Published: 26th of January, 2023. Guyana, South America. Guyana News.Last updated: January 27, 2023 at 1:32 am
Every day, hundreds, sometimes thousands, of Brazilians drive over the Takutu River Bridge into the remote border town of Lethem to Guyana’s south. On any given day, you can easily spot about 50 Brazilian cars along Lethem’s Commercial center. On the weekends and when there’s a national holiday in Brazil, you are likely to see an estimated 500 Brazilian cars in the town of Lethem. Each car would carry an average of 4 persons. Most of these cars would be seen parked in front of Chinese stores, some in front of restaurants, and others at hotels.
But what is the real reason so many Brazilians drive over to Lethem every day? How long do they stay there? Which cities in Brazil do they come from? And how does this benefit the Guyanese economy? We’ll explain in this article. This publication interviewed a number of Brazilians to bring you the scoop.
First off, the main reason that so many Brazilians visit Lethem each week is not tourism. While seeing a new place and crossing the Takutu River Bridge might be a part of the game for Brazilian travelers to Guyana, tourism is not their primary objective. The real reason for most Brazilians visiting Lethem is…you guessed it…business and commercial reasons. And no, they are not bringing Brazilian goods to resell in Guyana.
Hundreds of Brazilians drive over to Lethem every day to buy cheap Chinese products. Bear in mind that I said “cheap,” not “inferior.” They come from as far as Manaus, Amazonas and the state of Para – as far as 24 hours’ driving from the border town of Lethem – to shop from Chinese stores and go back home with their merchandise. Upon arriving in Lethem, most of them shop and leave Lethem the same day, resting in hotels in the border towns of Bonfim or Boa Vista. Only a small fraction of Brazilians choose to stay in hotels in Lethem because hotel cost in Brazil is much lower than in Guyana.
So what do Brazilians do with the merchandise they shop from Chinese stores in Lethem? Do they use it themselves or do they sell it back to others in Brazil. The answer is both. Some families come to shop items from Chinese stores for their personal use, but the vast majority buy to resell in Brazil.
And they resell it “under the table.” That is, under the noses of the Brazilian tax enforcement officers. Technically, it would be illegal for Brazilians to purchase Chinese goods in Lethem and resell it in Brazil without paying the necessary import duties. But if they paid the import duties, they couldn’t resell it because the import duties would send the cost flying through the roof. This is because Brazil taxes imports extremely high in order to discourage imports and encourage self-sufficiency – a somewhat childish economic policy that sounds plausible in theory but doesn’t really do much in practice.
So how do Brazilians circumvent the import tax system and create a lucrative business reselling Chinese products in Brazil? The answer is “consumer quantity.” The Brazilian government allows each Brazilian to take over 3 of each item tax-free to Brazil. 3 is the consumer quantity limit. So, if one car brings 5 persons, each of those five persons, for example, can legally take over 3 Chinese drones. So technically, a car of 5 persons can take over 15 drones. And there is no limit to the number of different items they can take. Further, the border is poorly monitored. Lethem and neighboring Bonfim is considered a “free zone” and only occasional spot checks are done to enforce import regulations and deter criminal activities. Further, Brazilians do not need to show any documents to enter the “free zone” of Lethem. And upon return, their cars are hardly, if ever, stopped and searched. In this way, Brazilians stuff their cars chock full of items that they take back to resell in Brazil.
But a car trunk full of products is still a relatively small amount of products. This way, they do not attract the attention of the tax enforcement officers at their homes. And if they do, the losses wouldn’t be that huge. Brazilians who do business buying Chinese goods in Lethem and reselling in Brazil visit Lethem an average of about 2 times per month to restock. Most Brazilians create Instagram pages and other online marketing methods to sell their Chinese products. In this way, Brazilians create a lucrative small business buying cheap Chinese products from Lethem and reselling it in Brazil.
So why do Brazilians buy cheap Chinese products when Brazil is known for making the highest quality products at an affordable price? Part of the answer is saving money. Some people just want to save money, and they wouldn’t mind sacrificing quality to save dollars. In any given demographic, some people would naturally choose quality over low cost, and some the other way around. With a population of over 200 million, you’re bound to find enough in Brazil who would sacrifice quality to save money.
But at the same time, Brazilians mostly or perhaps exclusively purchase those products for which Chinese businesses have the competitive advantage over Brazilian manufacturers. And some of these items may be a higher quality at a lower cost. These include children’s toys, drones, tools, innovative devices, and kitchen utensils. Brazilians are less likely to purchase items such as cosmetics and clothing from Chinese businesses.
While the trading takes place principally between Chinese and Brazilians, Guyanese living in Lethem and the country in general still benefit. For example, hundreds of Guyanese living in Lethem are employed in Chinese stores in Lethem’s commercial center. Hotels earn revenue when Brazilians choose to spend the night in Lethem. And restaurants in Lethem are always busy due to the influx of Brazilian visitors.