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Panama: The Shining City

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Despite bureaucracy and other challenges, Panama is about to experience the greatest growth period since the original construction of the Panama Canal.

BY ROBERT E. BAKER

Many see Panama as a shining city on the bay with an inherent national destiny to become the center of commerce for the Americas. It might surprise some to know that in the 1500’s Panama was the center of commerce for all of Latin America. In those days Nombre de Dios (on the Atlantic coast) was the crossroads for trade routes throughout the Americas from Mexico to Peru. Subsequent to several pirate attacks at Nombre de Dios the Spanish port was moved to Portobelo in 1599 and was improved upon (expanded and modernized) several times as trade grew and the weekly gold shipments to Spain increased. New trade routes were established that brought people from all over the navigable world and the trading activity initiated annual trade fairs in Portobello that lasted 150 years, making Panama the center of commerce in Latin America and the wealthiest colony in the New World.

But that was then and this is now. For years we have been referred to as the Miami of Latin America. With the recent modernization of our international airport, brilliant new bridges spanning the Canal and illuminated high rises going up all around the capitol, we are quickly becoming the shining city of lights, perhaps the Paris of the hemisphere.

We are presently undergoing a growth rate in excess of 7 percent, even before the expansion of the Canal begins, and it appears that the country will continue to experience above average growth for the next 5 to 8 years. Additionally, Panama has improved in its global ranking in economic competition to 57th place, establishing us among the top three for all of Latin America and among the top third worldwide. In the last two years we have made important progress in several strategic fields that will help pave the way for our future growth.

However, an area of concern is the complex bureaucracy, which is blamed for long delays and increased costs for everything from starting a new business to fixing your roof. Perhaps we need to discover a new consensus regarding our basic values and future goals. According to the Organization for Economic Development (OECD) the many bureaucratic obstacles are an indirect result of an overstaffed and bloated central government. The resulting expenses for opening a new business in Panama now cost almost 400 percent more than it does in the average country. Could this be caused by the cumbersome and complex laws that require you to get permits and pay fees for everything from selling bananas on the street corner to opening a new restaurant? Precisely. For the majority of countries the direct cost to open a business is 5.9 percent of per capita income whereas in Panama that same cost to open your business is almost 24 percent of per capita income. This keeps the little guy down and might also be one of the reasons for the large disparity between rich and poor.

The study focused on the multitude of steps that it takes to open a new business and how long it takes to accomplish those required steps. Unfortunately, there are many different documents needed from a vast variety of different governmental agencies before you can legally open your doors and each document comes at a price and takes a certain amount of time. Some are quick and some are slow. Most are available the day you are at the government office but several others are not and you will have to return because the person who is authorized to give you the stamp or accept your fee is out sick or the stamp was lost or the fee has changed and now your certified check is for the wrong amount. Before you have completed the process you will have spent an average of 19 workdays jumping through bureaucratic hoops and paying fees to comply with the many requirements. During your involvement in these nightmarish complexities you will have learned more about the city traffic and the idiosyncrasies of government offices than most people care to know but do not despair. Change is in the wind.

The good news is that we are miles ahead of most of the Latin American countries and even some of our European friends. Further optimism is witnessed by the fact that our present government is working overtime to make positive changes in almost every sector of our ruthlessly flawed bureaucracy. Additionally, the misguided and lacking managerial savvy of the past has given way to a host of new government executives that are well educated, pro business, socially responsible and against corruption. Our city infrastructure is about to embark on the most ambitious plan in our history, one that will revitalize our roads, increase our energy reserves, and improve our transportation system.

We are about to experience the greatest growth period perhaps since the original construction of the Panama Canal. In that process we will receive a total makeover from top to bottom. Thus, beneath the serene surface of business-as-usual there is a gaining current that is bristling with change. The new current is filled with human hope and technical innovation that will bring in a new tide and transform the Panama we used to know into a dynamic and competitive first world trading partner.

Robert E. Baker is the president of the American Chamber of Commerce & Industry of Panama. Republished with permission.

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