sign in sign up
<<
Home , Cif, Cup Noodles, Instant noodle, Instant soup, Maruchan

COMMERCIAL REPORT: INSTANT MARKET () IN PANAMA

EMBASSY OF THE REPUBLIC OF IN COLLABORATION WITH MARKET RESEARCH CONSULTANT PANAMA CITY 2020

1

INDEX

1. INTRODUCTION ...... 4

1.1 Objective ...... 4

1.2 Methodology ...... 4

2. EXECUTIVE SUMMARY ...... 4

3. SUPPLY ANALYSIS ...... 5

3.1 Packaged ...... 5

3. 2 Markets ...... 5

3.3 Trend Information ...... 6

4. NOODLES CONSUMPTION ANALYSIS ...... 7

4.1 Market Characteristics ...... 7

4.2 Consumers ...... 7

5. DISTRIBUTION CHANNELS ...... 9

6. INSTANT PRICES REFERENCES ...... 9

7. FOREIGN TRADE ...... 11

7.1 Imports ...... 11

7.2 Panama – Indonesia Commerce ...... 12

8. MARKETING FACTORS ...... 13

8.1 Sanitary Registry ...... 13

8.2 Certificate of Free Sale (CLV) ...... 13

8.3 Import declaration ...... 14

8.4 Sample Shipping ...... 14

8.5 Regulations and technical legislations ...... 14

8.6 Labeling ...... 15

8.7 Tariffs ...... 15

8.8 Tax on Transfers of Corporal Goods, Furniture and Services (ITBMS) ...... 16

8.9 Costs and Prices ...... 16

9. REFERENCE COMPANIES ...... 17

2

CHARTS

Chart No. 1:

Consumer Sale Prices of Various Instant Noodles Brands ...... 10

Chart No. 2:

Reference Prices for Instant Noodles – Riba Smith Supermarkets ...... 10

Chart No. 3:

Value (In Dollars) of the Import to Panama Per Year

According to Specific Tariff Item and Country of Orign ...... 11

Chart No. 4:

Weight and Value of Imports to Panama Per Year,

According to Tariff Item from Indonesia ...... 12

Chart No. 5:

List of Technical Standards Related to Products

And Industries of Flours and Cereals – Pasta ...... 15

Chart No. 6:

Instant Noodles Tariff ...... 16

Chart No. 7:

Pasta Producers in Panama ...... 17

Chart No. 8:

Buyers / Importers of Instant Noodles in Panama ...... 18

GRAPHS

Graph No.1:

Annual Availability of Pasta per Habitant ...... 7

3

1. INTRODUCTION

1.1 Objective

The purpose of this study is to analyze the instant noodles market and the imports of this product from Indonesia. The following tariff items have been chosen as the main items during the study: 1902 (Pasta, including cooked or stuffed (with meat or other substances) or prepared in other ways, such as spaghetti, noodles, macaroni, noodles, lasagna, gnocchi, ravioli, cannelloni, , even prepared) and 1902.30.00 (Other pasta. Noodle )

1.2 Methodology

Among the main sources consulted to obtain information on these tariff items, these are included: the statistical data of the Comptroller General of the Republic of Panama and the National Customs Authority (ANA). In addition, different institutions were consulted, such as the Panamanian Food Safety Authority (AUPSA), the National Directorate of Technical, Industrial Standards of the Ministry of Commerce and Industries, Authority for the Defense of Competition and Consumer Affairs (ACODECO) and the National Customs Authority was consulted.

The data presented in this research is based upon the information available during the research process and reflects the lack of updated information and limited access to certain institutions.

2. EXECUTIVE SUMMARY

Instant soup is an industrial preparation that offers cooked dehydrated noodles in containers. They are easy to prepare since their maximum cooking time is only five to three minutes, although in some of them it is enough to just add boiling water to a mass of pre-cooked noodles to which the dehydrated is incorporated. They come in presentations offering different options such as , meat, chicken, , etc. Nowadays, society has acquired the habit to substitute meals for easy-to-prepare foods, including products such as instant noodles which can be find easily in the market due to the high variety.

Southeast Asian and Asian cuisines include a wide variety of noodle with different types of fish broth, seafood and meat, and different types of noodles depending on the country, these being a differentiating element of Western cuisine compared to the Eastern cuisine.

