Hugo Cuesta
Managing Partner
View from the Top

Rule of Law, Stability, Pro-Business Government Keys to Invest

Wed, 05/08/2019 - 16:10

Q: Given national and global uncertainty, why should investors be confident about their prospects here?

A: The perspective on the situation varies considerably depending on each industry, with some more concerned than others, whether it is because of López Obrador’s administration, the signing of USMCA or US politics. In Mexico, the balance of political forces is a factor that favors investors and will continue to help maintain objectivity of the decisions made in the country.
Q: Organisms like the OECD say Mexico needs to increase tax collection. What approach should López Obrador take? A: The focus should be to expand the taxpayer base and reduce informality. The tax burden falls on a very small percentage of people and the extension of the taxpayer base can generate greater fiscal efficiency. A problem for our government is that it cannot compete with the tax rates offered by the US because Mexico does not have a similarly large taxpayer base. Furthermore, the impact of the US trade war with China, its imposition of sanctions on steel and aluminum imports and its targeting of the automotive sector could generate a climate of mistrust if not resolved soon.

Q: What actions can boost the country’s competitiveness?

A: International investors seek three things when doing business in a foreign country: legal certainty (rule of law), stability and a pro-business government. If those conditions are provided in Mexico in an optimal, clear and viable way, we will attract more investors and increase our competitiveness. The government needs to deliver attractive incentives to attract direct investment, with industries offering a high level of expertise to profit from these incentives.
Q: Cuesta Campos y Asociados has an active role in terms of international trade. Where do Mexico’s untapped commercial opportunities lie?
A: Mexico is among the countries with the largest number of signed free-trade agreements so it has already diversified despite the natural tendency to focus on the US as our main trading partner. The paradigm shift, in which the US promotes protectionism and China promotes free trade, is an indication that Mexico must adjust its foreign policies. Mexico will have to recognize other countries, including China, as potential partners and allies.
Q: You offer specialized services to Japanese investors. What opportunities led the firm to offer a specific service to Japan?

A: We have a strong presence in the Bajio area with an office and a predominantly Japanese client portfolio. This area of the country has benefited from the arrival of many Japanese companies but their arrival has also created the need to contract services like ours. The Japanese industry believes in our firm because we have international and national expertise.
Q: Innovation is becoming the key to offering new and improved services. How does a traditional law firm offer innovation?

A: Clients are increasingly demanding services that offer added value and efficiency. We use technology to provide a differentiating value to the client and we build the innovation of our services around it. Our law firm understands the paradigm shifts of the industry and also the forces that affect them. We believe that technology offers the possibility to improve the value added derived from the legal industry. The challenge for the future will be in the industry’s ability to make the shift to develop a vocation of service with technology. 
Q: What would you say are the most complex challenges that the country will face in the future?

A: It is imperative for the government to respect the conditions that were offered to investors at the time of their arrival into Mexico and facilitate a positive business environment. Also, the country’s bureaucracy must be simplified to improve industry response times and guarantee each sector’s effectiveness. An improvement in the bureaucratic-administrative apparatus means an improvement in the economic sectors of the country. Reduction of corruption and impunity are critical to maintain and increase Mexico’s competitiveness.