César del Valle
Director General
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Private Sector Worries for Zee Success

Wed, 11/01/2017 - 14:19

Q: What measures is the government putting in place to create successful Special Economic Zones (ZEEs)?

A: Several countries have established ZEEs, but not all have been successful. These zones take many years to completely establish and the Mexican government is doing precisely what they should do to make them a reality. The Mexican government has established ZEEs in the states that have the lowest economic growth and to show its commitment, it created the Federal Authority for Special Economic Zones (AFDZEE) and Federal Law for Special Economic Zones (LFZEE) that will dictate how they will operate. The AFDZEE will create the rules and establish all the necessary incentives, formalities and requisites for operating in these zones. The federal, state and municipal governments will have to work together to implement the LFZEE and ensure transparency.

It is extremely difficult to guarantee that a ZEE will be successful and it will depend on many factors. The most important factor is that the government provides continuity across presidential terms. ZEEs are zones within a country that were unable to flourish on their own and that is why they need the undivided support of the government. When areas do not develop organically, the public sector must intervene to boost development artificially through fiscal and legal incentives.

Q: What are the private sector’s main worries regarding ZEEs and how is IDOM participating in their creation?

A: The private sector has expressed various concerns regarding the ZEEs. These include the lack of infrastructure, security, more attractive fiscal incentives and the training of human capital. According to the rules, for companies to receive these benefits they must generate long-term jobs and economic development of a disadvantaged region.

IDOM was recruited to offer technical expertise in generating the viability studies of the four zones: Lazaro Cardenas, Coatzacoalcos, Salina Cruz and Puerto Chiapas. At the same time, we had to help with the process of creating the AFDZEE as well as the social and environmental impact studies of these zones. The planning had to be carried out before the declarations could be approved. The ADZEE has done a great job drafting the plan for these zones and creating agreements between the states and municipalities.

Q: In wich ways is the PPP Law helping to close Mexico’s infrastructure gap?

A: PPPs will help solve the country’s infrastructure deficit through the financing of projects but I believe most importantly through experience. The private sector is able to provide input and implement new methods of operating infrastructure projects. PPPs are used all over the world and have proven to be a good method of obtaining funds and creating efficient projects. USP are becoming more popular, especially within the healthcare sector. IMSS and ISSSTE have created various project tenders under the PPP scheme, especially because they realized that the involvement of the private sector in the health sphere could drastically reduce operational costs. I believe this is a good method of developing more infrastructure in the country. The will and innovation of the private sector are there but there is still a lack of results. The challenge is that the government must tender these projects and actually finish construction on time and on budget.

Q: What importance will be given to urban planning initiatives in 2017-2018?

A: Urban planning is necessary and it should be independent of any electoral process. It is fundamental for the development of existing and new cities. The legislation now covers the necessary legal processes for zoning in urban areas. This is important because many cities in Latin America have experienced an urban sprawl that has grown too rapidly to completely organize, generating social and economic inclusion problems along with high infrastructure costs. Having an integral urban planning process optimizes the development of infrastructure and mobility alternatives.