#516 – The Expat Files: Panama’s Beaches, Real Estate, and Latin America’s Challenges

Automatically transcribed from the original recording; names and wording may contain errors.

[00:00] South of the border down Mexico way That's where I fell in love when the stars above came up to play and now I wonder Hello there all you expat wannabes. I'm Johnny Mueller and you're listening to the expat files living in Latin America The show that tells you just what it's like to live work play and or retire down here in Latin America It's a mix of the good the bad the ugly and the great and it's all right here. So let's get started Oh, don't you know I get a lot of people sending me emails about Panama So let's catch up on what's been happening there recently now first Let me say that I like Panama But it's way too hot to live there for me Anyway, and people ask does it have great beaches because it has a Caribbean side and the Pacific side

[00:50] Well on the Pacific side the beaches are pretty much crap Just like they pretty much are on the rest of the Pacific side through Central America and Mexico, too Remember that Pacific side crap on a 1 to 10 maybe anywhere from a 3 to a 5 That's all up and down the Pacific coast of Mexico Central America and parts of South America So of course land on the Pacific Ocean side is much cheaper than on the Atlantic side In fact, I can show you dozens of real estate ads right now with beautiful beach houses on crappy dark sand beaches on the Pacific That are under a hundred thousand dollars complete. That's beachfront land house and pool, too How about it your own oceanfront property for under a hundred grand?

[01:35] But don't sell your gold or your bitcoins just yet because you see the Pacific Ocean just pounds away on the shore And there's no such thing as that clear pristine water that you see on the Caribbean side And besides that because you're in volcano country mostly on the Pacific side Unfortunately, not only don't you get white sand sometimes? It's almost black which means you can't even walk on it In fact, I can say about 80% of the beaches on the Pacific side of Central America in Mexico You can skip the part about kicking your shoes off and walk in the beach Robinson Crusoe style So then people say what about Costa Rica? They've got some nice Pacific coast beaches, right? Like capo's Haco Beach and Manuel Antonio. Yeah. Well, they're still not white sand beaches By the way, they're not those long luxurious picture postcard strips of beach that stretch as far as the eye can see

[02:24] They're short little strips of sand with scruffy vegetation on the back end and note There's no powdery sand beaches on the Pacific Coast either the fine powdery stuff You'll only find on the Atlantic Caribbean side, you know the usual suspects you see in the travel agent brochures Roatan utila the Belize K's Margarita Island off Venezuela and some of the islands off Colombia, of course You've got the English speaking Caribbean islands, too. They've got those great powdery white sand beaches, you know, Jamaica Bahamas Cayman Islands But we're talking about Latin America here. Remember it's the expat files living in Latin America, right? anyway, even on the Caribbean Atlantic side where you do have white sand beaches or Brownish white sand beaches. Anyway, that would be from the Yucatan in Mexico all the way down to Panama and parts of South America

[03:13] Still when you're on the mainland of Latin America, you don't get that very desirable almost powdered sugar style sand beach Until you get to the islands, but back to Panama Like I said, I've never seen a beach in Panama that I'd say is over a 7.5 out of 10. I repeat you're not gonna find a beach. That's an 8 9 or 10 unless you go to the islands However, there are some exceptions to that rule some of the all-inclusive hotels and resorts bring their own sand in So if you're at a resort and they've got powdered white sand they're cheating However, when people talk about that pure turquoise water and beaches to die for on certain Caribbean beaches The truth is in almost all cases those great beaches only exist in one small sliver of the island

[03:59] Like take for example Utila or Roatan Honduras about three-quarters of those islands don't have sand beaches at all They're hard dark gnarly coral rocks And man if you walk barefoot on that stuff you're gonna pay for it And by the way, if you're gonna rent or buy or go to a hotel The prices will always be cut rate on the coral side and even in Roatan Which does have a strip of beach that I have to say is at least a 9.5 It's one of the most beautiful beaches you'll ever see in your life that would be a strip on the island that only covers about five to ten percent of the circumference of the island and that area of Course is the high rent area if you want to buy or build on that beach You're looking at a half million bucks and up However, when you're talking about the rest of the island Which is absolutely beautiful to where there is no beach at all just that coral

