come and pick it up – you have to drive it over and drop it off. How many companies or homes are going to take the time to do that?

But I am even aware of it in my kitchen. Every maid so far has had to be trained not to simply throw away the peel and veggies that are “up to scratch”. They don’t realize that those ugly veggies that are not pretty enough for the salad can be used to make a fabulous vegetable broth!

And then they complain to me that I don’t have any bullion cubes for veggie broth! Really?  Admittedly, my cooked veggies from the broth that I then throw away (and keep only the broth) probably decompose much faster in the rubbish than the raw ones would have – they probably smell more as well.

But more than anything, I am appalled by the packaging at the supermarkets (not that I buy my veggies at the supermarket anymore) – the way that they individually wrap all in Styrofoam and glad-wrap! As if there wasn’t enough rubbish already.

But this is definitely a modern day problem, the same way that the floating island of rubbish is a problem in the middle of the Pacific Ocean and the plastic now found at the bottom of the Mariana Trench!

There are ingenious solutions found in a number of parts of the world, such as this solution to “flip-flops”:

It’s really easy to complain about the problem, it’s much harder to do something about it. Even on a personal level. I can make small choices:

  • a recycling bin in the yard (because I’m lucky enough to have a  yard)
  • the choice to take my own bags to the vegetable market and supermarkets and only buy fruit and veggies that are not pre-packaged
  • the conscious decision to hold onto the paper to take it to the recycling plant ourselves
  • metal / glass water bottles – which we refill regularly rather than buying bottled water

But the plastic bags, bottles and packaging issues need to be addressed on a massive scale if we are going to make any headway.  My little contribution is only a tiny grain of sand in the Sahara desert and that’s not enough.

Panama, business, money, entrepreneur, business index, economy, doing business, starting a business, economic indicators, ideal business environment, import, export, fintech, incubators, assistance

Panama’s money stories, part 2

In Part 1 of Panama’s money stories, I highlighted some of the sordid details that Panama has been known for and the ways that Panama has been presented and vilified in the press internationally.  In this Part 2, I want to have a good look at what Panama has to offer, the strengths and weaknesses of Panama’s location, workforce, and infrastructure.  In Part 3, I am simply going to dream of “what could be” – well, because this is PanUtopia.

Location, location, location

Like any good real estate investment, Panama has a great location.

It is the Bridge of the Americas and the Crossroads of the World: with the InterAmerican (or Pan-American) highway travelling East-West along the entire length of the Isthmus (well, except for the Darien Gap which Panama refuses to open – but that’s fodder for another post). Running North-South through the Istmus is the Panama Canal, recently expanded to allow post-Panamax ships to pass through.

The Pan-American highway has many stories to tell, haivng 14,000 miles of road (or roads) that traverse from Tierra del Fuego all the way to the Arctic Ocean. I remember at 8 years old a French couple that had started riding their motorbikes in Argentina and were heading up through Mexico, intending to get all the way to Alaska! pedal moped, riding bikes, interamerican highway, argentina, alaska, mexico, colombia, Panama, Bridge of the Americas

They were something like this – but much more worn and dirty! And fitted out to carry their bags on the back, and side-bags.  At 8 years old, I could only imagine the adventures they were having!  Roll forward to 2018 and we still get those bikers through Panama – perhaps riding better bikes, but with the same adventuresome spirits!

As the land bridge between the two continents, Panama boasts an incredible variety of species, both plant and animal life.  From North America, it has jaguars, tapirs and deer, from South America sloths, anteathers and armadillos, and from the oceans the giant sea turtles which lay their eggs in Bocas del Toro and even on the Casco Viejo beach in Panama City!

Panama, Isthmus, land bridge, Bridge of the Americas, Crossroads of the WorldPanama is blessed in its location: we are protected from the hurricane belt, getting pelted only by tropical storms and heavy rain.  While Panama rests on the Pedro Miguel fault line, it does not have a history of seismic activity.  You might read about the 1621 earthquake, or the 1991 Bocas del Toro earthquake (which actually happened in Costa Rica, but caused considerable damage in the neighbouring Bocas area).  This is one the strongest recorded earthquakes in Costa Rican history, registered at 7.7! But, as noted, it was actually in Costa Rica…

Since the 1500s (you might remember the pirate stories) Panama has played an important role in international trade routes: from Peru through to Spain, with the French and the United States heavily interested in participation in the possibilities of this location.  Even today, Taiwan and China dispute investment and participation in the Panamanian economy (the ports), and a US presence is continually felt under the terms of the 1979 treaty in spite of the removal of a military presence.

Hub of the Americas

Panama Canal, Miraflores, locks, logisticsFrom this location, Panama has become known as “the hub of the Americas” – one of the most significant transportation and logistics countries in the world.

