Amid Covid-19 crisis, Panama flies the flag for global shipping industry and for humanitarian values
Panama is showing strong leadership to the world in humanitarian assistance to its vital maritime sector and to society more widely, Her Excellency Natalia Royo, newly-appointed Ambassador of the Republic of Panama to the United Kingdom of Great Britain and Northern Ireland, tells Allaboutshipping in an interview. Ambassador Royo said that thanks to its geographical position Panama can distribute aid to the region quickly and efficiently amid the disruption the covid19 crisis has caused. The nation is taking robust measures to assist its economy, said the Ambassador, and is ready to extend deadlines where necessary for procedures involving shipowners and seafarers.
For many years, the Panama flag has maintained by far the top position in number of ships covered and in company registration, and the Panama Canal with its new locks that doubled capacity meets the demands size-wise for most of the shipping industry’s tonnage.
With the Coronavirus “tsunami” shaking Planet Ocean to its foundations, Panama is there to assist business in its entirety, the Ambassador assures its clients and partners, and keep the world on the move. At this critical time for Panama’s continuing development John Faraclas put some challenging questions to Ambassador Royo. Here are her comprehensive and incisive answers.
1)The Panama Canal Authority is requiring all ships transiting the waterway or planning port calls in Panama that have called at countries with confirmed cases of the Coronavirus to report contact. What effect is this having on ships planning the transit – is it slowing their progress, or even deterring some from this route? Are many ships being boarded? Do Panama officials have enough personal protective equipment including masks to carry out this task? Have any ships been detained for such reasons?
The Panama Canal plays a critical role in facilitating the safe passage of international goods and people and will continue to adapt its COVID-19 response protocols, in coordination with the Ministry of Health of Panama (MINSA) and the Panama Maritime Authority, to guarantee its safe and sustained operations as the situation evolves.
Currently, the Canal continues operating with its high standards and with the personnel needed for our transit operations.
It is important to emphasize the fact that the Panama Canal’s inspection and control personnel work tirelessly to ensure compliance with regulations on health and prevention of contagious diseases within its waters. These inspections for contagious risk issues have been carried out for years and are required for all vessels that arrive in the Panama Canal waters. To mention some, they include:
- The vessel is required to report its conditions on board and does so through the Panama Maritime Single Window System (VUMPA, for its acronym in Spanish). In the case of non-compliance and/or providing false information, the vessel is subject to penalties and/or restrictions.
- A Panama Canal inspector embarks and confirms the inquiries included in the Maritime Health Declaration through a form previously completed in the VUMPA.
- The inspector also interviews the vessel’s captain or officer in charge to reconfirm that there are no sick people or crewmembers showing symptoms on board.
- If there are any confirmed or suspected cases on board and depending on the symptoms it is concluded that there is a relevant disease aboard. When concluded that there is a relevant disease on a vessel then the Maritime Health Unit of MINSA, is called onboard. During this time, boarding and disembarking are prohibited for people and a yellow flag is hoisted, announcing the ship is under quarantine.
- Next steps are determined, following MINSA’s inspection.
Nevertheless, in response to COVID-19, the following additional measures have been implemented at the Panama Canal:
- Vessels are required to report if and when crew changes occurred within 14 days of arrival at ports with COVID-19 cases to MINSA.
- Panama Canal’s inspectors must contact vessels via radio before boarding to confirm all crewmembers onboard are healthy and to verify any recent crew changes.
- Panama Canal personnel are equipped with alcohol-based hand sanitizer gel and masks.
- Also, the Panama Maritime Authority send Maritime Safety Information to all vessels arriving at Panama Ports Facilities, notifying strictly that only the crew involved in cargo operations can be on deck, while the rest of the crew have to be in their cabins or accommodations; with this measure, the contact between ports personnel and crew members will be reduced.
- Constant communication is maintained between the Panama Canal and MINSA’s maritime health unit.
We have had cases of vessels that reported people with symptoms on board, but upon reviewing the cases, transit was allowed when it was confirmed that it was not COVID-19 or other contagious diseases.