[04:46] Like I said, you could probably get a nice lot for I'd say 20 grand and up I'm talking about right on the ocean and then you're only about maybe 10 minutes away from one of the most beautiful beaches in the World because the island is small I'm just digressing a bit as usual because people ask me a lot about beachfront property, too Especially Roatan and utila because they're still a bit laid-back Anyway about real estate in general I can tell you this the bubble in Latin America is set to pop very soon in a few minutes I'll give you some great examples and I bet you're not hearing any of this stuff up in the States now as far as Panama beaches on the Caribbean side some of them are almost white sand beaches But they're not the fine white powdered sugar style beaches. You'll find in some of the islands Oh, and by the way when people talk about the fine beaches in the Dominican Republic and Puerto Rico

[05:33] Nope, they're not pure powdery white sand beaches either nice But they're lacking in a few respects including the fact that they don't get maintained very well And that's generally because the locals have mucked them up a bit. You see Latins are born litterbugs Yep, the world is their dumpster and for Latin men. It's their urinal, too So if you're diving or snorkeling there get ready for the occasional straw piece of plastic and coke can now That's not to say four-star hotels and resorts don't manicure their sand sometimes. It's beautiful and perfect however How can they manage to constantly de litter that vast ocean area outside their beach now don't get me wrong That's not to say there's coke cans and plastic everywhere But you know it is annoying when you're snorkeling or just waiting out some feet from the shore and you stick your head in the water

[06:21] And you see a coke can or a piece of plastic every 10 or 20 feet So if you're at a mom-and-pop place and not staying at one of those big hotels It could be a nice white sand beach, but you'll find rocks and scruff growing here and there in other words Not a very good photo op however like expat Eddie says if the price is right Who cares about a few Cheeto wrappers popsicle sticks and the occasional mound of dog poo Eddie always says if you want Nice white manicured sand and pristine waters You could just walk over to the nearest four-star hotel order a beer at their poolside lounge and hang out at their beach Now that said I am a fan of occasioning in those Latin Caribbean islands, Puerto Rico, Cuba Roatan Dominican Republic and San Andres, which is a very nice little island that belongs to Colombia and believe it or not

[07:09] That little island has 3d camera on all inclusive resorts on it in fact about 20 years ago I stayed in the very first d-cameron in existence. It was on San Andres Island In fact when I was there I was told it was formerly a narco kingpins residence that the state repossessed for back taxes when the guy got bumped off So that was the first one and now I believe there are around 60 d-cameron resorts worldwide. Don't worry I'll be giving a d-cameron update by popular demand. So stay tuned for that. But where was I? Oh, yeah real estate Even when the real estate bubble pops if you can get some cheap real estate Let's say in Dominican Republic, San Andres, Puerto Rico, Roatan Never forget that almost all islands depend heavily on importing things especially technology that includes low-tech stuff, too

[07:59] Because most islands just don't have manufacturing So even when the real estate bubble bursts your cost of living will always be much higher than even in the first world So if you want to buy a car a dishwasher a washing machine a TV be prepared to get gouged That's how corrupt governments. Are there any other kind make the big dough by taxing imports In fact, I once bought a house on the British island of Montserrat in the Caribbean That was back in the 80s and I wanted to get a cheap small car Well at the dealerships the cars were exactly twice the price of the same car up in the States So I decided to ship a light new Honda Civic down that was worth about six grand then now It cost me about twelve hundred bucks to ship it and the tax on that car was gonna be about 50% of blue book

[08:48] Which was another three grand and since I happen to know someone in the Adwana at customs down there I slipped him 500 bucks under the table well before I shipped the car down and guess what no import taxes That's how things work in third world countries So yes, I did take a chance whether he was gonna be able to pull that off or not You can never really count on that so be prepared to pay double even so I've come to the conclusion that I really never want To ship a car down again. In fact, the only way that's worthwhile is if you got pension auto residency status You know what that's all about We spoke about that many times on the show then you can ship a car in every five years or so without paying duties However, we're talking about a special case here. So ask your lawyer if you qualify But remember almost always you're better off buying a car once down here, but where was I? Oh, yeah, Panama

[09:38] So how much do I know about Panama? Well, I've been there at least 30 times live there for a while, too So let's get you up to date on a few Panama items and this is a little irritating It's not gonna make you happy. But when you get to Tucoman Airport, now, that's the main airport near Panama City When you get there all happy and smiling ready to hit the beaches or the casinos whatever though as you'll probably notice as soon as you Get to the airport the government workers there can be slugs and jerks though upon arrival to a tropical paradise You're probably not disposed to let that bother you However at the end of your trip on your way out starting January 1st 2016 They're gonna nail you with a $50 departure tax That'll make it the highest in Central America followed by El Salvador with a $40 departure tax Honduras with a $40 departure tax

