FORESTAL INVESTMENT IN PANAMA

When I first came to Panama in 1995, I was involved in a number of reforestation programs in the central provinces of Panama; most were run by the Panamanian government and focused on reforesting denuded, barren fields that had once been dense rainforest. We planted Caribbean Pines and some Teak, but few native species of trees. While working in these reforestation projects, I realized very clearly that the process of deforestation in Panama, as with most tropical countries, is a human induced ecological problem. The cycle went like this: A population of farmers from an already exhausted environment moved into a jungle area, cut down large trees and then burned the forest to make agricultural fields. After burning all the vegetation, the land was used in a long fallow agricultural system: the land was used for two or three years and then was left to return to high forest for 10 to 12 years. But over time as the population grew and more food was needed the fallow, or resting period, was shorten until farmers were using their land every year or every two years. At some point the land became useless for agriculture; at this point, most of the land was turned into cattle pasture.
The turning of the land into cattle pasture meant the quality of the soil was further degraded – at some point the land wasn’t even good enough for cattle grazing and was abandoned and became known as cerro – useless land.
Futuro Forestal is trying to stop and reverse this process. What Futuro Forestal is emphasizing in their tree plantations is diversification on each plot in order to protect their investment and encourage biodiversity - a good policy. Futuro Forestal is also experimenting with about 50 other native and exotic species. Basically, Futuro Forestal buys the seeds from government centers (IDIAP is the government agency) and then starts the trees off at their nursery for the first 4 months or so. Sites are prepared, including digging a 1 m planting hole, which is filled with their special organic soil mix. Once the rainfall pattern is stable (May, June), the seedling is then transplanted in this medium, and it literally takes off! Visiting the various plots and seeing the growth heights of the species and then being told their age, you can’t help but be astonished.
Futuro Forestal: Investing In Reforestation
Futuro Forestal is a private German-Panamanian Reforestation and Forest Services Company that has spent the last 11 years developing and refining an innovative investment model based on ecologically and socially sustainable reforestation in the tropics. Futuro Forestal offers investors the chance to own a forest that produces high yield, fine tropical hardwoods. The sale of the wood, seeds, as well as carbon credits enables the savvy investor to make a substantial profit while contributing to a socially and environmentally sustainable project. Investors receive fully titled land, planted with up to seven species of valuable tropical hardwoods, AND the forestry services of Futuro Forestal for 25 years. Profits of 6-11% IRR can be obtained on a 25 year term. The company works closely with the Smithsonian Institute in Panama as well as the Yale School of Forestry and Environmental Studies and the University of Panama; it is FSC (Forest Stewardship Council) certified. The project is also being monitored by the Panamanian Environmental Authority ANAM.
Futuro Forestal has recently won the Metafore Innovation Award in Portland, Oregon, for their investment product WoodStockInvest. The award recognises improved social, environmental and financial results in the area of forest products.
Futuro Forestal’s project aims to create an attractive environment for the investor and at the same time help to restore the biodiversity of Panama. Their reforestation activities take place in two areas. One is located in the Chiriqui Province in the town of Las Lajas, which is located on the Pacific Coast of Panama, about a 5-hour drive from Panama City and an hour-and-a-half drive from Boquete. Their newest reforestation project is located in the area of El Pito/Soná in the Veraguas province, where they have established their new “Finca Las Huacas”. The new Finca, specially dedicated to the Forestry Visa, offers 2 ha plots of titled land with 25 years of sustainable forestry management services for 40,000 US$ which is the minimum required by the Panamanian authorities to qualify for the Reforestation Visa.
Depending on species, after the 20-30 year growing period and silvicultural management, Futuro Forestal expects to have about 400 crop trees to harvest, with heights of around 25-35 m. Most trees will reach the incredible heights of 20m within their first 4-8 years (compare that to coastal BC where best site growth is about 2-3m!). First income will be generated with the different thinnings, which occur at year 10, 15, 18, 22. and 25. A profit can also be expected from the sale of carbon credits. After that, the key is to transfer the growth to the girth, to put on diameter growth. Thus, further thinning and fertilizer applications. Unlike in the slow-growing conditions in North America, in Las Lajas, silvicultural investment must be intensive in order to keep up with the fast growing trees. By the way, all fertilizer applications consist of 100% recycled organic by-products, such as chicken manure and sugar cane leaves.