Just recently we had two cruise ships, Zardamm and the MS Rotterdam, with 4 people who died on board allegedly due to COVID-19. The Ministry of Health, in coordination with the Panama Canal Authority and Panama Maritime Authority, authorized the transit of these ships through the Panama Canal understanding the situation of the passengers and the humanitarian aid required for the vessels to disembark on a safe port. The Canal took extreme sanitary measures to assist on the safe transit of these two vessels, including the use of the Neopanamax Locks to reduce to a minimum the number of the Canal’s operators involved in the operation.
Panama was the only country in the area to aid these vessels and it was done for humanitarian reasons. Our president Laurentino Cortizo has been prompt to promote solidarity among Panamanians and has shown a strong leadership to the world regarding humanitarian assistance.
Due to our assistance on the transit of both cruise ships, our government received messages of appreciation from many countries of the world, such as the United Kingdom, Canada, France and the Netherlands. Around 1,800 people on board from the countries mentioned were aboard these vessels. The Panamanian government is also aiding and cooperating with other countries on this difficult situation and we already have established a hub for humanitarian assistance to cover from Panama 24 Latin American countries. Thanks to our geographical position we can distribute aid to the region, quickly and efficiently and on the crisis covid19 has caused, this hub, which is the first one on the region and used by the Red Cross and United Nations, has become an important tool to help other countries.
2) The Canal is a vital support to the economy of Panama. How will the current difficulties impact its ability to help balance the national budget?
It is too early to measure the economic impact on the traffic throughout the waterway, but it is true that the Canal is vital for our economy. Even if the Canal represents around 5% of our economy, all the maritime and logistics activities that surround it represent approximately 30% of our GDP. The Canal contributes with around 20% of the government’s income that goes directly to social investments. Just for contextualizing the importance of the Canal to Panamá´s economy, in 2019 the state received 1,786 million USD. Having said that, we have a very diversified economy and a very resilient population. All will depend on the duration of the crisis but I am confident that, after the crisis, we will find new ways to prevail and cope with the world’s new social dynamics. Also, we have to take into account that the Canal works with a very well-prepared group of professionals and independently from the government so hopefully the situation will be transitory, and economies will be restored. Regardless of everything that’s happening, the Panama Canal acts, will react and has acted accordingly to the dynamics of the world economies.
3) Fitch Ratings has downgraded Panama’s rating from stable to negative, and the country is still listed in the Financial Action Task Force’s money laundering watchlist. What is being done to improve the situation, and how will the coronavirus emergency add to these pressures on the Panamanian economy?
President Laurentino Cortizo’s administration is fully committed to ensuring that the FATF Action Plan is carried out on time to ensure Panama’s prompt removal from the list. Besides, it is important to mention that the country’s banking centre is in compliance with FATF recommendations and that the sector financials are solid and stable, with robust liquidity and solvency. Only 8 months into the new administration, President Cortizo’s government has been working on strengthening the effectiveness and transparency of Panamanian institutions to also guarantee the rule of law and fair competitive conditions for local and international investments. In summary, these are some of the actions taken for the development of a more adequate framework:
1. The creation of the International Services Competitiveness Unit within the Ministry of the Presidency to align government agencies with a new mission, strategy and roadmap to enhance the financial services centre.
- The government holds weekly high-level meetings with President Cortizo, the National Commission against Money Laundering, representatives from the Financial Intelligence Unit and the Prosecutor’s Office to ensure coordination of the FATF action plan and strategy and to achieve an effective AML/CTF/PWMD national system.
- Enhanced coordination and communication protocols between inter-government offices, throughout standard operations procedures to identify, investigate, and prosecute cases related to AML/CTF/PWMD.
- Four bills approved in Cabinet and Congress that:
(i) Suspends the access of companies that haven’t paid their annual tax for more than three consecutive years and/or have not reported their resident agent with the Public Registry;
(ii) Modifies the Penal Code to ensure that the appropriate law is implemented as a deterrent for tax evasion;
(iii) Imposes sanctions (5-8 years in prison) to those who carry out the money transfer service commercially without a license;
(iv) Guarantees full autonomy to the supervision entity.
- The government is working towards the implementation of a Registry for Resident Agents and a Registry for Ultimate Beneficiary Owners.
- Panama’s AML/CTF regulation will be modified to homologate the responsibilities of all obliged subjects and to establish more proportional and dissuasive sanctions.
