Although Panamanian businessmen recognize that in the first months of the Cortizo administration there have been advances that could improve the performance of the local economy, it is predicted that the reactivation could take longer than expected.
In Panama, a proposal is being discussed that seeks to increase from 5% to 8% the Selective Consumption Tax on soft drinks, carbonated beverages, processed juices and other sugary beverages.
Laestrella.com.pa reports that "... The vice president of Corporate Affairs of the National Brewery, and representative of the Industrial Union of Panama (SIP), Juan Antonio Fabrega, warned last Tuesday that jobs generated by the industry of sugary beverages could be reduced, if the Selective Excise Tax is increased from 5 to 8%, as established by Law 570, which will be discussed today in the first debate in the Economy and Finance Commission of the National Assembly."
The performance of the activities of ready-mix concrete, milling products and alcoholic beverages explains the 2% growth registered by the sector in 2017, reversing the fall reported in 2016.
The Trade Union of Industrialists of Panama (SIP) reported that last year the manufacturing sector's share of GDP was 5.2%, and that the activities which boosted the industry were ready-mix concrete, mill products, alcoholic beverages, animal feed preparations, cements and derivatives, and meats.
A new bill, agreed between the government and the private sector, expands tax incentives granted to companies in the sector through the Certificate of Industrial Promotion.
The text was drafted after the government and the private sector reached consensus on how to define tax incentives to which companies in the sector are entitled to.The project will be submitted to the Cabinet this month and will be discussed in the current legislative period.
In 2016 the GDP of the industrial sector shrank by almost 3%, affected by a 12% drop in sugar production and 11% in beverage production.
In the last two years, the contribution of the industrial sector to the economy has shrunk by $80 million, according to estimates made by entrepreneurs who are members of the Union of Industrialists of Panama.In 2016 alone the sector's GDP fell by 2.8%, and this year the outlook is not very encouraging.
A proposal put forward by the Aupsa would require all companies that import raw materials, ingredients and food for manufacturing, processing or commercial repackaging, to register with the institution from 2017.
The Union of Industrialists in Panama (SIP) warned of the risk that it believes is represented by the draft proposal by the Panamanian Food Authority (Aupsa), which wants to be responsible for the registration of people who import into the country food or rawmaterials used for the manufacture or processing of products intended for human or animal consumption.
An extension has been granted, until July 30, on the charging of a tariff imposed by Colombia on footwear, textiles and clothing coming from the Colon Free Zone.
Colombia's decision to extend the collection of mixed tariffs on imports of footwear, textiles and clothing from the Colon Free Zone until 30 July, has caused opposition among Panamanian businessmen.
The initiative aims to expand the scope of the Law on Multinational Companies to provide the same benefits to industrial companies who export their entire production.
In Panama discussion is taking place of a new law for Branches of Extended Multinational Enterprises (SEMA by its initials in Spanish), an extension of the law on Multinational Corporations known as SEM, in order to attract industrial companies with some similar benefits to those contained in the SEM.
The union of industrialists projects that the economy will grow by 6% this year and has raised concern over the fall in manufacturing activity.
From a statement issued by the Union of Industrialists in Panama:
Panama will continue to lead economic growth in Latin America and it is estimated that it could close 2015 at 5.8%; while for 2016 the amount projected is 6%.
Farmers and industrialists are opposed to the possibility of including fluid milk in the list of products whose prices are controlled by the government.
Industry representatives argue that if the product is included in the list, "... small retailers will not want to handle our product," said Ricardo Sotelo, president of the Union of Industrialists of Panama to Panamaamerica.com.pa.
On June 3rd and 4th representatives from companies in the sector will gather together in the capital to discuss issues related to technology in the management of solid and liquid waste, and water use efficiency.
This conference will focus on the issues of waste management and recycling, it will be aimed primarily at industrialists, environmental consultants and engineers, public sector and NGOs.
The industry says that the absence of an industrial policy is one of the reasons that 6 out of 10 subsectors in the industry decreased production in 2014 compared to 2013.
A lack of an industrial policy is added to "... The uncontrolled import of products and not having a concrete strategy so that domestic and foreign companies can made decisions on producing in the country." These three factors are what have led to a decline in manufacturing output in the last ten years, according to entrepreneurs.
Electricity distribution companies will receive about $300 million less in state subsidies leading them to foresee an increase in rates which will affect the productive sector.
The State will compensate only the Chiriqui electricity distribution company (Edechi) with $27 million and the electricity distribution company Metro-West (Edemet) with $38 million, ceasing to give subsidies to the company Ensa.
Employers claim that the measure has distorted the market and are demanding to suspend it once the six months period ends.
According to the government, the lack of some products with regulated prices in supermarkets is due to a strategy used by companies to get the measure suspended, however, they claim that the situation is due to the distortion in marketing processes caused by the measure.
The new government's tendency to increase social spending and its regulation of commercial private activities is concerning the business sector.
The economic direction that Panama has taken since Juan Carlos Varela took office in July 2014 has failed to convince the private productive sector, which is suspicious of increased government spending through the implementation of subsidies, many of which do not have a reasonable enough basis and are not entirely necessary, according to some entrepreneurs.
Beverage Industry Digital Magazine established in 1942, the oldest Spanish trade journal and the only beverage trade magazine serving the Latin American beverage market. It serves soft drink bottlers, brewers, bottled water...
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