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1 july 2003
scheinbaum
panama city, panama
PLACE YOUR BETS: THE "HUB" OF THE AMERICAS?
by Mark Scheinbaum
PANAMA CITY, R.P. (July 1, 2003)--Panama, with its canal, might make the
perfect home for a "capital" of the Americas, but it looks as if both Central
and South America will lose out to "North" America.
Don't get me wrong, the Iraqi War was good for Panama's shipping, banking,
and insurance economy. Just not good enough.
"I hate to say it´s too bad the war is officially over, but for awhile
there I did my largest business ever," Cosmo Gonzalez, a wholesaler
and distributor of genuine Cuban cigars said in the back room humidor of
his combination
office and shop.
It didn´t matter which direction the ships were traveling, especially
the officers, they knew we could deliver Cuban cigars to them for their long
stay in Kuwait or Iraq, and typical orders were $700-900," he said.
Low inflation, low interest rates, 1:1 currency ratio with the U.S. dollar,
the focus of the recent Miss Universe pageant in Panama, and easing fuel prices,
have kept new housing and office construction steady.
But consolidation in banking, telecommunications, agriculture, and retailing,
have taken its toll. Pending new free trade agreements for the Americas could
even favor less developed regional economies over Panama.
"Let's face it, Miami is the capital of Latin America," a 20-year veteran
insurance executive with offices in both Miami and Panama told me. "There
are always attempts to consolidate Latin American divisions in Buenos Aires,
Mexico City, San Juan, and so forth, but for transportation and political
stability, there will again be a trade focus on the importance of Miami.
Even if it is Miami which gets new legal and financial clout as a de facto
free trade headquarters, Panama is still hoping for a renaissance in corporate
appreciation of basic geography. "We are getting more business from pharmaceutical
companies that realize it is cheaper to ship to either the Pacific or the Atlantic
from Panama," said Leo Rodriguez, president of Imprenta Herndandez,
a 60-year-old printing company specializing in international pharmaceutical
clients.
Remarking about booming luxury high-rise apartment construction, shopping
malls, and expatriate investment from around Latin America, Luis Larocca,
president
of Telecarrier of Panama joked, "I may have to move to Sao Paolo to
find a place where the rush hour traffic is a bit lighter than here in
Panama."
Dell computers recently completed the first round of interviews for 300
bilingual and computer-savvy telephone customer service operators. This
is the latest
in a bilingual "800 number" boom for heavily bilingual Panama.
Yet a widening gap between rich and poor, and a troubled social security funding
system (the social security workers have variously been on strike, slowdown,
walk-outs, and demonstrations), show the basic infrastructure problems of President
Mireya Moscoso's administration.
Next year´s presidential race is wide open, and rural vs urban interests
seem to be polarizing many national issues. City folks complain about gasoline
prices, crime, and new mortgage finance rules,while country folks talk
about banana cooperatives and commercial overfishing of the coastline.
"There is still a future, and a feeling of excitement, but you work longer
and harder for much less money than in the U.S.," said Marisa Rojas,
25, a graduate of Oglethorp University in Atlanta, and assistant buyer for
an upscale
clothing store.
"At a certain level people want the latest European fashion, and the hot
label, but when you look at the challenge in making a profit in retailing, you
have to attract a larger client base which will now browse in your shop, but
make their actual purchase at a discount outlet store," she said.
Nowadays there are few customers at the Davidoff, Kenneth Cole, and Tommy
Hilfinger shops in Panama´s World Trade Center building in fashionable
Marbella district.
Office manager Cecilia Hauck, single mother of two young daughters, summed
up the upscale trade center crowd this way: "Even though business
is down, and we technically might feel a recession, the stores actually
have
a fairly
good flow of people. The problem is they look and look and then discuss
what they will buy, when and if they get more money."
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Mark Scheinbaum
is chief investment strategist for Kaplan & Co. www.kaplansecurities.com
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