A Shopping Spree at Borders Three.

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Author: Luxner, Larry

FOR YEARS, TWO WORLD-class attractions have lured tourists to South America's famed "Triple Frontier," the place where Argentina, Brazil, and Paraguay meet: the majestic Iguaçu Falls and Binacional Itaipú, the world's largest hydroelectric dam.

These days, a third attraction vies for attention as tourists stream across the border from Brazil into Argentina: Puerto Iguazú Duty-Free.

Over a thousand people a day visit the sprawling border shop--which covers nearly an acre on a huge tract of land adjacent to the Tancredo Neves International Bridge and just before Argentine customs.

Some shoppers are drawn by the building's futuristic architecture; others are simply looking for bargains on name-brand perfumes, cosmetics, liquor, and other luxury goods. Either way, the venture has clearly been a winner for London Supply, the Argentine company that owns the bustling duty-free concession.

"Currently, we're living in a paradise," says London Supply's commercial director, Francisco Heredia Lafuente. Adds store manager Marcelo Beisso: "It's like a pilgrimage here. During Holy Week, there's a line of buses waiting to enter our parking lot. One day last year, we received fifteen hundred people in three hours."

Puerto Iguazú Duty-Free's outer structure is graced by a dozen fountains ringing the entrance. Passing via black marble steps through an enormous foyer, tourists are greeted by an Argentine government tourism office, a Telecom Argentina kiosk, and an Internet station that resembles the lunar module.

Inside, a soaring white ceiling encompasses eight distinct departments ranging from electronics to liquor to accessories. Along one high wall, ten clocks show the current time in Puerto Iguazú, Cape Town, Calcutta, St. Tropez, Phuket, San Francisco, and other randomly chosen cities. In the middle of all the action sits a café-bar with mahogany floors, under a huge video screen that plays music videos all day long.

Heredia says that, thanks to an unforeseen jump in regional tourism, London Supply has nearly recouped its $12 million investment in the border store only three years after its inauguration.

"The recovery of the Argentine market happened faster than we expected, and mainly for two reasons," he says. "Argentines aren't traveling outside the region as much, and more foreigners are coming."

The Argentine economy is finally rebounding, following the country's worst depression in over a century. In 2004, Argentina's GDP expanded by 8.8 percent, with further growth of 6.5 percent expected this year.

This means more money in the pockets of tourists, 870,000 of whom visited the Argentine side of Iguaçu Falls last year. The Brazilian side, meanwhile, registered 980,000 arrivals. More than a million people will likely visit each side this year.

Faisal Saleh is president of the Instituto Polo Internacional Iguassu, whose mission is to boost tourism to the region, which consists of nine cities in three countries: Puerto Iguazu, Puerto Esperanza, Puerto Libertad, and Wanda (Argentina); Foz do Iguaçu (Brazil); and Ciudad del Este, Hernandarias, Minga Guazú, and Presidente Franco (Paraguay).

Together, these nine cities have nearly 800,000 inhabitants. But rumors that the region may be linked to Islamic fundamentalism and possibly terrorist groups have hurt local businesses, many of which are owned by Arabs like Saleh, who runs an electronics shop in Ciudad del Este.

"We saw a steep drop lift tourism] in recent years," says Saleh, "but it's coming back now, and last year, we received two million tourists. We're expecting a 15 percent jump in tourism in 2005.

"Traditionally, Paraguay has never had any development plans for this zone, which we consider essential for tourism. Now things are changing," he says. "Almost $25 million in new tourist infrastructure is being invested this year, and city officials are making Ciudad del Este more beautiful by removing street vendors and creating parks."

For its part, London Supply has spent hundreds of thousands of dollars on advertising and promotion--plastering nearby highways with billboards, handing out pamphlets at area hotels, and even providing buses to take tourists across the Argentine-Brazilian border.

Asked why that border, which sees six million crossings a year, never had a duty-free store up until now, Heredia says, "because it didn't occur to anyone before."

PHOTO (COLOR): Shoppers jam busy streets of Ciudad del Este, Paraguay, which is gearing up for increased tourism

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By Larry Luxner