PriceSmart Project The project will expand PriceSmarts existing warehouse-stores in Central America and the Caribbean through the constructing and operation of 13 deep discount, no-frills membership-shopping warehouses. These warehouse stores are similar to, but smaller in size than, warehouse clubs in the US.  They sell a variety of food and consumer goods with an emphasis on quality, low prices and efficient operations. Product selection is approximately 60% food and 40% non-food items.  About 45% of sales are derived from products sourced in the local or regional markets.      Project Justification      Strategic fit   :  The project is consistent with PSMTs strategy is to develop, own and operate international merchandising business in emerging markets by investing in, acquiring, or creating new retail warehouse membership-shopping businesses that leverage existing and local capabilities.      Market gap   :  The project will capitalize on the absence of membership warehouse type shopping that deliver quality, value and low prices for: i) US. brand-name products that are not currently widely available in such markets; and ii) branded local and regionally-sourced products.  Typically, the target countries are characterized by high-priced local competitors with minimal experience with modern operating processes in purchasing, distribution, merchandising and information technology.     Lower prices to consumers   :    PSMTs strategy is to offer quality, value and low prices through its high-volume low-cost operation. Its goal to be the "low-price leader" for the markets served is achieved by offering a limited range of products in a low-cost, US-style no frills warehouse type environment.        Strong, experienced, and knowledgeable sponsor   :  PSMT will leverage the successful US. warehouse retailing concept, its existing organizational infrastructure and stores including economies of scale in buying (as stores are added, buying power and negotiating leverage improves), low-cost distribution, network of suppliers, and experienced human capital.     Positive development impact and role   :  The project will introduce new merchandising technology, provide about 1,800 direct jobs and respond to local needs by being an important retail outlet for local products.   The project will link Central America, the Caribbean and the US. through PSMT''s buying and retailing network.  In addition, although PSMT is a public US corporation, IFC''s support is needed as it cannot access US funding since its warehouses are located outside the US and its shares are not actively traded.     IFCs Role     IFCs role is to provide long term financing not readily available for private firms in the Caribbean and Central America.  In the current international financial market environment, unassisted access to the eurobond or international syndicated loan markets is virtually closed, save for top-tier firms in Mexico or Argentina.   The projects requirement for a significant amount of long-term debt with long maturities (not readily available in the region) precludes it from obtaining US dollars from local sources.  In addition, the project''s regional nature works against its ability to access local bank financing.  Moreover, PSMT cannot readily access US funding as its warehouses are located outside the US and its shares are not actively traded on NASDAQ.  Thus, IFCs "A" and "C" Loans will meet the projects needs and strengthen its financial structure. IFC will also assist the project by mobilizing funds from international commercial banks, and by providing environmental oversight to ensure that the project meets World Bank Group guidelines, along with its financing.      Development Impact     The project will have a strong developmental impact by expanding and strengthening the retail industry in each country and in so doing provide consumers with lower prices on a wide variety of food and quality consumer goods through increased efficiencies of purchasing, logistics, technology and distribution.  Thus the project will help contribute meaningfully to raising the real standard of living for a large portion of the population in each of the target countries.  The project will bring the convenience of warehouse shopping to large portions of the population in several countries in Central America and the Caribbean.    The project will provide outlets for local products and foster the production of quality goods; it will help improve the competitiveness of those countries industry and agriculture.  Currently, PSMT sources about 45% of its goods locally or regionally (including produce, meats, soft drinks and brewery, soaps, milks, etc.  The project will help introduce international best practices and bring modern technology by helping suppliers to adopt bar coding and other sophisticated MIS systems.  In addition, the project will create about 1,800 permanent employees (about 138 per store); many more indirect jobs will be created.  In addition, significant opportunities exists for training, acquiring merchandising skills, and promotion within the group as PSMT advertises job opportunities for domestic, regional and international jobs internally and on its Web site. The project will also link markets in Central America, the Caribbean and the US through PSMT''s buying and retailing network.  It will give Central American as well as Caribbean manufacturers access to PSMT''s members in the US and Asia as well as in each other''s markets.  In addition, the project has already mobilized capital from the region and introduced Latin American investors to the Caribbean; it could also serve as a catalyst for further investment.