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News Article

After COVID-19, Mexico May Be More Attractive Than China for FDI

By Alessa Flores | Wed, 11/11/2020 - 17:07

Graciela Márquez Colín, Minister of Economy, revealed this week that Mexico will be more attractive in terms of investment than many countries, including China, once the pandemic is over. This is not a stroke of luck but the result of actions to position Mexico as a good place to invest. "For two years, the country has been immersed in attracting more companies from around the world, boosting investment and increasing productivity in different key sectors to recover from the economic and health crisis," Marquez said at the Alacero 2020 Virtual Congress.

Although Mexico has gone through a series of transformations since López Obrador became president, it has not ceased to be an attractive country for foreign investment, according to Joaquin Barrera Alonzo, Director of Fixed Income and Investments at SURA Investment Management. Barrera believes that "all major financial assets in Mexico have generated competitive returns when compared with other emerging markets.” According to figures from the Center for Public Finance Studies of the Chamber of Deputies (CEFP), foreign direct investment (FDI) in 2019 amounted to US$39.92 billion, a 4.17 percent increase over 2018. It is worth noting that 53.1 percent of that corresponded to reinvestment of profits, 38.96 percent to new investments and 7.94 percent to inter-company accounts.

Despite the effect of the pandemic in Mexico’s economy, authorities foresee that investments will increase as the economic recovery advances. "In 2020, FDI is expected to amount to US$29.8 billion, a decrease of 9.44 percent against the preliminary data for 2019. In 2021, it is expected to rise to US$30.3 billion, a 0.75 percent increase over 2019’s estimates," explains the CEFP.

Different countries have communicated through their ambassadors that investments will continue. For example, Corin Robertson, UK Ambassador to Mexico, explained in an exclusive interview with MBN that Mexico is a strong partner for the UK. “Since the foreign secretary visited Mexico last summer and signed the Partnership for Sustainable and Inclusive Growth, we have been building up and strengthening political dialogue, economic links and wide-ranging cooperation between the UK and Mexico through an investment up to £250 million (US$322 million) in cooperation programs over the period 2019-2023.” 

Jorge Rave, Country Head at Export Development Canada (EDC), also shared with MBN that EDC is committed to creating Canadian success stories in Mexico. “In 2019, we were responsible for more than C$3.3 billion (US$2.5 billion) in business volume in Mexico, of which C$1.6 billion (US$1.2 billion) went to financing companies in different economic sectors. That same year, Canadian direct investment in Mexico exceeded C$22.5 billion (US$17.2 billion).” One of the reasons is that in agreement with Rave, Mexico is and will continue to be an attractive country for Canadian companies.

The Swiss Embassy in Mexico is also positive about the future of relations between Mexico and Switzerland, considering that Mexico is Switzerland's second-largest trading partner in Latin America, while Switzerland is the ninth-largest investor in Mexico. "The size of the Mexican domestic market is one of the main attractions for companies seeking to invest and expand their presence in the world," explained Eric Mayoraz, Swiss Ambassador to Mexico, to MBN. For this reason, Swiss automotive, manufacturing and aerospace companies, see working in Mexico as an opportunity to enter the Latin American market or expand their presence in the region. Even in these difficult times, both countries have strengthened their trade relationship. “For more than seven decades, our two countries have cooperated in the economic field, in health, education, science and technology and human rights, among others. This pandemic has also allowed us to strengthen our relationship and reaffirm our bonds of union and our fraternal solidarity,” says Mayoraz. 

Finally, there are also good news for Mexico coming from Asia. Cosmas Cheppy Triprakoso Wartono, Indonesia’s Ambassador to Mexico, told MBN that Mexico is one of Indonesia’s largest emerging trading partners in North and Central America. “In Latin America, Mexico is Indonesia’s third-biggest trade partner after Brazil and Argentina. Meanwhile, Indonesia could be Mexico’s gateway to Asia and ASEAN.” He also explained that the Indonesian Embassy in Mexico will continue to focus its efforts on encouraging and facilitating trade relations between the two countries, with special support from the chambers of commerce and associations.

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Alessa Flores Alessa Flores Senior Journalist and Industry Analyst