The product is a relatively accessible that also gives some security in terms of brand, that is, people believe that these soups are nutritious depending on what they spend. Moreover, the efficient distribution of the product is also important as it is not difficult to find an in the remote villages of the country. The expansion of the instant soup distribution business has also reached vending machines, which usually offer products such as soft drinks and juices, cigars, and sweets.

The consumption of these soups is most common of a medium social extract, mainly among students and office workers. Such people prefer this meal because they solve a matter of time availability and low spending. There is nothing else available in the market, at least not that they

4 associate in terms of well-being and health; this happens because the brand image is positive in terms of hygiene.

Currently, the category is mostly occupied by the offer of oriental instant soups, which are convenient and tasty, though contain a poor nutritional content with a lot of sodium.

3. SUPPLY ANALYSIS

3.1 Packaged

This segment is divided into the , Noodles, Prepared/Instant, Short and Long sub- types. According to marketing research from companies such as Dichter & Neira, in 2018, in Panama, approximately 7 million kilos of pasta were sold with a value of 15 to 16 million dollars. The category presented stability in volume and a 4% growth in value. The main national competitors were: Pastas La Suprema, S. A.; Products La Parmigiana; Gold Mills, S. A.

3. 2 Markets

Most sales (65%) are made in Panama City and its surroundings, while the remaining (32%) in the countryside (mainly in Chiriquí and Chitré). This product is marketed through 4 channels, depending on the type of customer: Wholesalers, Supermarkets, Traditional and Industrial/Institutional channels. In 2018 wholesalers represented about 1% of the sales, supermarkets 40%, traditional (which include grocery stores, shops, and kiosks) 34%, and institutional the remaining 16%.

According to commercial reports from Dichter & Neira, approximately 9,000 customers are served in the Panamanian market. The Companies work with an active advertising presence, a trade marketing department dedicated to supporting trade, which added to the sales and distribution force and the power of the portfolio, has a numerical distribution close to 98%. The production plant and corporate offices of these companies are in Panama City. The companies have distribution agencies nationwide to serve the national market. The parent company in Panama covers from Arraijan to Anton, as well as Colon and Darien. David's subsidiary covers Chiriquí and Bocas del Toro; the subsidiary in Aguadulce covers the Central Provinces.

Although Panama's commercial market is small, it offers great business potential due to its purchasing power and opening to new products. It shows two very marked socioeconomic segments: the upper class and the lower middle class. The first one prefers the big recognized international brands and gives more importance to the quality than to the price, it has great influence of the customs and tendencies coming from the and Europe, so it usually buys in exclusive shopping centers. The second, whose product acquisition is more influenced by price than quality, purchases in low-price shopping centers and large department stores. The market of sale in this segment is dominated by the Hebrew merchants, and a strong presence of Chinese products is observed.

According to the Ministry of Labor, from the point of view of the consumer, this market has consumers with a legal minimum income of around USD 671 / month, considered the highest in Latin

5

America. This level of income allows the average Panamanian consumer to cover a food basket composed of 10 food groups and 50 products estimated to contain the calories needed for an average individual. The estimated cost of this basket in Panama is USD 305.96.

On the other hand, one must consider the strategic position of Panama and assume it as a gateway not only to the Central American commercial market. Therefore, it is necessary to consider that the pace of life and business in this country is slower, the deadlines are higher than usual, the business counterparts do not decide immediately and work schedules are more reduced (the schedule of most public and private offices are open from 8:00 a.m. to 4:00 p.m.).

Likewise, the culture, customs, and idiosyncrasies of the people of that country should be considered. We must remember that the American influence is strong, so much so that most consider that American products and brands are of better quality than a similar product from another country.

3.3 Trend Information

This segment has maintained growth dynamics during the last three years because of the country's economic development and the corresponding positive impact on consumption levels. In 2018 there was an increase in value of the categories but not in volume, because of inflationary price increases.

The economic opening trade policies facilitate the arrival of imported products to compete in the main process categories that intensified during 2013 and poses additional challenges for the administration in relation to maintaining competitiveness due to cost increases. Additionally, innovation and creation of new market segments are causing variations in the demand for products that are manufactured and distributed. Inflation pressure is creating a strain on the costs of local production factors, affecting competitiveness vis-à-vis imported producers, who do not have these costs and are benefited by the exchange situation of their countries of origin.

