Exit U.S.

By Mike Muehleck

One and a half million U.S. households are preparing to move out of the U.S.
The vast majority of émigrés are in their 20s, 30s, and 40s. And some may not
ever return.

No, we are not talking about the next major deployment of National Guard
units to the Middle East. In fact, none of the emigrants are government
workers or corporate employees leaving for temporary overseas assignments.
These folks are malcontents or adventurers. They consist entirely of private
citizens and their families packing up and leaving the good ol’ USA solely at
their own initiative.

This news comes from a Zogby International poll of 115,000 Americans
conducted over the past two years. Bob Adams, CEO of New Global Initiatives,
commissioned the poll when he realized that no reliable database tracks the
movement of Americans out of the country. A recent Barron’s article, written
by Bob Adams, breaks down the Zogby/New Global Initiatives data as follows:

· 1.6 million (U.S. households) have already made the decision to leave
· 1.8 million are seriously considering and likely to leave
· 7.7 million are somewhat serious about leaving and may do so
· 3.0 million are seriously considering purchase of non-U.S. property
· 10.0 million are somewhat serious about purchase of non-U.S. property

Adding it all up, some 10% of all U.S. households are looking to leave the
country, while another 11% are considering living outside the U.S. at least
part time.

“That Can’t Be Right”

“Incredulous” is the word that best describes the reaction of people when
they hear Adams’ conclusions. I brought the subject up the other night while
barbequing and drinking beer with some American business people I know here
in Bangkok. Even this well-traveled group greeted the poll results with
skepticism. They asked, “How did he get thes data? Who did they interview?”

Maybe I was missing something, I thought to myself. So I decided to give Bob
Adams a call. I reached him one evening at his home in Panama. “It’s
happening,” Adams insisted, when asked about this new wave of emigration.

“And we really can’t say exactly why.”

While Adams’ survey includes destinations all over the world, the survey’s
findings corroborate Adams’ first-hand observations in Panama. Adams says the
recent American immigrants to Panama are different from previous ones. Ten
years ago, the typical American ex-pat in Panama was likely to be a retiree
who had previously been in Panama. Perhaps they had been on a military
assignment or with the Canal Zone administration. These folks tended to live
in “American only” enclaves for social and security reasons and had fairly
little interaction with the local population. These older ex-pats frequently
used the words “tropical paradise” to describe why they moved to Panama.

But today’s immigrants tend to be a lot younger, professionally employed, and
more likely to meld into the international community than earlier
transplants. These folks generally say they moved to Panama for adventure, a
lower cost of living, or to escape the growing intrusiveness of the American
political and legal systems.

Adams’ interest in the topic of American emigration is the result of
serendipity. Having lived and worked overseas for four decades, Adams decided
it was time to settle down. He identified Panama as the best candidate. As he
was preparing to move, he noticed the poor quality of Web sites catering to
potential immigrants to Panama. So he set up his own site,
RetirementWave.com. He intended to create an impromptu guide to assist like-
minded people in the decision to move to Panama. But it quickly turned into
an unpaid job responding to inquiries from interested parties worldwide.
Adams realized he could reach an audience that extends beyond Central
American real estate investors.

Why Do People Emigrate?

Why do people leave home for strange foreign lands? While a handful might
claim to leave for political or religious reasons, most seek greater economic
opportunity. All of my grandparents emigrated from Germany or Lithuania in
the early 1900s. My wife’s Chinese grandparents, for example, emigrated from
China to Siam in the same generation. None moved to new lands because of a
burning desire to be “free.” They all moved because they wanted to make more
money and thus enjoy a better life.

If you Google the word “emigration,” and you’ll mostly get sites that detail
the emigration from Europe to the U.S. in the 19th and early 20th century.
Google “American emigration” and you get a link to Adams’ New Global
Initiatives Web site and not much else. Most economic oriented sites only
discuss the effects of legal and illegal immigration into the U.S. It’s hard
to find any thoughts about the economic, political, and demographic effects
of younger Americans leaving for greener pastures overseas.

If people emigrate to find economic opportunity, might Adams’ survey portend
bad news for the U.S.? Current U.S. GDP is $44,000 per person versus Panama’s
$8,000. It seems unlikely that people are leaving for immediate financial
gains. Still, Panama is a young country demographically, with a median age of
26. Panama’s GDP grew at an 8% clip last year. It doesn’t have the U.S. baby
boomers’ $55 trillion unfunded pension liability. Neither is it involved in
difficult, expensive Middle East nation-building. So we should not be
surprised if a growing number of 20-to -40-year-old Americans are willing and
eager to abandon the wealth that “has been” to pursue the wealth that “might
be.”

Investors might want to consider a similar tactic.

http://www.agorafinancial.com/afrude/

Law 41 of 2007 in a nutshell

Thanks to Jaime Raúl Molina for this article regarding the new law 41.

Back in August this year, Law 41 was enacted. This piece of legislation is one that has not generated as much interest in the mainstream media as it should have, because it is one of the most important pieces of legislation that this country has produced in the last decade for improving the investment climate. It has the potential of converting Panama into the jurisdiction of choice for regional corporate headquarters for Latin America.

