Weekly Report 119 by PRODENSA

INSITUATIONGENERALMEXICO Weekly Review #119 I August 24, 2022

As of this Wednesday, August 24, the new regulation on labor inspections will go into effect, which establishes new deadlines for compliance with the Mexican Official Safety Standards but also establishes penalties for ca ses in which inspections are not allowed to be carried out and even terminates the license of those who carry out voluntary inspections and falsify information.

According to the Regulation published in the Official Gazette of the Federation (DOF), it is established that inspections may be initial and will be determined by business activity and industrial branch periodically, “es tablishing a random system to determine annually the shift in which the Work Centers must be inspected”.

To set such terms, the Labor Authority must consider the industrial branch, type, and economic scale, degree of risk, number of workers, the risk they represent for the workers, and the difficulty to correct them.

INTO EFFECT,

SOURCE: Economista

In the case of companies that voluntarily join the com pliance program, they must provide truthful information, otherwise, if it is detected that “the information pro vided is false or that they conducted themselves with fraud, bad faith or violence, the Work Center will be re moved from the corresponding voluntary compliance program and the practice of extraordinary inspections will be ordered; if the falsehood of the information pro vided by the employer is proven, it will be presumed to be intentional conduct, and if the contrary is not proven, it will be considered when determining the amount of the applicable sanction, without prejudice to the hea ring that must be given to the competent Public Prose cutor’s Office.”

It should be noted that the periods for repairing the anomalies detected in the Health and Safety inspec tion, “a term ranging from immediate application and permanent observance to no more than thirty working days may be granted to correct the deficiencies and non-compliances identified.”

Likewise, there are verification inspections, which are carried out when it is required to verify compliance with the measures previously ordered by the Labor Authori ties regarding Occupational Safety and Health. The La bor Authority may enable this type of visit to be carried out on non-working days and hours.

NEWINDUSTRYMANUFACTURINGLABORINSPECTIONREGULATIONSGO ESTABLISH NEW COMPLIANCE DEADLINES

• Jesus Murillo Karam Case: the president pointed out that this issue should be divided into two: the one that has to do with the disappearance of the students (which has already been • The report already has a version of what happened and who participated in the events) and, on the other hand, how the authorities agreed to hide the facts and fabricate the “Historical Truth”. Both Murillo Karam and Tomas Zeron, according to the FGR, assumed the responsibility for this investiga tion.

• Electoral Reform: The President accused INE and the Electoral Tribunal of not being impartial and of being subjected to interest groups of the old regime. He indicated that, even if the electoral re form is not approved, they will continue to inform the people and motivate citizen participation to avoid electoral frauds.

• Report of possible acts of corruption at SEGAL MEX: Roberto Salcedo, Secretary of the Public Function, informed that 38 complaints filed with the Public Prosecutor’s Office by governmental agencies have been investigated and 618 files have been opened for alleged administrative responsi bilities.

• Social programs initiative: The President informed that before the end of his six-year term he will send an initiative to curb abuses in the management and delivery of resources of the social programs delivered by the Government.

• Pensions and subsidies in Baja California: Presi dent Lopez Obrador informed that they also have the resources to increase the pension for senior citizens in Baja California, so it will increase by 25% starting in January and another 25% in 2024. Likewise, he said that the disability program will be expanded, previously only support was given until the age of 29, and now it will be universal throughout Baja California. This with the support of the Government of Baja California and the Fed eral Government.

• Elections in Mexico City: The President declined to comment on the rumor that Felipe Calderon will be the opposition candidate for Mexico City mayor.

POLITICAL AGENDA

• Rosario Robles Case: Regarding questions about the status of the case of the ex-official, the presi dent said that he agrees that the judges are taking too long with the sentences. He added that he is proposing that the Secretariat of Public Security be in charge of this matter because many people in prison have not been sentenced for years. The amnesty decree had already been published, but no progress has been made.

3 KEY POINTS OF PRESIDENT ANDRES MANUEL LOPEZ OBRADOR’S Morning Press Conference August 17 – 23, 2022

• Airline Delays: Ricardo Sheffield stated that most of the complaints regarding delays have been filed against Aeromexico and at the Mexico City International Airport. Complaints are resolved, on average, in less than 15 minutes. He added that more than 90% are resolved in favor of the user, through Conciliaexpres. Finally, he pointed out that the delay has improved in the last week, as it is now less than one hour. The president pointed out that since there were interests that controlled the airport when the Secretary of the Navy enters to bring order and the lines begin to form, it is said that it is because the personnel were taken to AIFA, but the reality is that there are no personnel in the airlines. It is not a matter of customs or ad ministration. Reports from the Secretariat of the Navy have indicated that not a single suitcase has been lost this month.