Finally, it should be noted that the limited supply of products caused by poor industrialization in the country has caused high brand loyalty by consumers. This feature favors some companies in the sector because it has brands of high remembrance, tradition and support that are valued by Panamanians and that lie with constant development and visibility will continue to strengthen in the future.

6

4. NOODLES CONSUMPTION ANALYSIS

GRAPH No. 1 Annual Availability of Food Pastas per Habitant, in the Republic 2010-2017

5 4.5 4.5 4 3.9 4 3.5 3.5 3.5 3.4 3.5 3.1 3

2.5

2

1.5 Kilograms Kilograms per Habitant 1

0.5

0 2010 2011 2012 2013 2014 2015 2016 2017

Source: National Institute of Statistics and Census of the General Comptroller of the Republic.

In Graph No. 1, it is observed that the annual availability of food pasta per habitant in the republic has varied throughout the years. The data shows that for 2017, there were 3.4 kilograms of pasta available per habitant.

4.1 Market Characteristics

Customers are influenced in their experience with instant / prepared food, through several ways. Time is one of the factors. The time that the consumer is willing to invest to prepare and eat their food affects the assessment and experience of the product. It also has to do with the general time availability in your life. The level of involvement is usually low in the food preparation process. It can vary, through the following ways: microwave, add hot water, add water and heat, heat in a pot and stove, etc. The inclination to choose products based on their nutritional content affects the purchase decision and the valuation of the product. The consumer also prioritizes as a critical and main attribute to determine the purchase. The previous factors are affected by its price and the purchasing level of the customer. Moreover, the harmful components (chemical ingredients, preservatives, dyes, sodium level, etc.) may affect how the customer views it.

4.2 Consumers

The consumers may be divided into several segments, in order to fully understand its differences.

7

Low / Medium

It is a consumer who is not willing to spend much time preparing food in general. For this reason, it has a moderately high consumption frequency. The taste and price are the factors that matter most to you when choosing an instant meal leaving the nutritional content and harmful ingredients as secondary factors or not so much weight.

As for the levels of research in which he is involved, they limit themselves to comparing prices and looking for intense of his preference. It is a segment that transcends gender and profession: students, workers, housewives with these characteristics: price sensitive, concerned with practicality, taste and not very involved in nutritional content because they have other more pressing needs.

Medium / High

This segment is characterized by a lifestyle oriented to take care of your body, exercise and eat foods low in and calories. Therefore, they have a high interest in choosing meals (instant or not) based on nutritional content, avoiding consuming high levels of bad , too many white and calories. They tend to be narcissistic and buys individual portions to have options for himself, and not just for his family.

They care about flavor and practicality, but caloric content always has a preponderance over his choices. For this reason, they are thoroughly informed about the products they buy, in search of products related to their objectives. They are willing to pay more to get those products. Due to the wide offer for this segment their choices vary and do not always consume instant food.

Medium / Medium High

Their accelerated pace of life affects their consumption at all levels (their days start early and end late). They are a person who has little time available (for work and / or studies, etc.) but at the same time they are aware of what they buy and consume. They worry about maintaining a balance: eating well, so that their busy day can yield enough time for them, but they do not want to completely sacrifice their health in exchange for a simply practical meal.

They value the nutritional content and pay attention to food additives because they are informed and aware of the importance of eating well, without reaching the extremes. Enjoys eating in this context of balance. Questions what the products bring and reads the labels. They also value the convenience and practicality of the product. As for food, although they like to treat themselves, most of the time their habits seek and prefer the healthy options. They think that homemade food is real food, generally better, not only healthier and cheaper, but almost always tastier.

Medium High / High

The needs of this segment are dominated by the pleasure of eating well and tasty. Their sense of taste is their maximum reference for choosing products, it is because in the search to find the

8 tastiest foods, they can become very adventurous in delighting new options that promise to delight them. They are willing to pay more for a guarantee of superior taste and quality, even when consuming imported products.

This food enthusiast is interested in everything that moves around the food industry and is quite informed about new proposals, exotic flavors.

