No Clean Energy, No Nearshoring: CEEGBy Eliza Galeana | Mon, 09/19/2022 - 18:10
Alberto de la Fuente, President, Executive Board of Global Companies (CEEG), pointed out that Mexico must promote access to competitive and clean energy sources in order to attract nearshoring investment from foreign companies.
He highlighted that the nearshoring phenomenon represents a key opportunity for the country since many players are seeking to establish operations close to the US. "We must continue to build dialogue with governments at all levels, or else we will not spread nearshoring. Hopefully, we can convince the government about the importance of enforcing our policy so that companies will continue to do business here,” said De la Fuente in an interview with El Universal.
Since last year, the arrival of foreign direct investment has slowed down due to the uncertainty caused by Mexico’s Energy reform proposal. “Companies attracted by nearshoring nowadays have a predilection for green renewable energy and right now, Mexico’s energy matrix is not aligned with that," said Renzo Merino, Analyst, Moody’s Investors Service, in a Forbes interview.
Furthermore, de la Fuente expressed that besides the US being Mexico's main trading partner, other options such as China, Mexico’s second-biggest trading partner, and Europe should not be dismissed. Merino added that the acceleration of nearshoring from Asia to Mexico could boost the latter’s GDP to grow about 3 percent annually.
In a different sector, Banxico reported that the transfer of factories and operations from Asia to Mexico triggered manufacturing production by 3 percent in 2021. “Nearshoring is an opportunity to attract more investment and demand, but the conditions for investment must be favorable,” stressed Alejandrina Salcedo Cisneros, Price Analysis Director, Department of Regional Economy and Information, Banxico.
According to Banxico’s Regional Economies Report, between April and June 2022, approximately 16 percent of larger-sized companies have benefited in some way from nearshoring in the last 12 months in Mexico.
Nearshoring refers to the transfer of business processes to companies in a nearby country, where both parties expect to benefit from one or more of the following dimensions of proximity: geographic, temporal, cultural, linguistic, economic, political, or historical linkages.