Investors have high expectations from Panama's new president, Ricardo Martinelli.
BY CHRONICLE STAFF
Local and foreign investors are bullish on the outlook for Panama with the new government of 57-year old Ricardo Martinelli, who was inaugurated today as president for a five-year term.
“I’m very positive on Martinelli,” says Kathryn Rooney, senior emerging markets macroeconomic strategist at Bulltick Capital Markets. “He’s extremely market-friendly and will continue the positive trend of the economy.” She especially singles out his plans to lower taxes and improve relations with the United States.
Robert McMillan, a former chairman of the Panama Canal Commission, is also upbeat on Martinelli. “Martinelli is pro business,” he says. “Not only is he a businessman, but he was also chairman of the canal.”
Martinelli, who was chairman of the Panama Canal Authority (ACP) and canal affairs minister between 1999 and 2003, understands the importance of the waterway and its workings, argues McMillan, the author of Global Passage: Transformation of Panama and the Panama Canal.
Martinelli will also be president when the canal is expected to finish its $5.2 billion expansion in 2014.
Another advantage with Martinelli is that he is making security a top issue, McMillan says. “One of the advantages Panama will have with Martinelli is that he understands the police infrastructure,” he says.
Among Martinelli’s other top priorities is infrastructure projects – including a new subway in Panama City – and securing U.S. passage of the US-Panama free trade agreement. It was signed two years ago, but has been delayed by U.S. lawmakers.
“If the FTA were put into effect, we could export more goods than we do today,” McMillan says.
“I hope … Martinelli will … set forth a program to wake up the [Obama] Administration and congress [on the urgency of passing the FTA].”
Although President Barack Obama has stated that he favors the FTA, there are growing demands from Democratic lawmakers and some U.S. officials to delay approval until Panama passes several tax and labor reforms.
U.S. officials have stated that they want Panama’s tax laws changed so it won’t continue being a tax evasion haven for Americans. “The tax issue – that could be worked out on the side [independent of the FTA],” McMillan says.
Meanwhile, some lawmakers have also urged allowing strikes for canal employees (prohibited since the United States ran the waterway from 1904 to 1999) and making it easier to organize unions in Panama. “They expect Panama to declare that unions can strike at the canal [even though] they couldn’t strike under the U.S. [administration],” McMillan says.
Obama officials have sent different signals about when the Panama FTA would be presented to Congress for a vote, but Senator Chuck Grassley, a member of the Senate Finance Committee, predicts that it won’t be approved until next year.
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