LATIN AMERICA. Border duty free stores in Brazil’s major frontier cities could be open by March 2019, according to ASUTIL Secretary-General José Luis Donagaray (pictured). He was speaking at the first media webinar arranged by the Latin American duty free association today.
As reported, regulation permitting the opening of land border duty free stores in Brazil was given the green light by Brazilian Customs authorities in March this year.
Stores will be permitted to open in any of Brazil’s 32 twin cities that border variously with Uruguay, Argentina, Paraguay, Peru, Bolivia, Colombia, Venezuela, Guyana, Suriname and French Guiana. It was initially thought that stores could open as early as August, but various logistical factors have held back the opening date.
Chief among these, Donagaray explained, was the trialling of software to be approved by the Federal Revenue & Customs service (Receita). He said: “Before the end of September, as confirmed by the Receita, the approved software that they have developed to operate duty free stores will be released. They got over one of the issues, which was connectivity, so now the software can be operated offline.
“Once that is done they will begin to receive applications from operators. We don’t know how long the applications will take but some people have speculated that stores will open by year end. I think that may happen with some smaller stores and locations; more likely the larger players will open around next March.
“There is strong interest. All you need to apply is Rs2 million (US$480,000) and although this is not very much you need stocks, logistics and much more to run a store. The first of the big stores will probably be in Foz do Iguacu, Ciudad del Este, Rivera and other places through the main operators. You may have some smaller stores that will just convert from duty free from domestic, which is permitted, but the biggest will open in the larger cities with strong travel numbers.”
In a related development, Donagaray confirmed that Uruguay and Brazil aim to harmonise their border duty free shopping regulations and that discussions are planned, as the Brazilian border store openings loom.
Donagaray also talked about the political and economic challenges in several markets. “In Brazil, the presidential campaign has just begun and we’ll know soon how that plays out. The Real is at about R4.10-4.15 to the US Dollar right now, and speculation is an issue. Brazil does not have an economic problem as such but there is political uncertainty. Brazil’s impact on the region is very big, and we await news. The Brazilian impact and uncertainty there means that overall sales in the ASUTIL area will probably be down year-on-year in 2018.”
“We estimate that business in Argentina has fallen by around -25% in the past two months.”
“In Argentina it’s absolutely different with the currency devaluation. It’s not a political issue but is related to a big deficit and inflation. The government is finalising support from the IMF. What we saw last year was people leaving Argentina to buy, now they are coming from Chile or Uruguay to purchase cheaply within Argentina. We estimate that business in Argentina has fallen by around -25% in the past two months. We foresee only a recovery in the first trimester of 2019, but not before then; currently we are seeing a loss of growth and employment in the country.”
Among other issues covered by ASUTIL was the regional approach to defending tobacco, under threat from the WHO-backed Illicit Trade Protocol. Donagaray said: “We are working hard in the Americas on tobacco, to involve Customs and finance offices in each country, to explain that duty free is not involved in illicit trade. It is a big, big issue and a first step. As we know, if tobacco is legislated against, alcohol and confectionery will be next.”
Planning the 2019 Summit of the Americas
Last week ASUTIL and IAADFS held a meeting in Miami with suppliers about progress on next year’s Summit of the Americas. “We met around 30-40 suppliers who received the new layout positively. We won’t allow people who are non-registered to come inside, which was an issue. Now you have to be registered to come into the sterile area of stands, suites etc. The new hotel is very attractive for events and entertainment. We’ll have changes to the social side, with options for more informal, flexible evenings on Monday and Tuesday.”
He added: “We are planning the executive education sessions too. We’ll have a keynote from a CEO of one of the big operators, an airports panel, one about the key categories and one on technology, The session will run for 1.5 hours, not two hours next year, on each of Monday, Tuesday and Wednesday.
“We are talking to the big suppliers now and expect more of them to take part. Most of the big P&C companies will be there.”
ASUTIL also recently relaunched its website. It now includes more regional news, studies of the economy in the region and from m1nd-set, as it becomes a reference point for members and for the industry.