As a travel hub, Panama has developed Tocumen International Airport to attract flights from Europe (KLM, Lufthansa, AirFrance, Iberia, Turkish Airlines, & Condor), China, and North, Central and South America.  The recent investment in the expansion of Tocumen is about 84% completed, with an expected completion in the third quarter of 2018.  This investment project was above US$900M, taking it up to 54 gates and extending the runway for larger aircraft. By 2025, the two terminals are expected to handle some 25 million passengers per year.

Panama has also become an important hub for telecommunications, with the Submarine Cables passing through Fort Amador and Colon (such as the Arcos Cable that connects Central America, Florida and the Caribbean and the South American Crossing cable).  In 2010, Panama became one of the first countries in the world to offer free wireless broadband access nationwide through the National Internet Network project, which provides free wifi at libraries, some busstops and other government sites.  In Panama City, connectivity is pretty easy to get, but there are generally fluctuations in the areas where there are not fibre-optic connections.  For businesses that rely on fibre-optic level connectivity, there are a limited number of neighbourhoods that can guarantee this service.

Panama, shipping, transportation, logisticsAs a logistics hub, Panama intends to make the most of its geographical location, creating the largest logistics conglomerate in Latin America. Shipping, logistics and trade contribute close to 35% to the national economy, making the concept of “hub” vital to Panama’s growth.  It uses the Canal, the ports on the Caribbean and Pacific Oceans (MIT, CCT, Cristobal, Balboa & PSA), the train line between the ports, and Tocumen International Airport (Copa, DHL, FEDEX & UPS), to provide multi-modal solutions.  This is all interconnected with the Colon Free zone and Panama Pacific zone.  The logistics industry is expected to create 10,000 or more jobs per year for the next 10 years or so – over 100,000 jobs in a growing industry!

Obviously, in order to fully develop this hub, Panama needs to continue investing in additional infrastructure for distribution and storage essential to the international business community.  Georgia Tech maintains a Logistics Innovation and Research Center in Panama, aimed at aiding the country to become the trade hub of the Americas.

Open for Business

Panamanians are complaining that the economy has really slowed, and yet it continues to be the 2nd fastest growing economy in Latin America. While the growth rate dropped from 11% in 2013 and 5.3% in 2016, it is still over 4.6% in the first quarter of 2018!  Infrastructure investments are underway in a number of areas, including the building of the second metro line in Panama City and the studies underway for another bridge across the Canal, which will include a metro rail bridge for the third line.

Depending on who you believe, and how the scoring is done, Panama ranks #3 in being “open for business”.  The World Bank rates Panama as 79th, taking into account a number of factors, and 39th for the ease of starting a new business.  Apparently registering for and paying taxes in Panama is one of the most difficult aspects of doing business in Panama!  But, hopefully that ranking will change, with the adoption of the online tax payment system implemented recently.  Panama is also ranked 54th in Economic Freedoms, which looks at rule of law, government size, regulatory efficiency and open market criteria.

That said, Panama continues to consolidate its position as a business hub, as the headquarters for more than 130 multinational companies!  The principal business and investment attractions for Panama are:

  • corporate headquarters & regional services
  • multimodal logistics
  • infrastructure development
  • maritime services
  • light manufacturing (free zones)
  • renewable energy investments
  • tourism

This translates into the following prime locations/special laws and incentives:

  1. Panama Pacific 
  2. Ciudad del Saber
  3. Colon Free Zone
  4. Special Free Trade Zones (dotted around the country)
  5. Multinational Headquarters

In terms of quality of life, Panama is ranked #1 in Central America and #4 in Latin America (UNDP).

Workforce & other challenges

workforce, employees, professional, training, educationAs I pointed out in my previous blog post about Panama’s money stories, corruption is probably the biggest obstacle that Panama faces – and it certainly is as far as perception goes. While Panama’s economy is stable and Panama has a well-developed services sector (most employment in the areas of banking, commerce, tourism and logistics), Panama continues to under-prepare its workforce for modern challenges. The poorly educated workforce ranks as the third obstacle in business for firms!

Education standards are considered to be poor by the World Economic Forum. The quality of public school education in Panama is still under fire, with a World Bank study indicating that upon completion of secondary school, the quality of the education is equivalent to 8 years of education, rather than 12.   Panama has taken important steps in improving the level of English in the public school education system, but still needs to modify the focus at Univeristy level.  Nonetheless, tertiary education is not in line with the needs of the marketplace – as social sciences, administration and law continue to be the predominant choices for students, rather than technology and sciences!

