Inbound shopping still a summer away
Published:Friday | December 24, 2010 | 12:00 AM
Investors being sought to develop, operate shops
Dionne Rose, Business Reporter
It will be at least six months to a year before the facilities for inbound shopping are ready, the operators of Jamaica's two major airports said this week, days after Tourism Minister Edmund Barlett said the legal green light had been secured.
Both Norman Manley International (NMIA) and Sangster International are hunting for investors to build out shop space.
Mark Williams, vice-president of commercial and marketing at the Airports Authority of Jamaica (AAJ), operators of NMIA, said a combined 1,021 square feet in separate locations have been set aside for two shops. The investor will be required to pour about US$30 million (J$2.6b) into developing and operating the facility, he said. The stock for the shops is counted in the investment.
Bids were invited last Sunday, but the entire process to the commiss-ioning of the shops is likely to run to mid-year, Williams said.
The Tourist (Duty-Free) Shopping System Act was amended earlier this year to allow incoming travellers - air and sea - access to purchase duty-free items before reaching Customs. The legislation became effective on December 15.
Purchasers who buy goods coming in would not pay duty at Customs on arrival, but if they still possess the item on departure may be required, then, to pay tax on it.
The Airports Authority said it has been planning for the change in legislation for some time.
"This is something that we have been waiting on," said Williams. "It will increase our competitiveness as an airport and give our passengers access to shop duty free."
The AAJ's request for proposals asks for an investor to design and operate duty-free speciality retail concessions on the arrival and departure sides of the airport.
"It is going to be a walk-through concept," said Williams.
The shops will offer items such as tobacco, cosmetics, fragrances, electronics, jewellery, leather goods and confectioneries.
The AAJ is either likely to offer the investor a rental contract, or negotiate a percentage of the shop developer's gross margin, the vice-president said.
The deadline for submission of proposals is February 18.
MBJ Airports Limited, the operators of Sangster International, said it also issued a request for proposals earlier this month for the operation of 1,000 square feet of space for speciality retail concessions on the arrival side of the airport.
That encompasses just one shop, it said.
MBJ's Chief Commercial Officer Elizabeth Scotton told the Financial Gleaner that develop-ment of the space would not commence before June/July, and that the area would not become operational before the fall of 2011.
"It is something that we have anticipated and have been pre-paring for since the MBJ took over operation of Sangster International Airport in 2003," she said. "We are very pleased, and we are looking forward to it."
MBJ says the investor will be offered a rental contract, priced per square foot of space, plus a percentage of revenue.
According to Danville Walker, commissioner of customs, the changes would boost the economy if the expanded duty-free policy performs as intended to grow the shopping market.
"If the shopping industry in Jamaica is comparable to either Cayman or the British Virgin Islands, it could easily replace the bauxite industry during its best years," he said.
Walker said, however, that he was unable to quantify the level of revenue that inbound duty-free shopping could bring to the coffers, as there was no historical data from which to base projections.
"We hope that it will take off," he said.
But Indru Dadlani, a past vice-president of the Inbond Merchants Association, said the industry is valued at approximately US$100 million annually (J$8.6b), and is predicting that with the amendments to the legislation, revenue could double within the next 18 months.
The legislation "has put Jamaica on equal footing with any tourist destination," he said. "You will now have lots of companies looking at Jamaica with a microscope."