Inclusion, Diversification, Innovation: FDI Attraction PillarsBy Alejandro Salas | Mon, 07/13/2020 - 05:00
Q: What is the administration’s strategy to continue promoting the country after the termination of ProMéxico?
A: Economic promotion is important to the federal government and the Ministry of Economy. This will not change now that ProMéxico no longer exists. Our goal is to take the best practices developed by that organization and others and apply them to continue stimulating economic development. The new economic promotion strategy will now be under the jurisdiction of the Global Economic Intelligence Unit directed by Sergio Silva, in coordination with state and municipal governments and the Ministry of Foreign Relations (SRE). The objective is to replace ProMéxico’s 46 offices with 150 points of contact across the world focused on foreign commerce. We are also coordinating with state governments and economic development units to properly channel economic support from the federal government to companies that need it.
Q: What elements of the previous administration’s trade promotion policy will be kept in place and what will be changed to make Mexico a more attractive investment destination?
A: The promotion strategy will change. In previous years, there was only a vague definition of the strategic areas and products that should be a priority in investment and trade promotion, which led to the poor use of resources and results. Now the parameters will be very clear. We will use data mining to accurately determine Mexico’s strategic products and sectors and to identify interventions to promote growth. We will analyze each region to evaluate their capability to produce added value products, which will in turn generate better jobs with better salaries for our population. Our strategy will also take into account an analysis of the global supply chains in which Mexico participates.
The Ministry of Economy follows three pillars: inclusion, diversification and innovation. Inclusion refers not just to companies that can enter global supply chains but also companies that can support the economic development of the communities where they are located. Our inclusion strategy also targets exports from more regions in Mexico, as most exports originate in just 11 or 12 metropolitan areas.
In terms of diversification, our goal is to grow the number of companies that export their products. At this point, 90 percent of all exports are done by big companies and we want SMEs to increase their participation. Moreover, five or six products represent 40 percent of Mexico’s exports, which are mainly destined for the US. We need a diversified export chain in terms of products and destinations as this will allow us to minimize risk. Regarding innovation, our goal is to be more competitive in areas with higher added value, which will also permit the generation of better work conditions in Mexico. The federal government is greatly interested in working with foreign companies to develop Mexico’s economy and capabilities.
Q: What are the main elements that manufacturing companies must take into account when investing in Mexico?
A: The first is to focus on human capital and consider whether the employees they need are available in the region in which they want to establish. The second is quality of life. When opening a branch in a different country, companies should look after the quality of life of the employees they bring with them. The third is the overall business environment. Some states in Mexico have advanced significantly in terms of transparency, certainty, rule of law, speed in opening a business and safety.
Q: What types of investment are necessary to improve local automotive supply chains in Mexico?
A: The automotive sector is going through a transformational process and technological changes will determine the success of automotive companies in the next few decades. Value chains in the automotive sector must adapt to these technological changes in the short term to be successful at a global level.
We are now developing a route map to understand how automotive companies can enter the value chain for electric mobility. The plan will include everything from the improvement of lithium production to attraction of battery manufacturers and how to support local governments interested in implementing electric public transport. We must also identify international financing sources and companies that might be interested in bringing production of electric-vehicle components to Mexico. This is a priority as the automotive industry is a strategic sector for the Mexican economy.