Infrastructure: Main Challenge for Southern Mexico’s IndustryBy Fernando Mares | Fri, 08/12/2022 - 18:22
The Mexican Confederation of Industrial Chambers (CONCAMIN) considers the southeastern region of Mexico has great industrial potential due to the availability of resources. However, the lack of adequate infrastructure and lingering logistics issues counter the potential benefits this area offers to companies.
According to José Abugaber, President, CONCAMIN, despite the abundance of water and other natural resources, there is still a long way ahead for the southeast to reach the northern and central region's economic integration and competitiveness. Among the main challenges for this region are insecurity, logistics and infrastructure, all of which directly impact the final costs of goods. “It costs US$0.25 more to produce one liter of milk in the southeast than doing it in the north or center of the country; this cannot be. This is mainly because of insecurity and very serious logistics problems. But, if we continue [improving] these conditions, in 15 to 20 years, the southeast could reach center-north levels,” Abugaber said.
CONCAMIN has collaborated with the federal government’s initiative, the Oaxaca Pact, which focuses on developing strategies toward social well-being through the strengthening of productive capabilities. For Abugaber, logistics, development and industrial parks are key for the development of the region. Similarly, promotion of the region is essential to attract more investment.
The federal government considers the regions’ economic integration a priority since it has been historically marginalized. In May 2022, Minister of Finance, Rogelio Ramírez de la O, informed that the southeast region had received over US$30 billion in investment for infrastructure projects, of which over US$10.5 billion are for refineries, US$10 billion for highways, US$4 billion for airports, US$4 billion for railways, US$1 billion for ports and US$300 million for modernization of customs offices.
Projects like the Interoceanic Corridor have grabbed the attention of local governments. In an interview with MBN, Oaxaca’s Minister of Economy considered the project to be of great benefit for Oaxaca since it would boost local talent. Moreover, the project will connect southern states with the USMCA corridor.
Other important associations like the Mexican Chamber of the Construction Industry (CMIC), along with the US Embassy in Mexico, agreed that investment in infrastructure projects in the south is key for the reactivation of the construction sector, as reported by MBN. Currently, industrial production in 2022 is 3 percent above the numbers from 2021, but it is 2 percent below what was registered in 2019. Industry insiders say it is because of the construction sector, which has been mostly delegated to the military.