Slowdown in mortgage loans

Mortgage loans in Panama were in 13.4% in June this year, a figure that is well below the 14.6% observed during the same month of last year, according to figures from statistical reports of the Superintendence of Banks of Panama (SBP).

From January to June 2016, mortgage loans amounted to 13 million 944 thousand dollars, 13.4% more than in 2015, while in the same period of 2015 it was 12 million 283 thousand dollars,  14.6% more than in 2014.

However, in June 2014, this figure was 10 million 721 thousand dollars, reflecting a decrease lower than 1 million 572 thousand dollars as compared to 2015.

According to Elisa Suárez, Director of the National Council of Housing Promoters (Convivienda), this slowdown is because there are new projects and while others could not continue or start due to issue with the paperwork required.

The construction industry today has to go through paperwork processing in more than 19 institutions with which it should submit papers involving between 60 and 90 permits, rates, seals, and approvals, which become longer every day.

Experts have pointed out that this is one of the issues that mostly affect the construction sector and expect thus that this matter is urgently assessed for the good sake of the recovery of this industry.

"We have a slowdown in the number of mortgages and real estates that have not been sold so far", explained Suarez.

She reiterated that they are behind for not being able to implement a series of important projects at the national level.

This trend is no different from the decrease of 11.1% that is reflected in the value of new constructions, thus showing a decline in the execution of new works.

Similarly, some construction sector´s businesspeople explain that this downward trend is due to bureaucracy.

 Difficult year

While the paperwork issue has been more difficult for the sector´s businesspeople this year than in previous ones, Suarez clarified that an excessive bureaucracy not necessarily means that there is a better supervision or that things are being done well.

"Simply, bureaucracy is bureaucracy." When you meet the standards, there is no reason to delay processes or duplicate processes", she affirmed.

Ivan De Ycaza, President of the Panamanian Chamber of Construction, during the Metropolitan Real Estate Forum, also stressed the importance of making changes in the bureaucratic processes through the implementation of an integrated technological system into public institutions.

This way it would be ideal to facilitate the success of construction in the country of the Canal, according to De Ycaza.

The construction activity generates about 180 thousand jobs per year, according to specialists.

"The main advice I would give as an industry and as a country is that we must take measures aimed to become more productive, since our labor legislation does not go in this direction," he added.

"For every dollar produced in the Republic of Panama, 36 cents come from the construction sector and this makes a multiplier effect of 3.31% in the economy in general", according to De Ycaza.