Issue: 2007 - 1

II. Business News

III. Tourism News

IV. Press Articles

Dear Friends:

It’s wonderful to be back with you after the holidays.  To start the New Year, we’ll be making a couple changes to the newsletter.  Usually, we include a family update and news of our community service in the same newsletter.  Starting now, we are going to split off the “Mike Cobb Gringo Life in Nicaragua” and the “GP Nicaragua Social Projects Updates” into separate newsletters.  The Nica Newsletter will still contain the usual news updates, economy section, tourism developments, and press articles and links.  We’ll also try to have it out on a more regular basis thus making the reports more timely. 

The big news in Nicaragua is obviously the election and inauguration of Mr. Daniel Ortega as the new President of Nicaragua.  For me, my family and for Gran Pacifica, we wish to extend our congratulations to him and his new government and offer our best wishes for an extremely successful term in office. We are optimistic about the future of tourism development in Nicaragua.   The Nicaraguans have shown a great deal of political maturity in hosting once again (and not surprising for those of us that live here) a peaceful presidential election and transfer of power.  

As we enter this new phase of Nicaraguan governance, I want to state right out that my wife and I feel perfectly safe here with our two young daughters.  In fact, I felt comfortable enough about the election to leave the ladies and fly to Argentina for a conference while they were happening here in Nicaragua.   Living here, you gain a perspective on the nature of the people and can see that the desire for a peaceful future is deeply rooted in their hearts. 

From a business perspective, our project will move ahead with all due speed to take advantages of the opportunities ahead.  As I was quoted in Business Week Magazine’s online edition a few weeks ago, "We believe that Mr. Ortega is serious about his commitment to promote foreign investment and tourism".  The IMF has weighed in stating, “We at the IMF look forward to working closely with the incoming authorities to support their objectives."  President Ortega himself stated, “Our promise is to eradicate poverty, we cannot eradicate poverty if we eradicate investors.”  

Yes, the US media is making a big deal the fact that President Ortega invited socialist leaders from Venezuela and Bolivia to his inauguration.  However, investors and business people from all over the world are still coming to do good business in Nicaragua.  The Canadians and Europeans are cleaning up in Cuba.  Only the US misses that opportunity.  It would be a shame if the same thing happens here.

The Facts Before and After the Nicaraguan Elections

The Gran Pacifica group is optimistic about the future of tourism and development in Nicaragua and Central America. Everybody in Nicaragua knows that the only way to prosper is to offer stability and economic growth with social responsibility to the poor.

We will stick to the path we have established and continue developing our project. In fact our 3rd annual shareholder event (Jan. 12-14) in Nicaragua was a huge success with a participation of 130 shareholders and more than 70 local guests.  Two new condo projects are coming on line right now.   So while it may not be 100% business as usual yet, it’s already business almost as usual. 

Come visit and see the realities for yourself.  Nothing substitutes for your own eyes, ears and evaluations of the real situation here.  Until next time, enjoy the news from Nicaragua.

INVESTMENT COMMENTARY
By Javier Morales, PD in Economics at Stanford University, Member of the Board of Central Bank of Nicaragua

On the political side, on January 10th newly elected president Daniel Ortega was inaugurated in a short ceremony offered to heads of states followed by a massive popular concentration leaded by Venezuelan President Hugo Chavez, and Evo Morales from Bolivia. The cooperative agreements signed by the new government with Venezuela and Iran showed a shift in the portfolio of donor countries.  A question raised by political analysts is the coexistence of previously signed cooperation programs with countries such as Japan, United States and European countries and the newly signed cooperative agreements, under the context of a monetary program to be negotiated with IMF, and the political implications of such alliances.

On the other hand the new President of the Central Bank, Antenor Rosales and the Economic Advisor of the President, Bayardo Arce have conducted an extensive media campaign to convince the private sector and the investment community that the goal of macroeconomic stability is a top priority of the government and that soon negotiation with the IMF will take place. Arce mentioned large private led investment projects in palm oil, ethanol production, textiles, hydroelectric energy and the tourist sector, making clear the point that the new government has also embraced private sector led development.

