FDI is expected to increase to 30 billion dollars during the current administration

theyucatantimes.com

Mexican Economy Minister Ildefonso Guajardo said that investors have a very balanced view of the country, and they know which states offer guarantees, stability and security.

Despite the perception of lawlessness in Mexico, foreign direct investment is expected to increase to 30 billion dollars during the current administration, Ildefonso Guajardo, Minister of Economy, said in an interview with Mexico City Newspaper EL UNIVERSAL.

Will the goal of increasing foreign direct investment to 30 billion dollars a year be reached?

I am almost certain that during the current administration we will have 30 billion dollars on average. One of the greatest strengths of our country is that power moved from one political party to another without changing the free trade and global integration policies. That sends a clear signal to investors that bet to stability and a consistent foreign policy, as we have done since 1994. This explains the volumes of Foreign Direct Investment and the huge automotive plants that operate in Mexico.

How much investments will reforms bring about? It has been said that at least 50 billion dollars in the energy industry.

It depends a lot on calculations, I do not have a number. However, 20 months after the beginning of the current administration the country has attracted nearly 50 billion dollars. This shows that foreigners take risks, and that sends a signal. That figure represents an annual average of 30 billion dollars, which can be easily achieved. Apart from investments in energy and telecommunications in the long-term, over the next ten years investment in manufacturing is expected to increase.

The economic model of our country is based on manufacturing, but growth has not been consolidated. This year economic expansion is expected to reach a meager 2%. Is the economic model working well or do we need to change something?

The problem is not the model, but the poor implementation of policies. Reforms were not undertaken 20 years ago. If energy and financial industries are not liberated and markets are not as competitive as they should be, the benefits of growth can not trickle down if small and medium enterprises are unable to join production chains.

Economy Minister Ildefonso Guajardo Villarreal (Photo: eluniversal.com.mx)

With the recently approved reforms will Mexico catch up or we will just recover from a 20-year slumber?

If things are done as they should, their implementation will lead to recovery and the country will attain the best possible level.

What comes next?

Competition, democratization of opportunities; all reforms are based on democratizing access to financing. Each of the reforms seeks to level the playing field. For example, the fact that Telmex had a market concentration inhibited the development of app innovators with cheaper access to broadband.

Does this mean that our country’s lethargy and the time we wasted led to the emergence of monopolies?

Monopolies are result of market concentration, but there are other factors such as education and funding issues, apart from geographic aspects linked to poverty and the lack of governance and security. All this creates a vicious cycle. Even though we are trying to offer the same security and justice conditions to all Mexicans, two or three states are lagging behind; it is necessary to ensure the same conditions as in the rest of the country.

Even the Bank of Mexico and analysts expect violence to affect growth.

I just visited Canada, Washington and Australia and investors are too sophisticated. Those who invest in the “Bajío cluster” (Tijuana, Chihuahua, Nuevo León) are analyzing the microsystems or ecosystems they have for their businesses in those areas.

Unfortunately, cities with a frail governance can not attract substantial investment, and that is reflected in a vicious cycle: lack of investment and opportunities and more security problems.

When you mention these three states do you intend to say that insecurity will not affect investment?

Investors have a very balanced view of the country, and they know which states offer guarantees, stability and security.

How much is Mexico’s federal government concerned about the image of the country abroad?

The Federal government is concerned about the reality of what is happening in certain parts of our country, and this reality has an impact on our international image. We certainly need to make an effort, because you can do 100 things right, but bad news affect a country’s image dramatically.

Would this bad image overpower reforms?

I do not think that will happen, but it will become an issue in the risk assessment conducted by analysts. However, the balance is still positive, investors are determined to continue taking risks in the country.

What is the government’s strategy for investors to feel safe despite these events?

Global players are already in Mexico and they are the main ambassadors of the success story of their investments in our country. The best promotion is the experience of foreign investors themselves, who have had success stories in Mexico.

