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News Article

Mexico Will Remain an FDI Hub: Christopher Landau

By Alessa Flores | Thu, 07/02/2020 - 09:26

US Ambassador to Mexico Christopher Landau said on his official Twitter that he was "fed up" with the media misrepresenting his words, specifying that Mexico is an attractive country for foreign investment (FDI) and that he will continue "to work with the Mexican authorities to foster investment and prosperity that is good for us all." Landau even described this time as "a golden moment" for Mexico to attract more FDI and explained that to achieve this, it requires “collaboration between the federal government and the private sector.”

“Mexico is one of the most competitive countries for productive investments worldwide,” says a report by Mexico Project Hub, alluding to factors such as the country’s strategic geographic position, competitive costs, young and talented population, size and strength of its internal market, macroeconomic and political stability, economic growth and an open economy with access to the most important markets worldwide. Only in 2018, the US Department of State explained the US is Mexico’s top source of FDI with US$12.3 billion or 39 percent of all inflows to Mexico. Furthermore, the 2019 World Investment Report, published by the United Nations Conference on Trade and Development (UNCTAD), ranked Mexico 12th in terms of foreign direct investment attraction and sixth among developing economies.

Among the countries that invest the most in Mexico after the US are the Netherlands, Spain, Canada, Belgium, Japan, Germany, UK, France and Brazil. It should be noted that Mexico has worked with almost all countries on the list to enhance its commercial opportunities. Today, July 1, USMCA comes into force, which will boost trade between the US, Canada and Mexico. Also, Mexico and Brazil have agreed to reduce export tariffs on heavy vehicles to zero percent by 2023 and the EU-Mexico trade agreement was modified in April to practically remove all trade barriers between Mexico and EU countries. 

Japan and Mexico celebrated the 15th anniversary of the signing of their economic partnership agreement in February this year. “The economic partnership agreement (EPA) between Mexico and Japan, which came into effect in 2005, has caused tremendous growth in trade between the two nations,” said Yasushi Takase, Ambassador of Japan to Mexico. The hope is that in years to come, the results will remain promising, according to a note by Japan Times.

Takase told Mexico Automotive Review that EPA has been a major contributor to investor confidence and it has helped foster a relationship between both countries beyond diplomacy.  “Beyond a diplomatic relationship, EPA included a chapter focused on investment and another focused on creating a committee to establish the right conditions to foster an attractive business environment. This committee has met over 10 times, bringing together government officials and private sector representatives from both countries,” says Takase. “Trade between Japan and Mexico has more than doubled since EPA’s establishment. Over the past five years, the number of Japanese companies in the country has doubled to a total of more than 1,200 players. Half of these companies are established in the Bajio region, including automakers, parts suppliers, construction and logistics companies and bankers,” he continued. 

Other ambassadors from countries with presence in Mexico are of the opinion that the future of FDI will remain constant, despite the economic difficulties derived from COVID-19. Franz Josef Kuglitsch, Ambassador of Austria to Mexico, told MBN that “Austrian exports to Mexico have increased by 349 percent since 2010. With a total value of €1.336 million (US$1.5 million) in exports in 2019, Mexico is ranked 21st among our most important export destinations.” In addition, Ambassador Kuglitsch explained Austria “is working closely with the EU Delegation in Mexico on issues of wider concern, e.g. in the present COVID-19 situation.” 

As for the Netherlands, the second largest investor in Mexico, the FDI outlook is also positive. Margriet Leemhuis, Ambassador of the Netherlands to Mexico, told MBN that” for the Netherlands, Mexico will keep being an essential trading partner. The value of Dutch exports to Mexico is around €2.7 billion (US$3.02billion), while Dutch imports from Mexico are worth €3.2 billion (US$3.6 billion), according to data from the European Commission. Even while tackling the outbreak of the virus, we have also been working to advance our open and fair trade agenda, which continues to be very important,” she said.

Photo by:   Freepik: bedneyimages
Alessa Flores Alessa Flores Senior Journalist and Industry Analyst