Panama Prices Stifle Southern Stores

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Happy shoppers can buy Costa Rican products in Panama at much lower prices than in Costa Rica, reported the leading Spanish-language newspaper La Nacion this week.

The competition is strangling some Costa Rican stores in the southern Zone immediately across the border from Panama, the paper added. This condition exists not only with home appliances, clothing and sports shoes but in food produced in Costa Rica.

In some stores in Ciudad Neily, not far from the border, some Costa Rican stores have laid off nearly a third of their personnel. The situation got worse about a year ago when a new shopping mall, known as City Mall, opened just across the border in Panama.

City Mall was the first on that side of the border to sell groceries, meat, vegetables and fruit as well as clothes, shoes and appliances, according to La Nacion. Not only that, but it boasted the first McDonald's restaurant in the zone.

To meet the challenge of this competition, the traditional Jerusalen store nearby expanded to become Jerusalen Mall containing a Burger King and a Subway. Both carried on the Panamanian tradition of undercutting Tico prices, Pablo Valle, president of the Paso Canoas Civic Committee told the paper.

At City Mall, for example, the paper found that Costa Rica-produced Dos Pinos skim milk cost only $1.35 per box (about 688 colones) whereas in the Costa Rican town of Ciudad Neilly, the same milk costs 781 colones.

A can of Sardimar light tuna packed in water sells for only $1.25 (about 638 colones) at Jerusalen Mall but in Ciudad Neily goes for a hefty 1,729 colones in Costa Rica. The Sardimar plant is in Puntarenas, Costa Rica.

Even gasoline is more costly north of the border: The three Panamanian stations across the border charge the equivalent of 1,928 colones per gallon while the Costa Rican price is 2,427 colones per gallon. This leads Ticos to top up in Panama.

Dos Pinos cream cheese comes at 682 colones per carton at city Mall, 791 at Jerusalen but 1,179 in Ciudad Neily. The paper reported that this price differential not only impacted commerce at Paso Canoas just inside the Costa Rican border but in Tico towns such as Ciudad Neily, San Vito de Coto Brus, Golfito, Palmar and Bueno Aires.

Minor Loaza, vice president of the Southern Zone Chamber of Commerce, estimates that the sale of not only groceries but even hardware has dropped 50% in the last year on the Costa Rican side.

Although it takes him an hour an a half from his home at Playa Zancudo every two weeks, Luis Felipe Moreno told the paper that it pays to shop in Panama. Even if he buys only 40,000 colones worth of groceries, he saves at least 15,000 buying there. He saves another 10,000 when he fills up at a service station for the trip back.