Mauricio Brizuela
Managing Partner
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Reinventing Mexico for Long-Term Growth

Mon, 08/07/2017 - 13:07

Q: In the 2018 IMD World Competitiveness Ranking, Mexico fell from 48th to 51st. What steps must be taken to improve the country’s competitiveness?

A: The same problems that are hindering our competitiveness will become the source of our future growth. The country must reinvent itself, redefine its internal and external trade, diversify its commercial partners and open new markets like Asia. Mexico’s dependence on the US will decrease but the relationship will continue to be key.

Q: What impact can these rankings have on foreign investment arriving to the country?

A: All rankings have an effect and we cannot disqualify them by choosing some over others because they all provide us with relevant information about the country. However, they must be analyzed and understood to gain the kind of solid information that supports decision-making. If we want to improve in the rankings, as a country we must unite different sectors to generate opportunities that make us improve.

Q: Given new technologies, where should Mexico focus its efforts to improve the financial sector’s development?

A: Mexico needs new lines of investment oriented to the financial sector through technology to better meet the needs of the country. Also, the government must identify the opportunities that exist in the country to strengthen the banking and financial system more effectively. Other productive areas can benefit from a stronger banking system, which can also help promote innovation.

Q: What approach should the current presidential administration take regarding tax collection?

A: We are part of the group of countries that collect less despite having higher tax rates. This means that we do not raise enough taxes because we are not including the entire population. Simply implementing a reduction in the tax rate is not enough because it would not be possible to subtract the expenses that we must pay. It is not just about lowering the rate. The government needs to support industries by encouraging them to pay taxes to further boost the country’s economic growth. If individuals and legal entities saw a return after paying their taxes, collection would be different. The Ministry of Finance and Public Credit and the federal government must promote a reform that motivates production and productivity. Reciprocity in the payment of taxes must be used by the government to invest in improvements for the companies that are already here. In addition, it is necessary to take into account that greater investments in infrastructure and other strategic areas can generate greater productivity and economic growth for Mexico.

Q: How is the US dollar and Mexican peso fluctuation impacting businesses?

A: We have all kinds of clients and some are more affected than others by the exchange rate. Products from companies that have higher dollar-peso transactions become more expensive, which then affects consumers. Most companies protect themselves by hedging their interest and exchange rates. The smart use of financial mechanisms can help contain the impact from exchange rate volatility.

Q: How can the Project of Technology Customs Integration promote the commercial relationship between Mexico and the US?

A: There have been positive changes over the years but we are still at a disadvantage because we have more complexity in imports and exports. Also, elements like drug trafficking generate more processes related to trade, which slows down productivity. The Project of Technology Customs Integration must be used to boost trade. Technology can increase the efficiency of import and export processes but we still have work to do before we have world-class processes. To achieve a commercial improvement, we must work on three key issues: corruption, the transportation system and simplifying imports.