Renovated Strategy for Investment AttractionThu, 05/09/2019 - 16:37
Mexico’s centralized model has acted as a barrier for the country’s integral development. For that reason, implementing a federal model that supports the economic development of every region in Mexico will be a priority to promote economic development, stated Alberto Uribe, Director General of Political Coordination of SRE, on Wednesday at Mexico Business Forum.
“Our country’s development has not been fair or equal,” said Uribe, “and development must include everyone equally.” He explained that Mexico’s centralized model was a barrier for growth in specific regions, especially in the south. Moreover, older strategies to promote the country and attract FDI did not benefit the country equally as “ProMéxico focused its promotion strategy on only 10 states.”
For that reason, SRE is revamping Mexico’s investment strategy. To do this, Uribe pointed to the book “Why Nations Fail” from top economists Daron Acemoglu and James Robinson and stated SRE’s priority will be to analyze “why nations triumph.”
The country is already a strong, attractive investment destination. “Trade between three countries in North America grew by 258 percent between 1994 and 2018. During that time, Mexico became the US’ main commercial partner for the first time. The trade flow between both countries is at US$1 million per minute.” Uribe also pointed to the fact that during the last 20 years, Mexico received US$530 billion in FDI, most of it headed to the manufacturing sector.
In 2018, Mexico received a total of US$31.73 billion in FDI, most of it from the US. The main sources for FDI are the US with 38.8 percent, Spain with 13.1 percent, Canada with 10 percent and Germany with 8.2 percent. Moreover, the country expects US$25.251 billion in FDI in 2019, Uribe said.
The new model will focus on strengthening all 32 states in Mexico through equal promotion. “The Ministry of Economy is developing a Global Intelligence Unit to help position Mexico. The country has 147 representatives across the globe but their objectives are unaligned.” The ministry is also developing internal promotion strategies. “On May 3, we had the first reunion with Ministers of Economic Promotion to showcase to ambassadors across the globe the strengths of every state.”
The Ministry has many more projects planned, including one for June 6 and 7, which will be the first summit of city mayors from Mexico, the US and Canada with the goal of creating alliances between these cities. Uribe highlighted the importance of alliances between cities; some even surpasses the states they are part of in terms of investment, he said.
Other actions include a “recently signed collaboration agreement to help Mexican companies penetrate global supply chains, which will allow the country to ratify its position as a key strategic partner to the US.” Uribe also highlighted many infrastructure projects, including State of Mexico’s US$466 million investment in the industrial development Arco 57 and Coahuila’s “Ports to Plains,” a US$3.6 billion initiative to connect highways between Mexico, the US and Canada.
Uribe also highlighted the two major infrastructure projects proposed by the current administration for the economic development of the country: the Mayan Train and the Transístmico project. The first will link Chiapas, Tabasco, Campeche, Yucatan and Quintana Roo, which together host 6.8 million tourists per year. This project will require an investment of “up to US$1.5 billion and has attracted the interest of many companies, including Bombardier.”
The Transístmico project will be a point of access to the southeast. “It will join two oceans, supply electricity and oil and support the poorest areas of Mexico. Thus, it will be a key for the country’s economic development. This project links the isthmus with global logistic networks and will strengthen the country’s productive capacity and create jobs.” Uribe stated that the project has atracted large investors such as BlackRock and will represent an investment of US$2.15 billion.
Uribe highlighted Mexico’s many opportunities to expand and strengthen trade networks and indicated that one of SRE’s many priorities will be to diversify its trade partners with an eye toward Latin America and the Caribbean, China and Europe. The ministry’s priorities include identifying areas of opportunity to increase FDI attraction, developing investment opportunities in the energy sector and ratifying USMCA. Key to achieving these goals will be to eliminate corruption, strengthen the rule of law and reduce bureaucracy, said Uribe.
“Between 2019 and 2020, Mexico will grow its GDP between 1.5 and 1.8 percent.” To do so, FDI will be essential, which can only be done by developing new trade partners while strengthening relations with current allies, especially the country’s main commercial partner, the US. ”We do not need a wall; we must build a trade zone.”