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Dec 23, 2004

Corozal Free Zone faces downturn

Story PictureTo supporters it’s a virtual gold mine, in which thousands of Belizeans find employment, hundreds of merchants reap riches and the Belize Government earns millions in tax revenues. For detractors it’s a haven for crooks, con artists and contrabandistas who deprive Belize’s treasury of tens of millions in customs duty. But for most Belizeans, the Corozal Commercial Free Zone is that place up north where, if they’re lucky enough to enter, they can buy a name brand tennis, bottle of Johnny walker or a tank full of gasoline…at rock bottom prices.

Janelle Chanona Reporting
It?s Wednesday morning in the Corozal Commercial Free Zone and there?s a slow but steady stream of consumers crossing the zone?s security check-point in search of tax free merchandise.

According to the CFZ?s management authority, by the end of the day approximately seven thousand pedestrians and two thousand vehicles had passed through its gates.

But business managers inside the zone are quick to point out that the big numbers are only due to the proximity of Christmas. The rest of the year actually saw a drop in sales.

In its heyday, drivers…mostly Mexican…waited in long lines to get into the zone to gas up their vehicles with cheap fuel. But today, Belizean officials say authorities from the border state of Quintana Roo have brought that practice to a halt.

Omar Ayuso, Operations Manager, CFZMA
?The opportunity that has been granted to Quintana Roo area by the Mexican Government, whereby they can fluctuate their prices to compete with the zone specifically. So we have on this side, our prices are going up and on that side they have the ability to reduce the prices. So that was one of the main attractions of the zone and that is no longer there.?

Vehicular traffic aside, according to storeowners, newly implemented and strict regulations at the Mexican border checkpoints have also led to less pedestrian traffic, putting a serious dent in their profits.

Phillip Ying, Owner, Mundo de Juguetes
?The Mexican economy is not too good. The purchasing power of the Mexican consumer has fallen. That is no doubt. But I would estimate as a whole year, we would contemplate a maximum of thirty percent less than last year. ?

Vince Waight, Manager, El Dorado Duty Free
?For this year things have dropped about thirty to forty percent. Sales haven?t been all that, but we?ve seen a little bit of increase in the Christmas time which is usual.?

Janelle Chanona
?What do you think is the overall factor??

Vince Waight
?I believe the factors with the customs on Mexican side; they have increased a lot of pressure on the Mexican purchasers. They come in here, and of course they buy a lot of stuff but they take it away as soon as they reach the border.?

Girish Nagrani, Manager, Belagio
?There is a lot of harassment going on in the Aduana. They are not allowing the people to carry more than fifty dollars U.S. worth of stuff with them. Yes, there have been negotiations going on with them and hopefully it sorts out the matter. We?re just asking them to open up the duties so they can carry the stuff across the border.?

Omar Ayuso serves as the Free Zone?s operations and marketing manager. He contends that bridging this divide of dollars and sense can only happen between Belmopan and Mexico City.

Omar Ayuso
?It?ll be a concerted effort between the ministries of finance, trade and industry, departments like BELTRADE and Customs. Because what has happened largely is that the Mexican Chamber of Commerce has been the one that has lobbied the authorities on the other side and the resulting effect has been the restrictions they have placed on the Mexican shoppers. So we have to kind of react to that and attack it where it can make a difference which is in Mexico City.?

Less money in the zone has highlighted other realities, like rent. Store owners say making rent is their biggest expense as they must pay as much as five thousand U.S. dollars a month for a stall in one of the zone?s many plazas.

Phillip Ying
?During the boom time of 2000, 2001, 2002 everyone wanted to rent stores and there are not too many stores so the rent went up sky high.?

?We came down from three thousand five hundred U.S. dollars per month to three thousand and then we renegotiated to two thousand seven hundred and then to two thousand five hundred and two months before I squeezed to two thousand three hundred. But I shall try my best to squeeze down more on the rental payment part.?

Back on the ground, another glaringly obvious issue that?s threatening the financial viability of stores in the zone is the fact that many of them sell exactly the same products for similar prices. Management says the situation has led them to push for more diversification in 2005.

Omar Ayuso
?There is a certain saturation of the market and we?ve kind of seen that coming. In fact, earlier this year, we imposed a moratorium on the formation of companies so as long as they were looking at going into the same type of products. So we are encouraging a diversification. In fact we want to move a little more to some light manufacturing and assembly, more than just general merchandise type of store.?

And even though Mexican shoppers have other options at home, Belizean business owners say the mall was only a flash in the pan.

Girish Nagrani, Manager, Belagio
?I would say it?s been a blessing in disguise for us because the people have gotten to compare the prices of the same stuff that are in Mexico, with the duty and the taxes with the ones that are over here.?

But even as management points to strong investor confidence and businesses profess optimism, it?s clear that the Corozal Free Zone is feeling the pinch of an unstable global economy and come 2005, as in the rest of the country, it will be survival of the financially fit.

According to the Commercial Free Zone Management Agency the ten percent tax on fuel and one point five percent social fee on other goods entering to zone, brought government over four and a half million dollars in 2003.

Viewers please note: This Internet newscast is a verbatim transcript of our evening television newscast. Where speakers use Kriol, we attempt to faithfully reproduce the quotes using a standard spelling system.

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