5. DISTRIBUTION CHANNELS

The value chain consists of 4 participants: 1. Manufacturer: The production and packaging plant, who will supply the distributor 2. Distributor: The distribution will manage the exclusive distribution of the brand at the local level, specifically in Panama City 3. Modern Channel: Supermarkets, Convenience Stores and Vending Machines o The target of the channel has medium high and high average income. o Three high traffic areas were identified where the segment spends considerable time either by study or work, and does not necessarily live in those areas: i. The Banking Area in Marbella ii. The Business Center in Costa del Este iii. Universities with undergraduate and postgraduate programs o The location of the Point of Sale is in neighborhoods of medium, medium / high or high socioeconomic status 4. Final Consumer: The target segment

As for the modern channel, some of the supermarkets and convenience stores in Panama are the following: • Riba Smith is a channel that seeks to serve clients of socioeconomic levels of medium / high and high purchasing power. In addition, Riba Smith promises quality products and a varied assortment. • Super 99 and Supermarket Rey targer a broader market and seeks to capture from low to high socioeconomic levels, whose focus is the price. However, there are branches with a privileged and strategic location. • Metro Plus as a convenience store adapts its concept based on the area where it is located. In the case of branches located in areas of high socioeconomic levels “Metro Plus” seeks to improve the consumer experience based on the following upgrades versus their other branches: the store space is larger, they have more product categories, more additional services, and the area dedicated to the pharmacy is larger.

6. INSTANT NOODLE PRICES REFERENCE

The following Charts No. 1 and 2 detail the prices of instant noodles brands for future reference, by certain brands and by Riba Smith’s catalog.

9

Chart No. 1 CONSUMER SALE PRICES OF VARIOUS INSTANT NOODLED BRANDS Company / Brand Product Unit Average Price CAMPBELL'S CONDENSADA - E U A: Chicken Noodle 305 g $1.61 26 oz. Chicken Noodle (737 g.) $2.72 HEALTHY - CHOICE: Chicken Noodle 425 g $2.51 - - , Chicken, Pork, Camaron, con queso y Instant Lunch otros (Cup) 64 g. $0.61 Chicken, Beef, Camaron, Oriental, Champiñon (Packet) 85 g. $0.33 TIO CHAN - PANAMA: Noodle Raven chicken flavor 85 g. $0.46 Noodle Raven shrimp flavor 85 g. $0.46 NISSIN U.S.A. Spicy Shrimp Cup 64 g $0.47 Shellfish Cup 64 g $0.47 Shrimp Cup 64 g $0.47 Orient Flavor Cup 64 g $0.45 RIKA - : Instant Noodles Pack 85 g. $0.58 Combination Instant Noodles Pack 85 g. $0.58 Instant Wo mein Pack 85 g. $0.58 Container Shrimp Wo mein 85 g. $0.96 Shrimp wo mein Pack 85 g. $0.58 GRAN Ribs – Pack 85 g. $0.41 Ribs - Pack 86 g. $0.41 Mayor Aleman - Pack 87 g. $0.41 Source: Consumer Protection Authority and Competition Defense - Department of Price Information and Verification

Chart No. 2 REFERENCE PRICES FOR INSTANT NOODLES RIBA SMITH SUPERMARKETS 2019 PRODUCT Price Shrimp And Habanero $0.51 Cup Noodles Spicy Chicken $1.05 Shrimp Soup Habanero & Lim $0.51 Shellfish Noodle Soup $0.51 Maruchan Inst Lime Shrimp $0.96 Nissin Big Cup Chicken Flavor $1.16 Chicken $1.60 Maruchan Inst California Veget $0.96 Cup Noodles Hearty Chick Flv $1.05 Cup O Big Roast Chckn $1.16

10

Maruchan Siracha Chicken $0.85 Beef And Noodle Soup $0.50 Chicken Noodle Soup Habanadero & L $0.51 Shrimp Noodle Soup $0,49 Maruchan Soups $1,55 Maruchan Inst Shrimp And Chile $0,50 Maruchan Spicy Chicken $1.45 Maruchan Sweet Sour Chicken $1.31 Cup O Big Cup Beef $1.16 Yakisoba Roast Chicken $1.60 Marucha Hot & Spicywith Shrimp $1.55 Yakisoba Beef Flavor $1.14 Rika Shrimp Noodle In Cup $1.13 Niss Bowl Noodles Hot Spicy $1.76 Noodle Rika Wo Mein In Cup $1.13 Nissin Hot & Spicy Chicken $1.76 Nissin Shrimp Hot & Spicy $1.76 Chicken Noodle Soup $0.50 Maruchan Chicken Flavor $1.55 Spicy Shrimp Noodle Soup $0.51 Source: Riba Smith Supermarket Website Product Catalog

7. FOREIGN TRADE

7.1 Instant Noodle Imports

Information retrieved from the National Institute of Statistics and Census of General Comptroller of the Republic. states that imports of Instant Noodles reached $ 3.3 million in 2018, representing an increase of $497,960 (14.9%) compared to 2017 when the amount was $2,833,804. Imports of Instant Noodles are led by China-Taiwan with an amount of $1, 413,684 for 2018 and $1,368,666 for 2017. The United States of America follows with an amount of $867,077 for 2018 and $649,804 in 2017. Third is Costa Rica with $296,638 for 2018 and $321,028 for 2017.