Economy Minister Ildefonso Guajardo Villarreal holds a degree in Economics from the Universidad Autónoma de Nuevo León, a Master’s degree  in Economics from Arizona State University and Doctoral Studies in Public Finance and Economics from the University of Pennsylvania.

Source: http://www.eluniversal.com.mx

México Expects $25 Billion in FDI this Year

by Murry Page

24 Oct 14  

mazmessenger.com

 

Ildefonso Guajardo Villarreal, Secretary of Finance and Public Credit, said México maintains its goal of reaching $25 billion in foreign direct invest (FDI) this year.

In an interview with reporters he said, “We believe that at the end of this year FDI will total $25 billion.”

He noted that during the current administration’s 20 months in office FDI has reach $50 billion.

The Secretary of Finance said that businessmen, both nationally and internationally, are very confident that the country as a whole offers an attractive and friendly environment for investment.

Notwithstanding the optimism of the Secretary of Finance, the Economic Commission for Latin America and the Caribbean (ECLAC) reported that of all Latin American and Caribbean countries, México’s FDI has dropped the most.

ECLAC announced that during the first half of this year México saw $9.733 billion in FDI, down 66% from the $28.784 billion reported during the same period last year.

   (from Azteca Noticias)

Almost $10 Billion in FDI in First Half of 2014

by Murry Page

30 Aug 14 

mazmessenger.com

 

México’s Secretariat of Economy announced that during the first half of this year México was the beneficiary of $9.733 billion in Foreign Direct Investment (FDI).

The Secretariat noted that this amount includes an atypical transaction in the second quarter, which consisted of the purchase of shares by Mexican investors of the company America Movil.

The first half of 2013 also saw an atypical transaction when shares of Mexican Groupo Modelo were sold to foreign investors.

The $9.733 billion in FDI reported for the first half of 2014 is 59 percent lower than that reported for the same period in 2013. The Secretariat noted, however, if the atypical transactions are eliminated, the FDI during the first six months of 2012 would have been 34 percent higher than the same period last year.

Spain led the list of countries investing in México with a cumulative investment of $2.544 billion.

(from El Sol de Mazatlán)

Mexico is the US’s second largest trading partner moving over USD$500 billion in goods and services across its borders

yucatantimes.com

 Should the Obama Administration take Mexico for Granted?

Why is the US Congress always occupied with east-west issues such as with Afghanistan, Iraq, Syria, Palestine and Ukraine, while practically ignoring its neighbors south of its borders (i.e. Mexico). To place it into perspective, consider the number of times Secretary of State, John Kerry or even President Barack Obama have met with Mexico’s President Enrique Peña Nieto. …maybe once or twice per year which barely compares to the hundreds of stops made in the Middle East alone.

The term ‘shuttling between capitals’ to negotiate trade deals and peace treaties with the US seems never to apply to Mexico or Central/South America, and yet Mexico is the US’s second largest trading partner moving over USD$500 billion in goods and services across its borders. With so much hanging on the balance, especially with immigration reform and border security between both countries, is it prudent for the US to take its neighbors south of the border for granted? …and what can Mexico say differently to place its agenda on a priority list for high level officials in Washington?  

Foreign Affairs ForumAt a recent forum at the Council on Foreign Relations in New York City called, Mexico as a Global Player sponsoredby the Foreign Affairs publication as part of a series on Mexico titled, Mexico’s Muscle, Revealing the Strength, the Minister of Economic Growth for the State of Mexico, Adrian Fuentes Villalobos, along with a cadre of supporting experts from both countries, sat on various panels where they proposed the idea of a NAFTA Version 2.0 (North American Free Trade Agreement). This enhanced version of the 1994 NAFTA agreement would seamlessly combine Canada, US, and Mexico into a North American partnership, one based on shared job creation and prosperity building.