<> CONTACT US click here
How To Invest And Why
Most investors in the project buy a 5 acre parcel or more – most investors invest 40,000 to 200,000 dollars in the project, most see a yearly return of 8% to 12% or more on their investment. But it is also possible to invest in smaller plots of ½ ha. After your initial investment you receive title to your land. Your land is then managed by Futuro Forestal: taking care of the trees intensively, fertilizing and executing the first thinning after approximately ten years. Thinnings will occur after years 15, 18 and 22 with the main harvest in year 25. Basically what you are doing when you invest in Futuro Forestal is investing your money in a valuable natural resource – tropical woods – that will grow in value as the demand for tropical woods grows, as it is, and as demand grows prices will rise. At the end of the 25-year cycle you will still own real estate in Panama as the land that is used to grow trees is in your name.
Security And Best Quality
There are no active volcanoes in Panama. There are no hurricanes on the Pacific side of Panama. There is no history of strong earthquakes in Panama.
Unique System of Insurance pool. More than 5 % of reforested land will be held back for investors in case of total loss.
Fire insurance for the first 5 vulnerable years
Key person-insurance with Generali (1.5 million US coverage).
Auditing through Deloitte.
FSC Certification through SmartWood (“well managed”).
Rating as No.1 Forest Investment in Latin America (SIRIREC 2004).
Risk minimization through ecological portfolio model (6 mainly native species of fine timber plus teak).
Co operations with renowned Universities such as Yale School of Forestry and Environmental Studies.
Tree guarantee: Futuro Forestal commits to replant trees which have died due to disturbed growth.
<> CONTACT US click here
Benefits To The Surrounding Community
Futuro Forestal is now employing 50 full-time workers and 80 seasonal workers. This has allowed families in the area to stay in Las Lajas and not migrate out of the region to Panama City or to the regional capital of David. The project has also helped farmers in the area learn about the benefits of reforestation. Hopefully, what the farmers learn at the project will change the way they farm, specifically not to cut down or burn trees. If the farmers can see there is money in preserving the environment, then they will be able to stay on the land and not become landless urban workers who can’t feed themselves. This process of change in agricultural practices is similar to what happened in Costa Rica 30 or 40 years ago: people stopped burning, stopped migrating to the city, and started to realize that protecting the natural environment meant food and money. Panama is just beginning this process.
Most rural farmers in Panama have a hard time making a living in the countryside, most have large families and most see their children leave the countryside and go to Panama City to look for work, so the family structure in rural Panama is breaking down because the agricultural base or natural resource base of the countryside is so depleted. If you go to the Panamanian countryside today you see mostly very old people and very young children who are left with their grandparents by young mothers who work in Panama City as domestic servants.
What I believe would be good is that people in the countryside of Panama have to find a way to reclaim land that has been destroyed because of poor agricultural practices. The first step in reclaiming denuded and barren land is reforestation, but reforestation that promotes biodiversity and not monoculture. In short, there has to be a migration from the urban areas back to the countryside and when this happens there must be some new agricultural system that is in place that will allow the population to survive on the land without destroying it. Reforestation now will help this process along later and what Futuro Forestal is doing in Las Lajas is planting the idea in the surrounding community about how to reforest and how do it in a way that is profitable and will allow people to stay together in the countryside and become prosperous farmers.
Farming was a prosperous activity in Panama in the past. Before roads were extended into the deep interior of the country, people had to produce to feed themselves. But when roads penetrated deep into the countryside, the road in became the road out and people started pouring out of the countryside to the city and when that happened agriculture and an instinct for natural resource management suffered. Food was shipped into these remote areas because of the new roads. Before the roads were cut it was difficult for people from outside these small rural communities, with names like Pan Dulce, Comensito and Agua de Salud, to reach them - they could only fly to the towns by light airplane. At that time, all the small towns had markets on Sunday at which people from the countryside and the local aristocracy bought their food - there was no food trucked in. Reforestation is the first step in improving agriculture and hopefully change people's feelings about seeing the importance of the environment as something from the dark past.
<> CONTACT US click here
Investing In Panama
The advantage of investing in Panama is that it has become very politically stable over the last 14 years and the U.S. has a vested interest in seeing this incredibly important country stay stable. As an investor you have the benefit of having modern services in Panama, especially modern banking services. There are over 150 banks in Panama for a country that probably has 200,000 people who could put money in the bank; in other words, there is a lot of foreign money in Panama and in order to protect the inflow of foreign money, banks have to treat investors well.