Main features of this law are:

Applicability. It applies to companies that offer and sell administration, accounting, management, logistics and other services to its own affiliates, subsidiaries or parent companies only.
Foreign employees limit exemption. The Labor Code of Panama places a ceiling on the percentage of foreigners a company may have among its personnel. The actual percentage varies according to special circumstances, but the maximum is 15%. However, with this law, multinational companies covered by this law will be exempted and will be able to hire foreigners without an upper limit of foreigners in their personnel, as long as those foreigners fall under what Panamanian Labor legislation terms “Employee of Trust”, which is basically an executive.
Tax benefits. As the operations of these companies consist in the provision of services to their affiliates abroad, the corresponding income is not taxable in Panama. Remember here that Panama has a territorial taxation system of income, thus, any income generated outside Panama, is automatically exempt from income tax.
Work permits facilitated. The paperwork needed for the obtainment of the visas and work permits of the foreign employees of the multinational company, will be significantly reduced.
Special license. Multinational companies wishing to take advantage of this law need to apply for a special license before the Ministry of Commerce and Industries.

Most of the advantages of Law 41 are not really new in Panama. What is an innovation is the fact that they have now been consolidated in a straightforward and easy to understand piece of legislation.

Law 41, in conjunction to the other known advantages of Panama, like its geographic position in the center of the Americas, its excellent communications, and its modern financial system integrated to the world, among others, are expected to attract multinational companies to establish their regional corporate headquarters in this beautiful country.

What will Panama gain from this?

Are you kidding me? First, this obviously translates into more investment and more employment (for they will need to hire locals too, as any foreign company does, not to mention the indirect employment effect), even more tourism.

But more importantly in the longer term, this will also generate the import of knowledge. If a headquartering cluster is created, then it means that much world-class managerial and entrepreneurial know-how is coming to Panama. The spillover effect will be enormous.

If Panama succeeds in this goal of getting to be chosen by multinational corporations as their base of operations for the Latin American region, this can only mean good news for Panamanians.

New law 45 facilitates consumer when contracts are voided

The complaints received by the consumer protection agency after the Ice Tower debacle were deafening to the point that a new law has been implemented to attempt to keep this from happening again. Unfortunately there is a lot of confusion as to the full ramifications and, the regulations will come much later than the proclamation. The way the law is being presented now, a consumer can get out of any contract and recieve a full refund if he has not taken possesion of the goods. As one can imagine, the real estate industry is in a tizzy as well as many of the other affected businesses. How many projects would be able to recieve bank fnancing if the client can walk away without penalty is a mjor question to be answered. I am certain the the real estate industry will not let that go uncontested or it would spell the end for the industry in Panama. Here are two of what will be many newspaper articles dealing with this subject.

Panama, Tuesday, November 20, 2007

New law facilitates the clients void their contract

Mario Muñoz andrem@prensa.com

Now the consumer counts on a new tool that grants them to be able to put aim to its contracts of benefit of services or provision of goods and to change to other suppliers. According to a new article, (77) including in Law No. 45 of 31st of October of 2007, clauses in the contracts that establish terms of excessive duration or limitations are prohibited that exclude or prevent the right of the consumer to end the contract.

¨The article does not discriminate some type of matter, reason why we must understand that it talks about any type of consumption contract. The norm does not discriminate any matter. One is due to understand that all the economic agents who sell goods or offer services to the consumer ", Dayra Vial said, female leader of Legal Consultant's office of the Authority of Protection of the Consumer and Defense of the Competition. "Many consumers complain which terms or excessive duration in contracts settle down", Vial said.

The measurement would have to be applied in contracts of public services, fix and mobile telephone, service of cable, among others. The introduction of the article took by surprise to the enterprise sector, since their representatives participated in the first debate of this law that unified previous Law No. 29 of 1996 and Decree no. 9 of the 20 of February of 2006.

Irving Halman, representative of the Chamber of Commerce, Industries and Agriculture, explained that this article was including in second debates without consulting to the private sector. Another source added that the affected sectors more are real estate and the one of the construction, because they generate insecurity to the banks that will change the financing rules.

Panama, Tuesday, November 20, 2007

Clients without onerous sanction

Mario Muñoz andresm@prensa.com

When a consumer decides to cancel a contract by the benefit of a service or the purchase of or does not have to receive no type of onerous or out of proportion sanction, according to article 77 of new Law No. 45 of the 31st of October of 2007. The norm establishes that in case of contract cancellation clauses of penalty like the loss of the in advance paid amounts are prohibited, the installment of amounts by non served or the unilateral execution of the penal clauses that had fixed contractually.

Either, the companies cannot establish clauses that fix indemnifications that do not correspond with the damages indeed caused. According to the Authority of Protection of the Consumer, "with Law No. 45, these unjust practices for the consumers will be sanctioned by the institution". In article 76 of this same law it is indicated like abusive and null when that clause that confers to the supplier out of proportion or little precise terms. Also an out of proportion delay term is abusive, for the execution of the benefit to its position or the establishment of indemnifications, penal clauses or interest out of proportion.