Foreign Affairs Magazine

Over the past twenty years, NAFTA used up most of its political capital in Washington and depending upon who you ask has rendered mixed results. The Huffington Post, for example, underscores the net loss of 1 million American jobs plus a net US trade deficit of USD$181bn, while Mexican-sponsored research groups show a contrasting view that highlights the creation of 6 million jobs between both countries along with a 500% increase in trade capacity. Despite their differences of opinion, one indisputable benefit was the development of a manufacturing hub for heavy industry located in the center of Mexico.

What was once a sparsely populated territory has now been transformed into a series of industrial parks that when viewed from 30,000 feet high appear organized like the floor of a modern plant. Top multinationals such as GM, Chrysler, GE, BMW, Boeing, Nescafe, DuPont, and Embraer, to name a few, have established a presence in the region with their key suppliers located nearby. As testimony to their commitment and confidence in its future prospects, many companies are continuing to invest hundreds of millions of dollars to accommodate their imminent rapid growth. Foreign investors including global banks have had a key role in boosting Mexico’s FDI (Foreign Direct Investment), which has doubled to USD$35.2bn in 2013 when compared to the year before.

For a country that has carefully mapped this massive expansion and has been responsive to the strategic needs of global manufacturers, one would expect that by all reasonable standards, Mexico’s achievements thus far would have earned it international recognition, and yet, when it comes to members of the US Congress, nothing could be further from the truth. For a slew of political reasons, elected US officials have conveniently stuck to two key issues when discussing US-Mexican relations, immigration reform and border security. With good reason, members of the panel spoke of their efforts to change the dialogue with the US but have done so with little success. The US Ambassador from Mexico to the US, Eduardo Medina Mora, described his personal hidden frustrations as he described his daily reminders to members of Congress on the many potential benefits Mexico can offer to the US. Clearly, the two pending bills have greatly polarized US-Mexican relations, which has resulted in a decoupling between Washington politics and the multinationals operating in Mexico.

The newly elected President Enrique Peña Nieto recognized his country’s political shortcomings early on after being sworn into office and in a series of extraordinarily bold moves pushed through four noteworthy bills to help bring his country closer to a US framework. These include:

1. An energy reform bill that for the first time allows foreign direct investments to improve the country’s energy portfolio and infrastructure.
2. A telecommunications bill that has broken a long-held monopoly among cell phone and television operators.
3. An education reform bill that among other challenges will reward teachers on the basis of merit.
4. A labor bill that makes it easier for companies to hire and fire employees.

In each case, President Enrique Peña Nieto had to take on powerful labor unions and business tycoons to successfully dismantle their influential centers. His efforts won him praise both domestically and internationally. His ingenuity and leadership earned him the respect from his country peers at the G-20 economic meetings. However, despite President Peña Nieto’s notable achievements, Mexico still has never been recognized as a priority by either the Obama Administration or members of the US Congress. Not all was lost. In response to Mexico’s relentless requests to gain access to high level officials in Washington, the White House finally acquiesced in May of 2013 to form the HLED platform, which stands for, you guessed it, High Level Economic Dialogue. Truly an unimaginative acronym and more than likely a US stalling tactic, the HLED limits Mexico to one annual meeting with cabinet-level officials in Washington.

According to one of the panelists, what Mexico needs is a revised narrative, one that addresses key mutual benefits that elected US officials can pitch to garner the support of their constituents. Just asking the US to change their dialogue away from immigration reform and border security, may not be enough. I believe something more is needed and have taken the liberty to lay out a few suggestions below (see appendix) that could help a Mexican delegation send the same intended message to the Obama Administration but, hopefully, in a more compelling manner.

I would be remiss not to mention the current threat from drug cartels in Mexico and the illegal immigration of Central and South Americans that travel through Mexico to reach the US border. No doubt it is one of the key concerns that weigh on elected officials’ minds and the American people. However, as history has shown us repeatedly, a strong economy is a far greater deterrent than an over-extended border protection scheme. By boosting medical tourism along the US-Mexican border, expanding the State of Mexico’s manufacturing hub, and educating both US and Mexican youth to meet increasing STEM job demand, drug cartels will be forced to circulate elsewhere.  As for non-Mexican immigrants, they should find employment in their own respective countries caused by a spillover effect triggered by NAFTA Version 2.0.