The banking laws that made Panama an offshore haven were passed by Omar Torrijos in 1970: those laws stated that there would be no tax on interest from any kind of account. Offshore business deals would be tax-free. No laws or restrictions on the setting of interest rates. Money could move in and out of the country freely. Numbered accounts rather than named accounts: Switzerland in the tropics it was called. Another reason why Panama became a banking center was the fact that the U.S. dollar is used as the national currency as well as the fact that Panama is in the same time-zone as Wall Street – making its banking hours identical to New York.

Types Of Businesses You Might Start In Panama
The place is swarming with great lawyers who are very inexpensive and for the most part honest. Now what kind of business would you want to open? A lot of people that are relocating to Panama are opening Internet based businesses, from clothes to tourism. Tourism has taken off over the last two years in Panama, though the tourist infrastructure in the country is still underdeveloped, especially the marketing of tourism. Another type of investor are those working in e-commerce, selling real estate in Panama through the Internet or shipping products out of Panama’s Duty-Free Zone to the world. For trading Panama is in an excellent position: perfect location between North and South America, there are great storage facilities in Panama as well as easy shipment of merchandise, you have a large duty-free zone from which any product can be assembled and sold in the region. Most people that trade out of Panama buy their goods in China, from China they ship merchandise to Panama’s duty-free zone and from the free zone they ship to other countries in Latin America, say, Venezuela, Costa Rica, Ecuador or wherever.
<> CONTACT US click here
Special Benefits For Retirees In Panama
The law outlining benefits for retirees in Panama was written in 1987, known as Ley No. 6 del 16 de junio de 1987 adjustments to that law were made in 1989 and 1992. The benefits for retirees in Panama are some of the best worldwide and certainly the best in the region. Here is a list of retiree benefits:
You can import a car into Panama every two years tax free.
Discounts on pensions, motels, or hotels.
Pay less on medical bills if not covered by insurance.
Prescribed drugs are discounted by 10%.
Airfares are discounted by as much as 25%.
Restaurants will give a discount.
30% off Public transportation.
You may import household goods worth up to $10,000 tax free.
20% off Medical services.
25% off light bills, water bills and cable bills.
No property Tax if Panama is where you own your only home.
Lawyers, Nurses, Therapists and other professions give discounts.
Home furnishings bought in Panama are tax free.
Interest rates on Commercial loans are lower for retirees.
National and foreigners are equal under the law in Panama.
50% off recreation, such as movies, sports events, ballet, parks all have a discount for retirees.
50% off Hotels.
Studying In Panama
FSU-Panama is the second oldest University in Panama. It has been operating in Panama since 1957 and offers majors in Computer Science, Environmental Studies, Information Studies, International Affairs, Interdisciplinary Program In Social Science and Latin American and Caribbean Studies. The University is located in the old U.S. Canal Zone and lies directly under the Bridge Of The Americas, the bridge that connects North America and South America. The University provides housing at a very reasonable price and tuition to the school is much less expensive than most universities in the States. Classes are in English and most students that spend their four years at the University learn Spanish. So you get Spanish as well as English as well as a U.S. recognized degree and you also stay out of the cold and get the chance to visit other countries in the region without having to travel so far.
Click Here to read more about FSU-Panama.
<> CONTACT US click here
Letters From People Who Have Visited Futuro Forestal
"I invested into FSC certified forestry with Futuro Forestal, because this is a smart way to combine ecological economical and social approaches in a stricken third world country. Especially the idea of reforesting in Panama as a profitable investment convinced me. I have been in Panama to see the project with my own eyes. I was impressed to see how professional the job is done there to benefit local people as well as the investor. This concept as a whole approach was important to my decision to invest and parts of my future retirement savings will be shifted into this opportunity"
Bernt Kamin Chairman of the Work Committee Seaport Hamburg
"We appreciate your practical experience with the plantation and the capacity to create a multiculture forest of primarily native species and to succeed in making the venture profitable and sustainable. We look forward to a continued positive relationship with Futuro Forestal."
John Spears, Senior Advisor, the Forest Team, and Socially Sustainable Development The World Bank in a letter to Futuro Forestal

Courtesy of:http://www.dejavuinvestment.com