First Brazil border shops could open before year end

Brazil may finally see the opening of its first duty free border stores in December, following the election of Jair Bolsonaro who will succeed Michel Temer as president on January 1.

ASUTIL Secretary General Jose Luis Donagaray, in a press briefing held last week, says he expects one or two small operators could open the first Brazilian border shop towards the end of this year. But he expected that the bigger operators would be unlikely to open until the end of Q1 2019 or in Q2 2019.

“Things are beginning to move in a positive direction for Brazil’s land border stores,” con-firmed Donagaray.

Brazil’s new president Jair Bolsonaro is likely to take immediate actions to reduce the country’s fiscal deficit upon assuming office.

“The result is increasing consumer confidence in Brazil; people are flying again and traveling within South America,” said Donagaray, adding “The Real is already gaining strength against the dollar, although in Argentina we don’t expect to see real signs of economic recovery until March or April 2019.”

As reported previously, the Brazilian national parliament passed Law 17.723 in 2012, which permits the operation of duty free stores in 32 cities in Brazil on the borders the country shares with Venezuela, Colombia, French Guiana, Guyana, Peru, Bolivia, Argentina, Paraguay and Uruguay.

Although the law was approved six years ago, the final legislation was only recently approved.

Donagaray said that the Association expects to see most development on the borders of Argentina, Paraguay and Uruguay. More specifically, he is looking at the big players to

compete in Santana do Livramento (twin city of Rivera in Uruguay), Foz do Iguacu (close to Puerto Iguazu in Argentina and Ciudad del Este in Paraguay) and Uruguaiana (adjacent to Paso de los Libres in Argentina but close to the Uruguayan towns of Bella Union and Artigas).

Although Donagaray would not comment on which operators were looking to invest, TMI understands that Dufry, DFA and Neutral are studying investment opportunities in a number of cities. Donagaray also says that there is a lot of interest to open stores from small companies in addition to the bigger operators.

Only a few months ago, Donagaray told TMI, “All you need to apply is to lodge a bond of 2 m Reais and although this is not very much, you do need inventory, logistical solutions to get the goods to the border and some retail knowledge to run a store.”

According to ASUTIL, the Brazilian Receita Federal has confirmed that the software to control the border duty free shop system has been trialed and is ready to go and that a workshop will be held in Porto Alegre on December 7.

Donagaray confirmed that the Association will attend the event along with member companies Dufry, Neutral, London Supply and Sineriz.

“This one-day event should allow us to see how things are progressing and what the problems are. We should have a good idea how fast things are developing after the workshop,” he said.

John Gallagher

Travel Markets Insider © 2018