Hopefully the acronym HLED will some day soon be changed to read The North American Partnership or TNAP – (NAFTA Ver. 2.0). There members would agree to meet at least monthly with US cabinet officials. Maybe then, Mexico will know it is no longer being taken for granted.

By Tom Kadala

FDI: Highest since 2007

by Murry Page

29 May 14

mazmessenger.com

 

The Secretariat of Economy (SE) said México recorded $5.821 million dollars in Foreign Direct Investment (FDI) during the first quarter of 2014. This is 17 percent higher than during the first quarter of 2013. The Secretariat also noted that this is the highest preliminary FDI figure since 2007 and higher than the average of the preliminary results recorded in the first quarter of the past six years by 38 percent.

The SE said that 61 percent of the FDI came from reinvested earnings, 31 percent of new investments, and 8 percent from accounting between companies. A total of 1,671 companies reported foreign direct investments.

By industry, 43 percent of foreign direct investments came in the manufacturing sector, 25 percent in financial services, 11 percent in the construction sector, 10 percent in the media industry, 8 percent in mining, and 3 percent other sectors.

(from El Diario)

Mexico says Pacific trade talks could conclude by April

chicagotribune.com

Mexico's Minister of Economy Guajardo addresses the audience during a dialogue as part of the Global Cities Initiative conference in Mexico City (Tomas Bravo Reuters, / November 14, 2013)

• Related
• Mexico's Minister of Economy Guajardo addresses the audience during a dialogue as part of the Global Cities Initiative conference in Mexico City

Reuters

1:58 p.m. CST, January 17, 2014

MEXICO CITY (Reuters) - An ambitious trade pact being negotiated among Pacific Rim nations could be concluded as soon as April, Mexican Economy Minister Ildefonso Guajardo said on Friday.

The Trans-Pacific Partnership (TPP) would cover almost 40 percent of the global economy and create a free trade zone reaching from North America to Japan and New Zealand, and the United States is keen to wrap up talks in the coming months.

"My estimate from the start of the year is that we could be closing a deal ... in the first four months of the year," Guajardo told reporters in Mexico City.

It could even be sooner than April, but would depend on how negotiations developed, the minister said.

The countries in the talks include the United States, Canada, Japan, Australia, New Zealand, Singapore, Malaysia, Brunei, Vietnam, Chile, Mexico and Peru.

Guajardo said he was upbeat about the prospects for foreign direct investment (FDI) in Mexico this year, although he forecast it would be lower than 2013, when the total was boosted by Anheuser-Busch InBev's acquisition of brewer Grupo Modelo.

The minister said he hoped the FDI total would be above $22 billion, or higher than 2013 without the Modelo deal.

(Reporting by Alexandra Alper; Editing by Dave Graham and Chizu Nomiyama)

Mexico may receive $35 bn in FDI in 2013, Peña Nieto says

globalpost.com

Mexico City, Oct 11 (EFE).- President Enrique Peña Nieto said Mexico could receive at least $35 billion in foreign direct investment in 2013, based on preliminary data.

"At the close of this year, foreign direct investment could eventually be more than $35 billion," the head of state said during a ceremony to inaugurate a Chrysler factory in the northern city of Saltillo.

"These investments confirm that the world is turning its attention to our country," the president said, attributing the FDI inflows to an increase in investor confidence.

He said accumulated FDI thus far this year has reached a record high of $24 billion.

During the inauguration ceremony, Chrysler Group Chairman and CEO Sergio Marchionne said the new $1.1 billion factory would provide employment to 1,000 people and churn out the RAM ProMaster commercial van.

He also announced an additional $164 million investment in another plant that will manufacture the four-cylinder Tigershark engine and provide jobs to 470 people.