As seen in Chart No. 8, Indonesia did not register imports in 2017. For 2018, the sum of its imports to Panama was $11,178.

Chart No. 3 VALUE (IN DOLLARS) OF THE IMPORT TO PANAMA, PER YEAR, ACCORDING TO SPECIFIC TARIFF ITEM AND COUNTRY OF ORIGIN SPECIFIC TARIFF INCOME AND COUNTRY OF YEAR ORIGIN Other pasta. 2017 2018 BOLIVIA 59,679

11

CANADA 119 CHILE 444 CHINA () 178,834 236,896 CHINA-TAIWAN (FORMOSA) 1,368,666 1,413,684 COLOMBIA 12,160 6,522 SOUTH 355 1,087 COSTA RICA 321,028 296,638 SLOVENIA 7,072 78,296 SPAIN 67,907 95,706 UNITED STATES OF AMERICA 649,804 867,077 GUATEMALA 14,214 18,047 32,694 INDONESIA 11,178 ISRAEL 6,553 1,961 ITALY 69,444 206,569 3,046 6,764 161 PERU 17,356 18,665 12,377 666 755 11,255 TURKEY 14,742 14,048 URUGUAY 20,942 COLON FREE ZONE 426 21,731 Total 2,833,804 3,331,764 Source: National Institute of Statistics and Census - General Comptroller of the Republic.

7.2 Panama – Indonesia Trade

In Chart No. 9 below, it is observed the weight and value of imports from Indonesia to Panama in 2017.

Chart No. 4 WEIGHT AND VALUE OF IMPORTS TO PANAMA PER YEAR, ACCORDING TO SPECIFIC TARIFF INCOME FROM INDONESIA SPECIFIC TARIFF ITEM YEAR: 2017 AND COUNTRY WEIGHT (IN KILOS) CIF VALUE OF ORIGIN NET GROSS (IN DOLLARS) Other pasta. 1,214,617 1,214,617 2,833,804 INDONESIA 6,660 6,660 11,178 Source: National Institute of Statistics and Census - Comptroller General of the Republic.

12

8. MARKETING REQUIREMENTS

8.1 Sanitary Registration

All food products marketed in Panama must obtain the corresponding sanitary registration from the Panamanian Food Safety Authority (AUPSA). This registration request must be made by the importer of the product, its legal representative or the manufacturer's accredited representative (indicating the possible importers of the product in the country). It must be legalized, upon payment of $4.00 in stamps and seal tax, and must include the following information:

• Product name and description • Product description • Manufacturer's Name • Tariff fraction • Place of origin (Country, Province, City) • Name of the Importer or Applicant (RUC and DV of the company, address and telephone)

Among the documents that accompany this application, the following are mandatory:

8.2 Certificate of Free Sale (CLV)

It is issued exclusively by the health authority of the country of origin of the product, although until recently the CLVs issued by Chambers of Commerce were also accepted. In addition, AUPSA requires the diplomatic legalization of said CLV. • Qualitative - Quantitative Formula of the product. Specify each ingredient and its content including the additives used. Both the ingredients and the additives must be detailed according to the international nomenclature. • Description of the manufacturing method. Complete explanation of the transformation process that the raw material undergoes, including the storage temperatures, time, and temperature of pasteurization when appropriate. • Information regarding the conservation and biological stability of the product. It is necessary to include the method used to determine it. • Declaration of the date of production and expiration. Likewise, a description of the lot coding system and its interpretation must be included according to what is declared in the labeling of the product. • Four original product labels. They must contain the complete information required according to current legislation. • An image of the product. It can be printed or on CD. When the packaging is difficult to handle (cans, large boxes, bottles with the information recorded directly on the packaging), they must provide identical art to the original.