• Coahuila mine situation: Laura Velazquez, National Civil Protection Coordinator, mentioned that geo physics works are being carried out at the mine to find new cavities, as well as possible water sup ply areas. She also commented that contact has been established with a company from the United States and another from Germany to validate and provide feedback on the strategy carried out by the government at the Pinabete mine.

• Border works: The President informed that the re sources for the border works are already available. He commented that this is the reason for his visit to Tijuana. He also informed that he will be in No gales to supervise the works and hopes to inaugu rate these border crossings before the end of his term. He emphasized that the government main tains the subsidies for the border: ISR, VAT subsi dy for gasoline, and the minimum wage is double the national minimum wage.

INFRASTRUCTURE

• Miner Rescue: It was explained that there are six abandoned mines around the Pinabete Mine, Coa huila, where the ten miners are trapped. Geophysi cal studies are already available to calculate water saturation and a large amount of water has been drained.

INTERNATIONAL

• Attention to migrants: He pointed out that atten tion to Mexican citizens in the United States is a priority, but it must be done through the institu tional channels of the Mexican Government; he called attention to consuls who do not adequately perform their work and neglect their consular du ties. Likewise, he remarked that the Mexican com munity needs greater political representation in the United States.

• Queretaro-San Luis Potosi Highway: regarding the Queretaro - San Luis Potosi highway, the president indicated that the company Vise de Santia go Villanueva was contracted for its rehabilitation and conservation. This contract is valid until 2026.

ENERGY • Illicit fuel market: General Luis Bucio, Head of the National Guard, pointed out that Tamaulipas was the state with the highest number of clandestine outlets and the states with the highest incidence are Veracruz, Hidalgo, State of Mexico, Nuevo Leon, Jalisco, Michoacan, and Puebla. As a result of the efforts, 589,333 liters of fuel were recovered and 307 clandestine outlets were located.

KEY POINTS OF PRESIDENT ANDRES MANUEL LOPEZ OBRADOR’S

• Crime Incidence Report: Luis Cresencio Sandoval, head of the Secretary of National Defense, present ed the Crime Incidence Report in Baja California. He informed that in the state there is a downward trend of 6 crimes: intentional homicides, vehicle theft, home theft, transportation theft, and extor tion. On the other hand, only the crimes of kidnap ping and human trafficking have increased. On the other hand, he pointed out that during June, Baja California ranked second in intentional homicides with 9,293. He indicated that the municipalities with the highest incidence of crime are: Tijuana, Mexicali, and Ensenada, They are also those with the highest police presence.

• Foreign investment: The President informed that never before had so much investment been re ceived as in this first half of the year, sharing the following graph. This is higher than that recorded in the last year of President Peña Nieto’s admin istration. He highlighted the investment from the sale of Grupo Modelo, Televisa shares, and Aero mexico. He considered Mexico to be an attractive and safe country for investment.

INVESTMENT

KEY POINTS OF PRESIDENT ANDRES MANUEL LOPEZ OBRADOR’S

• Citibanamex sale process: Regarding the suspen sion of the Citibanamex sale process by a judge, the president said that the process will continue and even commented that the bank accepted that preference will be given to Mexican buyers. In this regard, he recalled the four conditions for the sale of Citibanamex: that it be acquired by Mexicans; that the buyers have sufficient economic solvency to protect their clients; that the buyers are up to date in the payment of their taxes; and that Bana mex’s cultural patrimony remains in Mexico. He also mentioned that he made a recommendation to the Chairman of the Board not to lay off current employees.

• Security Report: Rosa Icela Rodriguez, Secre tary of Security and Citizen Protection, assured that good results are being given from the strat egy implemented in security matters, she assured that there is a reduction in the incidence of fed eral crimes, including crimes against health, fis

SECURITY

• Zero Impunity: Ricardo Mejia, Undersecretary of Public Security, indicated that from August 11 to 17, 8,305 people were arrested for common and federal crimes. The arrests were made in Jalisco, Guanajuato, Chihuahua and Baja California. Con cerning crimes against journalists, 12 cases were reported throughout the year, with 29 arrested or wanted and 21 linked to proceedings.

