The first Brazilian border duty free shops could open by the end of the year, according to ASUTIL’s Secretary General.

José Luis Donagaray provided an update during the duty free association’s second media webinar earlier this week.

In the first webinar which took place in September, Donagaray indicated he did not anticipate any of the stores opening before March 2019.

But with the Department of Federal Revenue of Brazil (Secretaria da Receita Federal do Brasil) releasing the software required to operate the stores and interested parties being able to apply for temporary permission to run them, the first openings could be sooner than expected.

SOFTWARE RELEASE

Donagaray said: “Brazil has released the software to operate the stores. Not all aspects have been finalised, but it has been released. Maybe some local operators will open small 30sq m or 40sq m outlets [by the end of the year — Ed], but there remains plenty of work to do.”

The opening of the first Brazilian land border duty free shops moved a step closer when legislation was finally approved earlier this year, as revealed by ASUTIL President and Dufry General Manager Brazil and Bolivia Gustavo Fagundes during this year’s inaugural Summit of the Americas.

Under the approved guidelines, border stores can be established in any of the 32 border twin cities (see map below) that border variously with Uruguay, Paraguay, Bolivia, Peru, Argentina, Colombia, French Guiana, Venezuela and Bolivia.

ONE-DAY WORKSHOP

Further information on the Brazilian border situation should be available following the upcoming Department of Federal Revenue of Brazil meeting in Porto Alegre on 7 December.

“We will attend the workshop along with representatives from all the major operators including Neutral, Brasif, London Supply and Sineriz,” continued Donagaray.

“This one-day event should allow us to see how things are progressing and what the problems are.”

One issue that may or may not be discussed at the upcoming workshop is the possibility of suppliers and brands being able to sell the same tax free products to land border duty free operators as they would to domestic retailers.

Donagaray, who also revealed during the webinar that ASUTIL’s General Assembly will take place in early December, explained: “Some stores operating in the cities and domestic market are claiming to the government they will be forced to contend with land border duty free  stores selling the same products as them without tax.

“This is a big problem and at the moment it is not clear what will happen. Issues like this need to be managed right from the outset.”

Looking ahead to next year, Donagaray believes the big land border duty free businesses will be located in three cities in particular. These are Santana do Livramento, Uruguaiana and Foz do Iguaçu. “All the big players in Latin America and elsewhere are very interested,” he remarked.

BAGGAGE ALLOWANCE

In other regional news, passengers travelling through Argentinian airports can now benefit from an increased baggage allowance of $500 worth of goods, up from the previous $300, mirroring Brazil and Uruguay.

This follows the raising of the inbound duty free allowance in the country (also from $300 to $500) at the end of last year.

Donagaray commented: “This is a good thing for retailers because the moment you increase allowances, whether for duty free or baggage, you see more movement. When we are talking about duty free, it is what you buy in arrivals. When we are referring to baggage, it is about what customers buy in departures.”

Regarding the current political and economic prospects for the Latin American region, the election of new Brazilian President, Jair Bolsonaro, has seemingly created an element of positivity in the country.

“People are starting to have confidence in the new government and the new President who is due to be sworn in on 1 January 2019,” said the ASUTIL Secretary General.

“We know from his economic strategy that he will be try to decrease the fiscal deficit and open the economy a bit more.”

Back in Argentina, where the country’s senate approved an austerity budget for 2019 earlier this week, an economic recovery might not be too far away.

Donagaray said: “We expect an economic recovery by March or April next year. The peso is decreasing in value against the US dollar, but remains very high.”

SUMMIT OF THE AMERICAS

Regarding next year’s Summit of the Americas, he added: “Almost all the speakers are finalised and we expect the conference programme to be in place by the end of the year. Registration is already open and spaces on the floor and in the suites are gradually being taken up.”

Updating the ASUTIL website is also a priority. “We are trying to have more exclusive space for members and in Q1 or Q2 next year we will also have a special section for press.”