Once the registration request is made, AUPSA will verify the information provided and issue a certificate of registration. Since August 2015, the sanitary and / or phytosanitary registry can be done electronically on the AUPSA website: www.aupsa.gob.pa.

13

8.3 Import Declaration

Through Cabinet Decree No. 41 in its Article 115, it is stated that any person who sends goods to the Republic of Panama from outside the mail, will backup and safeguard it with the following documents: • The original commercial invoice (with the name of the place where it is established or address of the person, house or firm that sells the goods and its address, date on which the sale is verified, name of the buyer in Panama and the consignee; class, quantity and description of the goods, and the partial and total price of the goods.) • The bill of lading (air waybill, bill of lading, negotiable maritime bill of lading, multimodal knowledge, etc., as the case may be) • Phytosanitary Import License. The license must be requested by the importer in the Executive Directorate of Agricultural Quarantine, under the Ministry of Agricultural Development; Executive Directorate of Agricultural Quarantine of the Ministry of Agricultural Development (MIDA). Normally it has a validity period of 90 days. • Phytosanitary certificate issued in the country of origin.

Finally, each import operation of food products must be notified to the National Standards Department of AUPSA through the Food Import Notification System (SISNIA) 48 hours before the product enters Panama. In the case of packaged products, it must include the Sanitary Registry Number.

8.4 Sample Shipping

The maximum amount allowed for the shipment of samples is 5 kg. In addition, the importer must notify the National Board of Standards of AUPSA through the Food Import Notification System (SISNIA) of the shipment. The sample submission notification form is available on the entity's website. For shipments of quantities greater than 5kg the notification must be accompanied by the following documents: • Copy of the Notification Evaluation Request submitted to the AUPSA. • Original response document of the Notification request issued by AUPSA authorizing the entry. • Sanitary certification issued by the competent official authority of the country of origin, or declaration of the dispenser on letterhead and notarized that expresses that the product does not represent sanitary and / or phytosanitary risk, as the case may be.

8.5 Regulations and Technical Standards.

The Ministry of Commerce and Industries of the Republic of Panama establishes the legal and technical parameters for the Elaboration and Regulation of Standards and Technical Regulations, within the international guidelines. In addition, through the Panamanian Commission for Industrial and Technical Standards (COPANIT) attached to this ministry, specific functions are developed for the adoption of Industrial and Technical Standards (REPEALED, Law 23 of July 15, 1997).

Although the standards are voluntary, it may be convenient for the exporter to consider the following standards related to paper and cardboard products in use for packaging or containers and /

14 or the industries that use these products (see Chart No. 10). The information in these standards can be expanded through the Department of Industrial Standards and Technology of the Ministry of Commerce and Industries.

Chart No. 5 LIST OF TECHNICAL STANDARDS RELATED TO PRODUCTS AND INDUSTRIES THAT USE FLOURS AND CEREALS - PASTA

TECHNICAL YEAR TITLE SECTOR REGULATION 7-424-98 1998 Flours and Food Technology Cereals. Pasta Source: General Directorate of Industrial Standards and Technologies (DGNTI)

8.6 Labelling

In the labeling of food and beverages, both the decimal and English systems are handled, and it is necessary to specify in Spanish those goods in which doses or precautions for use must be recorded. In addition, the name and address of the manufacturer, the ingredients, the expiration date, the production lot, the content and condition of the product (liquid, gaseous, etc.) must be visible. If the product is in transit, the load must be clearly labeled with that warning.

The labeling of food products imported by Panama must contain the following information: • Name of the manufacturer • Address and country of origin • Due date • List of ingredients or components • Lot Number • The state of the product, for example, liquid, powder, etc.

The labeling must follow the CODEX Alimentarius standards of FAO and WHO for food, food additives and food packaging, as shown below:

8.7 Tariffs

As of January 1, 1998, a tariff reform was implemented in Panama, as part of the commitments made to the World Trade Organization. The harmonized system for the designation and codification of goods is adopted. The national tariff ceiling for imported goods is reduced, except for a few agricultural goods that were part of an exclusion list.

The tariff reform implemented was much deeper than what was agreed with the WTO, in such a way that the initial proposal to establish the tariff ceiling in 35-30% at 5 years ended up being 15%. The tariffs on agri-food products vary considerably depending on the type of food or drink in question. Normally the ad valorem tariff (ADV) is between 10-15%. However, there are other articles that, because the local industry is protected, increase the applicable percentage, as seen in Chart No. 11.