On the macroeconomic front, international reserves at the Central Bank closed 2006 at a record level of $924 million by December 31st. Deposit in the financial systems are healthy at a US$2,176 millions with a drop of only 4% related to the record high reported in August 8th of 2006. Exchange rate spread has been stable after the elections. During the first week of January, inflation was only 0.37%, after closing last year inflation rate in 9.5%. GNP growth forecast for 2007 is uncertain and will depend on a positive expectation related to the investment climate. A positive factor influencing investment is the recent drop in oil prices that have enhanced the competitiveness of the economy.

Vice President of Nicaragua, Mr. Jaime Morales Carazo, met with US Company CONE DENIM, a company with a 100 million dollars investment on a Free Zone Construction located at Ciudad Sandino, a North West neighborhood in Managua.
CONE DENIM will begin operations in 2008 and will generate 800 hundred of employments opportunities.

Mr. Morales informed that this visit to CONE DEMIN is to reassure the support that the government will give to all foreign investments and to continue all negotiations made in hand with the CAFTA initiative and that has been left behind by the ended government this January.

Matt Haynes, Vice President of CONE DENIM, said he has well believes in Ortega´s government, reason for which they are investing
.

III. Tourism News top

Nature Air will continue its regular flights on December 1st, 2006.
www.natureair.com

According to Robert Quist, from Nature Landing Magazine, the publisher of the Costa Rican Airline "Nature Air", this tourism airline has plans to continue its regular flights on December 1st 2006 between Liberia Costa Rica and Granada Nicaragua. This year, more than 110,000 passengers will travel Central America on Nature Air, the Costa Rica airline that has become the premier Central America airline for adventure travel, luxury vacations and eco tours.

New President of the Nicaraguan Tourism Institute (INTUR), Mr. Mario Salinas, addresses 130 International Investors from the Gran Pacifica Group
Managua, January 13th, 2007

Right to Left: Michael Cobb, Gran Pacifica President, Joel Nagle, CFO, Architect Mario Salinas, INTUR President, Ray Steeb, VP of Development, Adiak Barahona, Gran Pacifica Marketing Manager

Gran Pacifica Investors listening to Architect Mario Salinas, INTUR President

Architect Mario Salinas, a successful businessman, is now the new President of the Nicaraguan Tourism Institute (INTUR).  In one of his first official acts in his new capacity, Architect Salinas addressed about 130 investors and property owners of the Gran Pacifica project at their recent annual meeting events here in Managua.  Mr. Salinas discussed his background as one of the largest developers in Managua, the future of tourism and the direction of the new government and increased budget for the promotion of tourism.  He then spent 20 minutes fielding questions from the audience. 

IV. Press Articles top

Latin Business Chronicle
Real Estate: Nicaragua Optimism Despite Ortega
January 15th, 2007.

Despite a new, leftist government led by President Daniel Ortega, executives in Nicaragua's growing real estate industry remain bullish.

"The real estate market outlook continues to be positive," says Claudia Gonella, director of the Nicaragua offices of U.S.-based real estate agency Coldwell Banker."We are selling well out of both of our real estate offices, at approximately the same rate as this time last year."

Timothy Thomas, owner and broker at ReMAX Monteverde, agrees. "I think [the government] will be OK," he says. "Our investors met with Daniel Ortega after the election and he wasn't the Daniel Ortega of the 1980s, that's for sure."

Nicaragua is one of the key growth markets in Latin America outside Mexico for U.S.-based First American Title Insurance Company.  "The market has not slowed down as people seem to be optimistic about Ortega staying the course when it comes to investments in the country," says Turalu Brady Murdock, vice president of First American. "From an investment opportunity there are still very good opportunities in Nicaragua in the real estate market."

Looks like a manifestation, but these are the investors from Gran Pacifica while visiting the Project and where they were able to see all the project progress.

Mr. Michael Cobb and Mr. Joel Nagel, Directors of Gran Pacifica

“You can see the houses of the town already”, said Mr. Michael Cobb, Executive President of Gran Pacifica, to summarize the progress occurred in the project. The master plan will be finalized with the construction of a commercial plaza, a five star hotel, a condo-hotel of 88 units, a golf course of 27 holes and 300 lots with their respective houses.

“Up to now, 12 million Dollars have been invested on studies, design, urban planning, permissions and infrastructure construction. All the buildings to be constructed will have a Nicaraguan Colonial style, based on the constructions of Leon and Granada with all basic services” said Mr. Cobb.

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