We Too Would Like to Be "An Island of Work" An Interview with Vice-President Ford of Panama

A. First let me tell you something I have said many times before. My father was a banker, and he was very connected with the Chinese community. He always conveyed to us his pride in having Chinese people as friends. One thing he often said was: "You'll never find a Chinese beggar in Panama." Thanks to their willingness to work hard, a lot of Chinese have become very successful in the community, in industry, finance, banking . . . and now in politics. I think the Chinese community in Panama is a highly respected community, and I think that is the way most Panamanians feel.

Q. There was however a large anti-Chinese movement in Panama about forty years ago.

A. What you are talking about is the misunderstood period of President Arias, and the fact that in 1941 he was apparently after the Chinese. I would say that there are misconceptions about many of the things that he did, so it is more for historians than us politicians to judge him.

On the whole, I would like to stress that the Panamanian people respect the Chinese community. And Panama is unique in that we have all colors of people, but no racial discrimination. Thanks to construction of the canal, and the influence of so many different nationalities, Panama became very cosmopolitan.

Q. Last year you visited the ROC for National Day. What was your impression of Taiwan?

A. I think it is an island of work, hard work. It is a people who have found their destiny and know how to work for what they want, and they can be proud of what they have. What they stress is: "we need to be able to do it on our own," which is something I am trying to impress on Panamanians.

During the visit, in addition to attending your National Day celebrations, I invited businessmen from your country to come to Panama to invest. We have recently established industrial parks and have all kinds of favorable opportunities for foreign investors. Local and foreign-controlled businesses all have an equal position. A number of new economic plans have also been initiated by the present government, to improve the investment climate.

Q. I believe that some foreign companies are hesitant about investing in Panama because of the labor laws.

A. Certainly, this is a crucial problem. In the past twenty-one years of military rule Panama has basically been a paternalistic state. Being paternalistic means giving more than you should give. I'm not saying that labor doesn't deserve certain conditions, but I think that in certain respects the labor code goes too far, and is one of the fundamental elements that does not allow the big growth we want in Panama. I will be talking to the President soon to see once and for all if we can adjust the labor code. My philosophy is very simple: in order to distribute wealth, the country must first create wealth. Maybe some among labor think that we are trying to take something away from them, but I don't think politicians were born to be popular, they were born to do things on behalf of the country.

Q. Which points do you want to adjust in the labor law?

A. Basically, it's the cost of firing an employee. (Ed. according to the current labor code in Panama, employment for over two months counts as permanent employment, and dismissal of permanent employees is costly.) The other thing is that the labor code does not motivate productivity and efficiency. If you work next to me and earn the same salary, but you produce a lot and I don't produce anything, that's not fair. So we need to have an incentive: the more you produce, the more you earn. So in my opinion we should make some changes, but the lawyers will tell us what can be done. If we approve it in cabinet, then it gets sent to congress for them to debate.

Q. Another factor that makes Taiwan investors nervous of investing, is possible social order problems. They still remember the looting that took place in Panama City during the American invasion and the fall of the military regime.

A. To tell the truth, I think this was blown out of proportion. Every city in the world has a certain degree of criminality. If we look at Washington D.C., we see the highest criminality rate in the world, but it is not news. You have to bear in mind that in that period, Panama not only changed from a dictatorship to a democracy, but it also saw the total devastation of an army to be replaced by a police force. So there's a lot of adjustment to make there, and it takes a little time. The police force is now doing a very good job trying to keep the crime rate down. In some cases, the employment by banks and businesses of private armed guards is a reasonable reaction to the transition period. But remember, compared to other countries in the region, Panama's social order still counts as very good.

Q. Recently, newly elected governments in Brazil and Nicaragua have taken action to open their markets to attract foreign investment. What do you feel about this?