15

Chart No. 6 INSTANT NOODLE TARIFF TARIFF ITEM DESCRIPTION CUSTOMS ITBMS LAW Tax 1902.30.00 Other pasta. Noodle Soup 10% 7% Source: National Tariff 2017

8.8 Tax on Transfers of Corporal Goods, Furniture and Services (ITBMS)

In addition to tariffs, there are certain products such as alcoholic beverages that must be paid when the ITBMS enters the country. This rate taxes the value of imports and sales made by commercial and industrial establishments according to the value-added technique. Food is exempt from this tax.

8.9 Costs and Prices

In Panama, the US dollar has and maintains its parity with the local (Balboas) since 1904. Thus, all commercial transactions and financial operations are denominated in dollars. There is no in the classical sense and monetary policy is marked by the Federal Reserve of the United States.

When analyzing prices, one must consider the following components: • High transport and customs clearance costs: no Panamanian distributor of food products imports full loads (FCL) but consolidates containers with references from several producers. Once in Panama, the cost of consolidating 1 pallet is approximately USD 200, while also having to add USD 250 for the import clearance and USD 150 for the internal transportation Colón - Panama, if necessary, according to Customs Authority. • Distribution margins: The high concentration of the distribution of food products has favored that the commercial margins remain relatively high between 20 - 35%.

16

9. REFERENCE COMPANIES

Chart No. 7 PASTA PRODUCERS IN PANAMA Company Address Tel. Email Website

Pastas La Domingo Díaz 217-2233 [email protected] http://www.epa.com.pa/# Suprema, S. A. Ave., Panama marcas-sub

Productos La Panamerican 2686361 d.pma@parmigiana. https://parmigiana.com.p Parmigiana, S. A. Hwy., Santiago com.pa a/

Gold Mills 65 Street West, 275 7000 [email protected] www.goldmills.com.pa Panamá Panama .pa

Pastas Frescas, Via España and Via (507)223- pastasfrescas2010 http://pastasfrescas.net/i S. A. , next to 6868 / 264- @hotmail.com ndex.php Arrocha Pharmacy 3030

Pastas Frescas Plaza 386- info@pastaspanaro http://pastaspanaroma.co Panorama, S. A. Conquistador, 2740/386- ma.com m/ store # 78 2741 Domingo Díaz Ave. Santa Clara (in front of Villa Lucre)

17

Chart No. 9 BUYERS / IMPORTERS OF INSTANT NOODLES IN PANAMA Company Address Email Tel. Website AGENCIAS BENEDICTO 89 St., Indurstrial Harry Eno jwong@grupobwon WONG S A Neighborhood, Bethania, Panama g.com 236-3444 AGROINDUSTRIAS ALIMENTICIAS DE VERAGUAS S A MT FOOD S.A Milla 9 Main, Transistmica St. 395 -4168 unitranspanama@g UNI TRANS S A El Dorado, Panama, Panama mail.com 302-6547 CHUNG YE E HIJOS S A José María Torrijos Ave. , Panamá 392-6860 INVERSIONES GENERAL UNION S A 16 St., Rio Abajo 2218810 CORPORACION INTERNACIONAL http://www.cialime

DE ALIMENTOS Plaza Las Mañanitas rafael@cialimentos 291-0300 ntos.com/ Boyd Roosevelt St., Ojo de Agua, LA GRAN San Miguelito, Diagonal to Hopsa, FORTUNA S A Panama, Panama 2739777 AGENCIA NUEVO Domingo Díaz Ave., https://agencianhs.c

HUNG SHENG S A Panama 271-5384 om/ FRESH MARKET [email protected] PA CORP 69 St. East, Panama om 387-5506 Corozal Ave. Castle Loop, 419 [email protected] https://www.manico

MANICO S A Organica m 395-5353 sa.com/ CASA FORMOSA S 32 St. and Justo Arosemena Ave. A 32-06 269 - 3511 IMPORTADORA RICAMAR S A Balboa Ave., Multicentro BINAT Commercial Center, Basement INTERINVEST S A Level Store L-001 208 - 2519 WELL CONTAINER SHIPPING (PA) Villa Grecia 388 - 6606 GRUPO F AND G INTERNACIONAL Via España, Plaza Regency Building, SA Store No. 1A, Office No. 2 314 - 1414

KINGMAX S A From January 1, 2018 to December 30, 2018

18