- Amendment of the law that requires accounting records to be kept by all Panamanian corporate vehicles operating abroad.
- Updates of Chapter V (financial terrorism) of the country’s National Risk Assessment and updates to understand the major risks and apply the corresponding mitigation measures and controls.
Panama is committed to becoming the best Latin American business, services, and financial hub by mitigating the risk posed by criminal activities and complying with the required international standards.
Finally, the Latin American Anti-Money Laundering Group, GAFILAT, recognised the country’s progress and welcomed the significant improvements in the recommendations: Panama went from complying with 35 requirements to complying with 38 requirements out of a total of 40, securing a current technical compliance score of 95%.
In terms of COVID-19, naturally, the pandemic is affecting the global economy and it is in the hands of our world leaders and the leaders of every sector of our economy to take action. In Panama, the economic measures and relief efforts include initiatives from both the private and public sector, such as freezing some bank payments and obligations, the suspension or delay of several public bills and tax payment extensions.
Panama has already taken a total of 27 economic measures; there are 50 under evaluation to be implemented in the next 45 days, and 29 projects and additional measures are being reviewed for the aftermath of the pandemic. Panama´s measures are being replicated by other countries of the region.
Moreover, the Panamanian government has implemented a program of economic solidarity, “Plan Panama Solidario”, which is an emergency plan of social assistance and humanitarian relief for vulnerable communities in Panama that will help approximately 1.35 million people in the country. This program includes benefits such as physical and electronic (accessed via their national ID) coupons for food and medicine, food supplies, and donations.
I have to admit that I feel proud of how this government is dealing with the crisis, humanitarian and cooperative approach above all, as well as the rapid, coordinated and unified response of all governmental entities.
4)A big slowdown is forecast in global trade growth. How is Panama and the Canal going to be impacted and how will they cope with that?
This is an unprecedented situation, therefore anticipating the economic impact at the moment would be very premature. The impact will depend on how quickly the economies of the countries that use the Canal recover. This situation is still so recent, and we have not received the impact of the market yet. For instance, if ports on the east coast of the United States reduce or suspend operations or when production and manufacturing restart for inventory replenishment in Asia. We continue to monitor the situation closely as shipping companies inform us of their transit schedule.
Nevertheless, it is more than probable that there will be an impact. The Panama Canal Administrator just recently informed that 52 transits have been cancelled, 35 cruise ships and 17 cargo vessels. Since we are the channel that connects 1,700 ports in 160 countries, there will probably be a slowdown. The reduction on oil prices can also have an impact so maybe ships would not mind taking the longer route through Cape Horn. But, at the same time, vessels have to consider that taking a longer route can be more damaging to the climate and Panama offers several incentives to use oil without sulfur, as it was approved by the International Maritime Organization, so even that alternative it is not completely certain. We must wait to know the consequences and our country is ready to respond to the needs of this trade.
5) On March 11, the presidents of Belize, Costa Rica, Guatemala, Honduras, Nicaragua, Panama, and the Dominican Republic signed a joint declaration in which they committed to preparing a regional contingency plan to combat the pandemic, aimed at complementing national efforts. How well equipped is Panama’s health system generally in medical terms to cope with rising numbers of victims and suspects? What else is being done to alleviate the humanitarian crisis?
The Central American Economic Integration System, with the help of the Central American Bank for Economic Integration, approved a fund of one thousand nine hundred (1,900) million US dollars that will be used on a Regional Contingency Plan. Amid this difficult situation, it is very gratifying to see how all central American countries are trying to help each other in a united way. I have to say that all Latin American countries have been, as never before, working together to cope with the crisis in a coordinated and cooperative manner and making lots of efforts to find solutions, sharing best practices and common strategies.
Specifically about Panama´s health system, it is well known that this crisis has affected the health systems of all the countries where COVID-19 has been spread, therefore Panama has also been affected by this. Nevertheless, with the quick response our Government, led by President Laurentino Cortizo strict measures from the beginning have been implemented to alleviate our health system.
