Open doors to attract investment | David Ordaz

David Ordaz

Despite the difficult global economic situation, Mexico has raised its hand as an important destination for investment from around the world, highlighting its strategic location with the United States, numerous trade agreements, healthy finances and natural resources. However, it also faces obstacles that will have to be faced in the coming years, such as regulation, infrastructure, insecurity, legal uncertainty and the creation of good-paying jobs.

According to the most recent data, up to September last year there were $32 billion in foreign direct investment (FDI), of which $2,800 million (8%) corresponded to new investments, that is, from those companies that touched Mexican soil. for the first time. Although this is an important fact, the truth is that it still does not live up to the promise and potential that the authorities perceive.

According to various analysts, the issue of governance is a very important barrier to investment as low legal certainty prevents companies from investing when long-term guarantees are not provided. Let us remember that 2024 is an election year, and evolving campaigns and orderly and reliable elections will help build confidence.

Much has been written about nearshoring, the relocation of companies that are leaving China and Asia and seeking to move their supply chains closer to the major consumer that is the United States. This is where Mexico should benefit.

More and more business executives in Mexico believe that one of the problems that needs to be solved with movingis to create a skilled workforce and at the same time stop the emigration of workers who turn to other countries in search of higher wages.

Even in the current high interest rate scenario, the Mexican economy is projected to continue in 2023, driven by a recovery in private investment, T-MEC regulations and nearshoring-friendly policies from U.S. prosecutors, according to investment bank UBS.

UBS, he noted.

The predominant impetus for the investment boom comes from a strong recovery in private investment. However, another part of the increase is due to the constant development of government projects such as the Mayan train, the Mexico-Toluca intercity train, stations connecting the new Felipe Angeles International Airport, the renewal of lines 1 and 12 of the Ciudad line. de Mexico City and the Interoceanic Corridor of the Isthmus of Tehuantepec.

Mexico’s investment boom is currently driven by increased spending on machinery and equipment, driven largely by growth in non-residential construction, a sector that has seen a lot of government investment. In addition, investment attraction may continue to increase with new tax incentives for companies in key sectors such as manufacturing and export industries to locate in a country with lower tax rates.

For various business organizations such as the National Council of Maquiladora and Export Manufacturing Industries (Index), the Coordinating Council of Business (CCE) and the Confederation of Chambers of Industry (Concamin), the continuation of the nearshoring trend could double the influx of foreign investment. and economic growth in the coming years, reaching more than 1% per month and exceeding $40 billion.

For entrepreneurs and industrialists, nearshoring should ensure optimal use through seven pillars: administrative simplification, legal certainty, infrastructure, security, regional development, strengthening education and labor skills.

For its part, the Mexican Institute of Competitiveness (IMCO) recently noted that Mexico must develop a strategy to attract investment at the local level, since the phenomenon of relocation of companies “is a unique opportunity to enhance the sustainable growth of states.”

According to the 2023 State Competitiveness Index (ICE), IMCO indicated that Mexico City is the entity with the most productive sectors, but states such as Queretaro, Nuevo Leon and border states perform above average, excelling in financial services, insurance, wholesale trade and manufacturing industry.