[10:28] Guatemala with a $30 departure tax and Costa Rica with a $29 departure tax But that's soon to rise to 60 bucks. So then how does Panama justify a $50 departure tax? well, they say that's because they've just issued a 625 million dollar bond issue for their new Tucoman International Airport expansion project And they need that like a hole in the head Have you ever been to that airport for its eyes? It's not any more crowded or congested or chaotic than any other large Latin American International Airport But of course malignancies like government have one purpose but to grow right now if I was Tucoman Airport's administrator I'll tell you what I'd do I'd fire at least half of the employees because most of them are just sitting around on their dead asses in a state of perpetual

[11:17] Slow-motion and it's not hard to see that. They really don't like their jobs Probably because day in and day out they see all these so-called wealthy Gringos flying in with their expensive luggage iPhones and designer travel gear and such So anyway have that 50 bucks cash handy because they don't take cash or credit cards at the airport departure gate And by the way, that's why they've installed a brand new row of ATM machines And there's even a little bank teller window within spitting distance Could that be for clueless Gringos who've blown all their dough at the casinos? Could be because you know Panama is a world-class casino destination Oh, and this news might change your mind about moving to Panama. So let me translate and paraphrase this it says lack of water in Panama alarms first world

[12:05] Entrepreneurs this article from Panama's biggest newspaper says the chairman of the Chamber of Commerce Has expressed to the president of Panama the willingness of their organization to actively cooperate To achieve the objective of having 100% potable water for everyone in Panama They've proposed a plan to the government to provide the country with water get this 24 hours a day Whereas now only first world Subdivisions gated communities small projects and high-end business districts have water service 24 hours a day then it goes on to say it is unacceptable that in a country with enviable economic growth and number five in the world out of 200 countries in rainfall yet fully

[12:54] 60% of Panamanians do not receive water continuously and worse 15% of the population does not have intubated water at all In other words, they have to go down to the river or the municipal tap in the public square fill their jugs and haul water home And yes, that would be polluted water. Then it goes on to say this serious problem has transcended different governmental organizations and administrations, they do not want to assume the fiscal and political costs and Finally the article says although the water problem is very serious fully 70% of Panama homes and buildings have no modern sewage treatment control. So how do you like that? Hmm, where do you think all that gray water and waste goes? Yuck, huh?

[13:40] But most first world visitors don't see any of that if you've ever been to Panama City You'll see it's a very modern high-rise kind of town And if you stay in one of the high-rise hotels do have a look out the window Pass the skyscrapers and nice parts of the city to those crummy subdivisions in the outlands Then have a look at the ocean entrance point to the Panama Canal where all the ships are coming and going you can't help But notice how filthy and discolored the water is everywhere where it stretches out into the ocean It looks like an ugly bathtub or jacuzzi scum as far as the eye can see you can't miss it You have to say to yourself why isn't anyone doing something about this? And it's not just the Panama Canal every single waterway in Panama is polluted So definitely do not drink the tap water and don't drink the bottled water either

[14:30] So it doesn't matter that Panama has the fifth highest rainfall in the world water water everywhere and not a drop to drink Now the following bit about Panama might make a lot of expats happy It's just a confirmation that the real estate bubble is about ready to burst So let me paraphrase this from Panama's largest newspaper It says there's a tough competition as hotel price wars accelerate in Panama now Let me stop a second and ask you this did you even know there was a hotel price war going on in Panama? Does any stateside gringo know that just check the prices on the internet and you'll never know there's a hotel price war going on However, if you're down here face to face, you can get those same rooms for half price Then the article says while occupancy rates and average prices of hotels continue to fall the Panamanian hotel market is still

[15:22] increasing the supply by 1,200 new rooms a year. In fact, the Panamanian Association of hotels called epithel reports that in the past five years there have been a 209% increase in the number of hotel rooms available in the country. That's a 40% increase year-over-year in contrast To the real demand which is only growing at 5% a year. So none of this makes sense That's a very stark example of a bubble. Then we have a quote from Sarah Pardo President of the Hotel Association epithel. She said in an interview with theprensa.com That's a big daily newspaper down here She said we need an emergency plan for the next 24 months or many hotels will go bankrupt

