Mexico Considers Lifting Caps on Foreign Investment

By Nacha Cattan - Oct 3, 2012 7:55 AM
bloomberg.com

Outgoing President Felipe Calderon’s administration is assembling a proposal to lift caps on foreign investment in some Mexican businesses, Deputy Economy Minister Jose Antonio Torre said.
“In the coming weeks we’ll announce the type of initiatives we’ll be promoting,” Torre said, according to a transcript of a presentation given Sept. 30. “It would be a bill that would reform the Foreign Investment Law that would lift some caps in some sectors.” He declined to specify which industries the bill would target.

 

Mexico’s antitrust chief, Eduardo Perez Motta, and the president of its Federal Telecommunications Commission, Mony de Swaan, have both called for the elimination of a 49 percent limit on foreign ownership of land-line phone companies to encourage competition. The current law also includes a 25 percent cap on domestic airline stakes and says broadcasting services must be exclusively under Mexican control.

 

The Economy Ministry favors increasing the airline industry’s foreign investment cap to 49 percent, Torre said.

“It’s a sector that demands high investment in capital,”he said. “Planes are a very significant investment, and we think loosening this limitation that exists today in the law of up to 25 percent is important.”

Grupo Aeromexico SAB (AEROMEX*), the only publicly traded Mexican airline, was unchanged at 19.99 pesos at 8:49 a.m. in Mexico City.

A press official in Calderon’s office who asked not to be named because he wasn’t authorized to speak on the record declined to comment.

Attempts in the Senate to lift the cap on foreign investment in land-line phone companies have failed as recently as last year because of disputes on whether to require investors to come from countries with similarly open rules.

America Movil SAB (AMXL), owner of Mexico’s largest land-line phone network, slid 0.6 percent to 16.45 pesos. Phone carrier Axtel SAB rose 2.6 percent to 3.11 pesos, and Maxcom Telecomunicaciones SAB fell 3 percent to 3.25 pesos.