Back in 2016, news sources were reporting the problems employers faced at job fairs: while 72,000 jobs were on offer, only 25,000 people joined the labour market through these fairs, because they were under-qualified or lacked experience.  Call-centers in Panama provide about 14,000 jobs to the Panamanian workforce – the principal ones in Panama are Dell and HP.  But there continues to be a need for better qualified English-speakers for Call-Centers.  Even in 2018, Panama faces these same challenges in logistics, tourism and even the construction industry.  Among the listed skills required are “soft skills”, such as discipline, punctuality and others.

At the same time, it appears that Panamanian firms do not do well in offering formal training to their employees, which does not assist employees in getting the industry specific training that they need.  Training for tourism or customer services is virtually non-existent and foreigners are constantly complaining of the bad service in restaurants.

Retraining, especially in technical schools, is very low.  There is a “stigma” attached to working in “manual labour”, and yet a dearth of properly qualified electricians, plumbers and specialist construction workers. Improvement is especially necessary in the vocational and technical areas. Everyone is a “handyman” and “knows how to do it”, but the reality is that you wouldn’t be able to pass inspections!  And as Panamanians have sought to move out of “menial labour”, Nicaraguan, Colombian & other immigrants have taken the posts of maids and housekeepers.

There are laws protecting many professions, such as law, medicine, dentistry and engineering. This means that foreigners cannot practice in these professions in Panama.  Yet, one of the fallacies is that chemical engineering is reserved solely for Panamanians – but Chemical Engineering isn’t actually taught in Panamanian Universities! Guess how many chemical engineers we have…

Inflexible labour laws are another cause for complaint among prospective investors into Panama: firing is heaving regulated, labour mobility is limited and labor typically costs 41% more than the paid salary (including social security, holiday pay, liquidation costs, etc.).  Panama’s minimum wage is the highest in Central America, and it is often difficult to find fluent English speaking employees.  Panamanians typically have an intermediate to advanced level of English, but are seldom proficient in business writing and customer service level English.

 

All of that said, Panama continues to be one of the most attractive places in Latin America for investment.  And yet, with respect to innovation, Panama still has so much to learn.

Education in Panama – hopes and dreams

Last week was the first week of school for public schools in Panama.  Universities typically finished their “summer holidays” at the end of January, but primary and secondary schools still have a three month summer vacation.

And after seeing headlines in Panama in late February, I’ve been asking myself: What has happened during these three months of school holidays? What efforts are made to ensure that when students return in the new year, the teachers will be better equipped as well as the schools in a better state?  And what can we do differently?

Panamá Bilingüe:

I was stunned by the news a few weeks ago that of 5,200 teachers sent abroad to study, only 1.5% (70) teachers were “certified”. Of course, it turns out that headlines sell newspapers, but don’t tell you the whole story!

During these summer months, about 1,000 Panamanian teachers and 500 students traveled from Panama to the US, England, Canada and Barbados for full immersion English classes through the program “Panamá Bilingüe”.  The Panamá Bilingüe program has a budget of over 100 million dollars for the five year period it is intended to run, and costs about $8,000 – $12,000 per teacher for training, airfares and accommodation costs.

When this program started in 2015, it was slated to be the beginning of a new era of education in Panama.  Unfortunately, if you look at the quality of the translation on the President’s website, you may be forgiven for thinking there’s not much hope for the future if this is the best that can be done for the President!

During the 5 year program (2015 to 2020), some 10,000 teachers are slated to receive instruction both in English and educational classes to improve the quality of the education received in Panama in public schools and at public universities.  A further 20,000 high school students and 30,000 primary school students are expected to also benefit from this program.

Teacher Training:

  1. national – before they are given any opportunity to study abroad, all expenses paid, the selected teachers are given training in Panama, in order to reach a certain level in English (Private & Public).  They are then given an exam (such as TOEFL or Cambridge) to see the level of their English before they go.
  2. international – 10,000 are being sent overseas. They will not only study English, some will also be studying in science and Education. Of these 10,000 teachers that are slated to go overseas before 2020, 5,200 have already completed the training internationally.  When they are sent overseas, they are expected to work (side-by-side) with teachers internationally (some 25-35 hours per week), as well as study at their designated University.

Unfortunately, the initial (and badly explained) results that came in February 2018 were not very promising. Of the 5,200 teachers who have traveled internationally so far in this program, only 70 (1.5%) have  obtained the Cambridge certification in English. However, what was important to note is that the certification in question was a certification to become examiners in Panama of students in English (i.e. it was not whether they had attained or not a proficiency in English, but whether they had a proficiency and the additional certification to be an examiner in Panama).  Five hundred teachers volunteered to participate in the courses for certification, of these 389 have a level of proficiency that are certified, and 70 have actually received the Cambridge certification as examiners.  So, while it sounds terrible that only 70 of 5,200 got certified, I had to read more to understand what they were getting certified in. Not half as bad as the headlines sounded!