[16:08] She says as we currently have another 30 large hotels under construction and another 25 in the planning There is a looming crisis and worse There are some 1,200 rooms which will become available by early next year and the following year and the year after Etc. Then she goes on to say there are first world four-star hotels that opened only two years ago and now have rates of Less than $50 a night It's estimated that the average rate in the capital has fallen by over 40% in the last two years because the influx of tourists has not grown of the 24,000 978 hotel rooms in Panama that are registered 15,000 of them are in the capital city then it says in a recent market study done by the Hotel Association

[16:56] The only hope is to start an international tourism media campaign Directed specifically at the first world like the program they had that ended in 2012 When the Panama government tourist bureau signed with an advertising agency that placed Panama as a tourist destination In international markets with other countries like Costa Rica Mexico Ecuador and Dominican Republic So there you have it a sure sign that the bubble is about to pop So as for Panama looks like in the upcoming year, there's gonna be some very cheap package deals going down So interested in a very cut rate vacation. Check it out a nice place to visit But I wouldn't want to live there And by the way, let me ask you this if you're interested in Panama real estate as it blows if you buy you better plan

[17:42] On living in the place yourself. The question is with all those vacancies. Who are you gonna get as a renter? So if you buy don't count on living on rental income, okay enough said about Panama Let's move on but stay in the same neighborhood. Now. Here's an article that'll shock you It comes from a Costa Rican daily called La Prensa Libre headline Costa Rica the next grease Now before I get into this article and I will paraphrase again. Here's one question How familiar does all of this sound to you? So here goes. Well, you heard the headline will Costa Rica be the next grease governor Otto Guevara unveiled the list of salaries of 22,000 public officials working in the Costa Rican Electric Institute ice ICE as well as

[18:30] the National Power and Light Company of Costa Rica CNFL the employment list exposes thousands of ridiculous Costa Rican government salaries Including a chauffeur who doesn't even have a high school education making 4,000 US dollars a month. That's eight times the average Costa Ricans monthly wage It also highlights a floral arranger for the Costa Rican government who makes $1,600 a month. That's 400% more than the Costa Rican average monthly wage Then we have a Costa Rican public accountant and auditor at eleven thousand two hundred US dollars a month He makes 30 times the average Costa Rican monthly salary Then they talk about a Costa Rican government human resources assistant. Nope. Not the guy in charge just an assistant making

[19:19] $6,300 a month 15 times the Costa Rican average monthly salary now It says added to these monthly stipends or other benefits such as 30 days of paid vacation 24 month a hundred percent severance pay if you get fired or quit then it says in parentheses But no one in Costa Rican government ever gets fired Then it says Costa Rican government employees get bonuses for redundancy housing zoning allowances and a month sick leave every year then we have this quote from a Non-governmental Costa Rican economist. He says these economically unsound endemic government policies feeds the predilection of Costa Rican University students in which nine out of

[20:06] Ten in a recent survey said they dreamed of being public servants because in addition to Privileged wages they enjoy ever escalating pensions and job security for life. Now does any of that sound familiar? I think all of it does doesn't it and finally at the end of this article comes the top or it says the Costa Rican Electric Institute that's ice is in the public pillory over disclosed information relating to its financial statements Which includes just this last year losses of tens of millions of dollars in its operations And those of its subsidies and losses of hundreds of thousands of cell phone customers Hmm wonder how they managed to do that Then they go on to report the details of dozens of other ruinous government sweetheart business deals

[20:55] Which only goes to prove the theory that if you really want to fuck something up let the government do it But the real question is when the Costa Rican government finally becomes insolvent and it will unlike Greece They've got no European economic community to bail them out However, and you might have seen this one coming guess who's doing side deals with the Costa Rican government? China so let's name the Latin governments. The Chinese are in bed with now That would be Nicaragua over that 50 billion dollar canal deal that'll never go through then there's Panama The fact is all you have to do is walk around in Panama City in the business district And you'll see that about one in five people in a business suit is an Asian Then you've got the failed state of Venezuela with China buying up some of their future oil production at fire sale prices