Panama has been considered a model for rapid response to Covid19 virus by United Nations health officials and as they said Panama´s response measures can be exported to other countries of Latin America and the world. The government have been behind these efforts from the start, and all Ministries have been working in a coordinated way. In my case, I felt truly supported by the Ministry of Foreign Affairs; since the very beginning, all Embassies received clear guidelines, accompaniment and support from the Ministry. As it is said, you will know how things and people work in a time of crisis, I have to say that the Panamanian government response was admirable, one step ahead compared to other countries and will continue aiding our fellow countries who require humanitarian assistance.
6) How will Panamanian companies and organisations – the international registry, shipowners and agents, ship suppliers and so on – be supported if their finances are badly hit?
The Panama Maritime Authority led by the Minister of Maritime Affairs and Administrator, Noriel Arauz, is taking the necessary measures to avoid the potential risks this pandemic may produce, taking into account that the maritime business must continue operating and that we must cooperate efficiently for its recovery.
We are committed to providing the best services; our personnel is ready to assist all our international clients 24 hours a day/7days a week to continue ensuring the expeditious service our clients are accustomed to, even during this unprecedented times.
It is crucial to remember that our registry is currently supported by 53 Consular Offices around the world and 13 International Technical Offices (SEGUMAR) that operate globally. It must be noted that our Registry is backed by the State and not by a consortium or private entity, therefore, we do not have the risk of going bankrupt on this sanitary crisis.
As Minister Arauz said, we are providing continuity ensuring that the operations will not be interrupted by any external factor since we have the appropriate equipment and technological platforms to solve all operations rapidly and remotely. The Panama Ship Registry has the mechanisms to facilitate our users in the registration of their property titles and ship mortgages electronically and remotely, avoiding the physical presence of the persons for the registration of such documents. All Panamanian Consular offices and Embassies worldwide are at the client’s disposal to provide them with all the notary services needed for the registration of property and licenses for the vessel’s operations, in an agile, efficient, remote and safe way, respecting and guaranteeing with each of our actions all the principles of legal security that have characterized us throughout the years.
The Panama Maritime Authority reaffirms the commitment to banking institutions worldwide that trust our ship registry to ensure their credit guarantees through the ship mortgage.
Additionally, Minister Arauz has issued instructions to all approved organizations that any audit, inspection or survey expiration date could be extended for 90 days, as well as dry docking is also extended for the same period. Also, an extension to Statutory Certification & Services and Certificate of Registry/Patents (in all its forms), Radio Station License (in all its forms), Exemption Certificates, Minimum Safe Manning Certificates issued to Mobile Offshore Units (MODU/MOU) has been issued. These benefits are focused on our direct clients of merchant marine. (Ref. Merchant Marine Notice. MMN-07/2020 and merchant marine circular MMC-313)
Furthermore, on Resolution JD No. 032-2020 our Administration suspends, for ninety (90) calendar days, the payment for the anchorage of passenger ships, port charges, berths, anchorage areas and marinas of the national territory, to all ships registered under the Panamanian flag; as well as an additional 50% off in the certification services of foreign seafarers onboard an economic group that keeps more than ten (10) passenger ships registered with the Panamanian flag.
Regarding the welfare of our seafarers around the world, the General Directorate of Seafarers offers to extend payments and licensing procedures to sailors and crew members on board the Panamanian flagship, Seafarers employment agreement SEA and certificates endorsements for 90 days.
At no cost, the ship owners and operator companies can request these special extensions for their crew members through any SEGUMAR office around the world. After reviewing each case and the compliance of the requirements established the Merchant Marine Notice MMN-03/2020, the SEGUMAR office will grant the necessary extensions/crew dispensation letter/authorizations following the good maritime practices and always ensuring the safe and uninterrupted navigation of ships on the Panamanian registry.
We encourage all the ship owners and operator companies to always follow the most updated PMA guidelines, circulars and marine notices through our consular offices, SEGUMAR offices and our governmental official maritime website:
Concluding this interview I must state that our team is here to help on this difficult and unprecedented times, so please if you or anyone on the maritime sector needs advice, do not hesitate to contact us at:
- The Panama Consulate in London:
- SEGUMAR office in London
Telephone: +442076293616 , +442076293649, +442076293650
- Panama Maritime Authority headquarters:
Telephone: +507 501-5000