Image credits: Josue Isai Ramos Figueroa
News Article

Government’s Mismanagement Slows Sector’s Growth: CMIC

By Fernando Mares | Thu, 06/30/2022 - 18:35

The Mexican Chamber of the Construction Industry (CMIC) is displeased with the slow pace of the infrastructure packages launched by the federal government and the private sector. The chamber says the sluggish pace is a consequence of the government’s mismanagement.

During a real estate forum, Fernando Solares, President, CMIC, stated that the chamber’s members are not pleased with the progress made regarding the infrastructure packages launched between 2019 and 2020. As a consequence, the sector has grown at a slower pace, with SMEs being affected the strongest.

Solares mentioned that the government’s mishandling of the packages is a key factor slowing down the development of projects. López Obrador’s government is currently prioritizing its own key projects, like the Mayan Train and Dos Bocas Refinery, which only benefit major developers and shove smaller construction companies aside. “The federal budget for infrastructure was US$32.8 billion, but resource allocation policies do not favor the development of construction companies,” Solares added. 

In addition, Solares said that there is a disparity in the resources allocated to states. He used the example of Tabasco, which owing to the Mayan Train and Dos Bocas Refinery is receiving a great amount of investment, while Aguascalientes has received less than 0.1 percent of the infrastructure budget by contrast. 

Solares said that the infrastructure sector needs more investment: approximately 5 percent of the country’s GDP is required to maintain infrastructure and foster a minimum growth. Nevertheless, public infrastructure investment was only 2 percent of the GDP in 2021. He added that although the federal government's actions create an uncertain environment, the trade war between the US and China could be a trigger for development for the next two years.

Solares announced that the third infrastructure package is on the way. The package will consist of 44 public-private projects featuring an estimated investment of US$15.4 billion. The federal government has delayed the official unveiling of the third package, but industry leaders have spoken about it already. In April 2022, Francisco Cervantes, President, Business Coordinating Council (CCE) heralded the infrastructure package, anticipating that it will focus on the southeastern region since this is a lesser developed part of the country. “We owe the south a lot. Infrastructure there must be developed such as roads, rails, ports and airports,” Cervantes added. 

According to the International Transport Forum (ITF), Mexico is the OECD member country that spent the least on infrastructure relative to its GDP in 2020, as the country spent just 0.2 percent of its GDP on internal infrastructure.

The data used in this article was sourced from:  
Forbes, MBN
Fernando Mares Fernando Mares Junior Journalist and Industry Analyst