[21:42] Then you've got the Chinese buying up vast tracts of farmland in Argentina Well, you get the picture right? Oh, and how about this coming out of many a gringo travelers favorite place Ecuador And here we thought in a little laid-back country like Ecuador Big Brother could never really make an impact Well, listen to this the article's title Big Brother cameras mandated for Ecuador's hotels motels nightclubs, which down here means strip clubs and bordellos and Business districts now you might know nearly a year ago, February 2015 Ecuador passed a video surveillance law Mandating that nightclubs bars cabarets motels hotels and other business establishments must have surveillance systems in place by March

[22:29] 2015 but since most businesses didn't comply. It's been moved up to January 2016 This is Latin America, you know, everything kind of moves at the speed of government So then you might say well big deal with Latin government's so lax how they're gonna keep track of all that Well, guess what? They can do it this time in that law It says in order to receive operating licenses and renewal of licenses those video surveillance systems must be in place Now for the dirty details this policy requires surveillance cameras to be placed in Strategic public places such as hallways waiting rooms entrances exits parking lots elevators gardens rooftops, etc And it says that video footage must be archived for six months and provided to authorities whenever requested

[23:17] Moreover, the new rules require businesses employ one security guard for every 50 customers Non-compliance leads to government's permanent closure of your establishment Then it goes on to say the encroachment of state surveillance in Ecuador's public life is nothing new since 2012 The government has mandated over 55,000 video cameras be placed in local taxis and buses. There are over 2,000 cameras on public streets and roads and 1,400 to 2,000 cameras in the nation's schools So understandably people and business owners are pissed signs have been popping up here and there in Ecuador saying things like big brother is watching you and State-sponsored voyeurism is legal as one anonymous law professor at an Ecuadorian University says quote

[24:07] fingerprint scanners in supermarkets in Venezuela cameras in schools bars and motels in Ecuador They say it's to prevent crime and wrongdoing and yet those same governments are never accountable for their own corruption Okay, that said you have to wonder what's wrong with Ecuador's pinhead legislators when just a year ago They attempted and nearly passed a law meant to obtain private information about citizens by collecting all internet traffic data in the country As well as the metadata associated with the communications Then they almost passed a law last year to force owners of internet cafes to record the activity of all their users Then finally the article goes on to say that Ecuador's national intelligence Secretariat that's seen on though. Not nearly as powerful as the US NSA or Britain's

[24:58] GCHQ with only an annual budget of 58 million bucks It has all the first world software capable of spying on social networks smartphones tablets computers Etc as well as having facial and voice recognition capabilities And here we all thought of Ecuador as this nice peace-loving little country with a mostly indigenous population of short brown happy mom-and-pop farmers in colorful costumes riding llamas and hauling wood big national security threat a Real sophisticated criminal bunch that needs monitoring, right? But then you got the other Ecuadorian 20% the ones that became large-ass government busybodies But what else is new and finally here's an email from a disgruntled US businessman dear Johnny

[25:45] I just heard that up here in the states We can't ask if a prospective job applicant has a criminal record anymore Because of the disproportionate amount of african-americans and hispanics who have been incarcerated and it's now considered racist to ask such a question But get this if they commit a crime while working for you and on the job You the employer are responsible for their acts Yeah, and the US government doesn't have an intrinsically criminal class in Congress, right? Get me the Out of here Johnny. Thanks for the good work Dale Well Dale that just about says it all and on this Thanksgiving weekend I just like to say that collectively all of us expat gringos down here in Latin America are

[26:34] Thankful for many things but exceedingly thankful for one thing in particular that we no longer live in the abomination In fact when you think about it all us gringos and expats down here in Latin America are the new pilgrims aren't we? So why not come on down and join that pilgrimage yourself get a head start by coming to my January Latin insider Seminar, there's still time to sign up. Just go to The new expat comm click on Johnny's 2016 seminar link for details and the sign-up info Oh and don't forget to go to www.the new expat comm for some really great blogs by our chief blogster and bottle washer John Galt himself who you'll be able to meet personally and hang out with when you come down to my expat seminar

[27:20] Oh, and finally don't forget to check out my new YouTube channel If you want some great visuals to go along with the narrative Just check it out and when you get there, don't forget to subscribe. It is free, you know You've been listening to the expat files living in Latin America coming to you twice a week from somewhere south of the border Email me the expat files at gmail.com And if you want me to help you sort out your own Latin American plans schedule a one-on-one expat files at gmail.com