In the explanations given by the Ministry of Education, they indicate that in terms of the English levels of the 5,000 teachers sent overseas to study, only 5% have completely failed to reach the levels of proficiency required (according to where they are at the time they start the course), and in these cases the teachers involved will be required to pay back the cost of the studies from their salaries.

What does concern me, however, is that the minimum level required is High Intermediate English. This means that the English teachers in our primary and secondary schools is possibly only Intermediate English.  These are not teachers who are speaking fluent English. So, if they are at intermediate level, how will our high school students reach anything higher than just intermediate?

Kids program:

In addition to the training for teachers, Panamá Bilingüe also offers classes for kids.  And this is for kids all around the country, not just in Panama City. Some of the kids will be from different regions, such as the Guna in San Blas, the Ngobe in the Ngöbe comarca between Chiriqui and Bocas del Toro. Of the 13,000 that started in the program, some 8000 children that have been participating in Panamá Bilingüe for the first three years were tested and 82% have reached Intermediate Level (as gauged by the TOEFL exams).

School buildings: Gazebo schools

Of the 1,080 gazebo schools (escuelas ranchos) found to exist in July 2014, the Ministry of Education has only been able to replace 504 so far with school buildings (some still under construction).  As expected, this project is taking longer and costing more than the current administration anticipated: they are half way there with only little more than a year left before elections (5 year term).

Although the numbers mention 1,080 “schools”, this really means buildings or class rooms, rather than the entire school.  So, for example, in 2018 they are undertaking 16 projects for 69 properties, which will eliminate 209 gazebo schools.  The new school properties will include dormitories for the teachers (as some are in remote areas), as well as play courts (with roofs) which can be used for assemblies as well as for exercise and gym class.

One of the biggest difficulties being faced is the remoteness and access of the regions where these gazebo schools exist.  Many contractors are not interested in bidding for the projects in these areas, because of the transportation issues (materials as well as workers).  So, the Ministry of Education puts out the details of the public bid, and no one responds.  And the Panamanian Ministry of Education does not seem to have its own maintenance and building division for these particular cases.

In these regions, the debate continues to be over school buildings, with no debate being entered into regarding the quality of the education that these children are receiving.

How do we combat poverty in these regions without any infrastructure to speak of?

Public Schools not ready

In addition to the issue of Gazebo schools, which is gradually being addressed and faced, every start of the school year, we hear of schools that simply are not opening for the first day of school because basic maintenance work has not been done.  So, for example, on March 5th we read that some 20 public schools were not ready and a further 32 schools were opening, but with either infrastructure issues or not having enough teachers.

Of these 20 schools, 10 are simply not opening and ready, and a further 10 are using alternative properties for the school year while their schools are being maintained. Once again, we’re talking about whether there WILL be any education, not what the quality of that education will be!

What makes for a first world education system?

When we look at the question of education, obviously these are very basic issues that Panama is facing.  Quite unlike the kinds of issues that you would face in say New Zealand or the Netherlands. Panama says that it aspires to be like Singapore, and yet Singapore often comes out as the best education worldwide!   If we look at the World Education Rankings, Panama doesn’t even make it onto the graph! Even the articles that criticize the US education system, providing graphs that include our neighbors Costa Rica and Colombia, completely ignore the existence of Panama.

How did (or does) Singapore make it to the top? For starters, education spending makes up about 20% of the annual national budget! Yes, you read that right: TWENTY percent.  Panama spends only 3.5% of its budget on education!  We get what we pay for!

English is the first language in the education system (since the 1960s), meaning that all children are fully bilingual, usually reaching fluency in primary school.  Admittedly, during the 1950s and 1960s, Singapore adapted their “survival driven” system into one which could provide a skilled workforce for their industrialization. They have also adopted the requirement that throughout primary and secondary school, all children must participate in one after school program (performing arts, clubs, sports, etc.).  Maybe these children aren’t perfectly well-rounded, but they are at least socialised and with some leadership skills.

Upon completion of secondary school, Singapore offers vocational education (since 1992), Polytechnics and Arts Institutions, Junior Colleges (2 years, pre-University), and Universities.  It also offers other alternatives, and encourages students to pursue further studies even after completing their Polytechnics or vocational training.

This strong focus on education in Singapore should be a shining example to Panama, as like Singapore, we lack natural resources (other than the Canal) and we need to develop our human resources and manpower to build a knowledge-based economy.  Obviously, there’s a lot more we could look at in Singapore’s system: meritocracy, investment and the priority that it has been given.