A. Every country is unique, so we cannot necessarily all be put together. First of all we have a very small consuming population in Panama, no more than 2.3 million inhabitants. Secondly, Panama has based its economy fundamentally on service: the canal; banking; insurance; law firms; ship registry. . . . We do have some prestigious industrial groups, but within a small economy you cannot afford to open up the market overnight, because it might overflow, creating unemployment and other problems. We know that the trend lies toward having a bigger market, but the only difference from other countries is the speed with which we may want to introduce the necessary changes.

In addition to the labor code, another problem is that the cost of production in Panama is high. Having our currency pegged to the dollar makes us a very strong economy (Ed. there is no native paper currency in circulation in Panama, but the US dollar is in wide use.) But we don't have the tool of devaluation to bring down the cost of labor, which is a tool that other countries like Brazil and Nicaragua can use. We are stuck to the dollar, and thank God! because we are not going to change our monetary system.

An example: How did Panama recuperate so fast [from the American economic blockade]? Because the banking system is very strong. It had been frozen for thirty months, and now it's free. Panama's industrialists and importers have good credit abroad (though the government may not at the moment because of the arrears that we inherited), because we don't have the problems of exchange rate. So Panama has a kind of internal momentum that makes it easier to trigger off the growth that other countries have to go through a very painful process to achieve.

In the first three months of 1990 for example, there was a drop in the economy. It was normal, because people were refilling their inventories after the looting. But the growth, from the second quarter on, was more than 6%. We expect to have at least 6% growth this year, which is one of the largest in Latin America, despite all the problems we had. So I am very optimistic about the future for our country.

Q. Do you intend for Panama to be industrialized like the advanced nations, or to preserve its agricultural character? Perhaps Taiwan's experience in this respect would be a useful reference?

A. I know from experience that many other countries, such as Taiwan and Singapore, developed in the same way--that is: starting from agriculture, moving into basic industry like textiles, and from there towards high technology. But I think that in Panama, where we already have a combination of resources such as the canal and the free zone, that we can have a combined economy, with a range of alternatives. We don't have to depend exclusively on one aspect of the economy.

Q. A question of wide interest to many people concerns the Panama canal, which will revert to Panamanian control at the end of 1999. What preparations is your government making for this?

A. Something I have to say is that nothing regarding the Panama Canal Treaty has been implemented, because of the military government. (Ed. The Panama Canal Treaty was signed in 1975 by US President Carter and the then Panamanian leader General Torrijos. It provides for gradual transfer of the canal zone from American hands, and on December 31 1999, full authority over the canal will revert to Panama.) They totally wasted ten valuable years, from 1978 to 1989, which to me, is a crime. We are on the point of getting back so many valuable assets, besides the operation of the canal, but nothing has been done regarding that, so we just passed a law authorizing the Minister of Finance to manage the reverted areas. Also, we are about to finish the terms of reference for a worldwide bid to make a comprehensive study of how best to use the reverted areas.

As to the future, we have to immediately start thinking about what kind of operation structure will replace the Panama Canal Commission. I will fight to see that we keep the Panama canal totally divorced from politics. The Panama canal doesn't belong to Panama--it belongs to the world of commerce and trade. Panamanian politics should never get near the operation of the Panama canal!

On the other hand, we can proudly show the world that Panamanians can run the canal. So the four years of this government will be very hectic because we have to be prepared for 1999, which is just around the corner.

Q. Thank you very much for coming for interview and giving us the benefit of your opinions.

A. My thanks to you too. We appreciate your kindness and I want you know that I admire your country very much.

We are losing an extraordinary ambassador with the departure of [ROC representative] Soong Chang-chih. Ambassador Soong has been very involved in the affairs of Panama, and has made a wonderful contribution. We hate to see him go, but we are glad that Panamanians will always have him as a friend in Taipei.

[Picture Caption]

Vice-President Ford gives a sincere and penetrating analysis. He is very popular in Panama.

Vice-President Ford gives a sincere and penetrating analysis. He is very popular in Panama.