KEY POINTS OF PRESIDENT ANDRES MANUEL LOPEZ OBRADOR’S

• ISSSTE: The President pointed out that a complete reform of ISSSTE is being worked on since this was one of the most abandoned and privatized social security systems. He added that next year there will be a first-class public health system, universal and free of charge.

• Health system and vaccination: President Lopez Obrador commented that the goal is to have an advanced health system, as in the Nordic countries. He added that yesterday it was confirmed that 10 million Pfizer doses for children are being offered. The contract is being closed to have them in Sep tember. Finally, he commented that the COVAX mechanism is moving towards its closure. In the world there is a surplus of vaccines in developed countries, they have surplus vaccines while there is still a shortage in poor countries. Zoe Robledo explained that the complexity of the health sys tem in Mexico is its fragmentation. It is not possible to continue having 32 different coverages. This is a legacy of neoliberalism in terms of inequality of service with respect to people’s location, where they are forced to move to large cities to receive care.

6 cal, financial among others, she also remarked a decrease in the number of intentional homicides. During this administration, motor vehicle theft has been decreasing, in July by 43.1% compared to December 2018. For its part, the fight against fuel theft continues to yield encouraging results.

HEALTH: • Pulse of health: Zoe Robledo, head of IMSS, men tioned that as a result of the recruitment days for medical specialists, a total of 22.49% of the va cancies have been filled. a total of 22.49% of the vacancies have been filled, including specialists in anesthesiology, gynecology, obstetrics, pediatrics, general surgery, general surgery, pediatric spe cialists in anesthesiology, gynecology, and obstet rics, pediatrics, general surgery, among others. He added that they will be placed in institutions ded icated to assisting people without social securi ty. Regarding the state of Nayarit, he detailed that there is 90% coverage of specialist doctors; 237.2 million pesos have been invested in infrastructure; 94.48% of the services are provided. In Tlaxcala, there is 91% coverage of specialist physicians; 174.1 million pesos have been invested in infrastructure; 88% of prescriptions are filled. Colima has 100% coverage of specialist physicians; 153.6 million pe sos have been invested in infrastructure; 90% of prescriptions are filled.

SONORA President Lopez Obrador reported that in the coming days the Government of Mexico will present an energy develop ment plan in Sonora. He mentioned that they are going to work on all the gener ation of electricity with solar plants, the same thing that is being done in Puerto Peñasco, but not just one plant, but five to have renewable electricity. In addi tion, the plan includes the exploitation of lithium, mainly for the automotive in dustry.

7 NEWS BY STATE

BAJA CALIFORNIA Aram Hodoyan Navarro, leader of the Metropolitan Center for Economic and Business Information (CEMDI), reported that Baja California ranked third among the states in the country that registered a higher value in exports, during the first quarter of 2022. Hodoyan Navar ro highlighted that 95.67% of exports correspond to the maquiladora indus try, where the activities that presented a higher value were the manufacture of computer equipment, televisions, and electronic devices with 33.87%.

NUEVOSTATELEON

8 NEWS BY

With the participation of the private ini tiative and within 10 years to obtain re sults that reverse the current situation of polluted air in Nuevo Leon, the state authorities launched the Comprehen sive Plan for Air Quality Management This(Pigeca).was announced yesterday by the Ministry of the Environment, headed by Alfonso Martinez Muñoz, who said that the plan will be ready in seven months.

COAHUILA Coahuila is one of the entities that has recorded the largest number of invest ment projects in recent months, since only this year 24 of them have been com pleted with an amount of $1,244 million dollars.

TAMAULIPAS According to the Secretary of Econom ic Development of Tamaulipas, at least three more foreign investment projects will land in the state, in addition to the 2 already completed this year. The two projects already landed represent an in vestment of more than $80 million dol lars and will be able to generate around 1,500 jobs.

9 NEWS BY

POTOSI

The employed population of San Luis Po tosi decreased between the months of May and June compared to the first quarter of 2022, according to the statistics of the Na tional Occupation and Employment Sur vey, New Edition (ENOEN, for its acronym in Spanish). During the second quarter, 1,242,654 Potosi residents were employed, while in the same period a year ago the number was 1,271,706. This implies a de crease of 29,056 people in the employed population of San Luis Potosi. Likewise, of the 1.28 million people who made up the Economically Active Population (EAP) in the second quarter of the year, 42 thou sand 425 were not gainfully employed, thus reporting an unemployment rate of 3.3% with respect to the employed popula tion. At the national level, the entities with the highest unemployment rates were: Ta basco: 5.7%, Mexico City: 5.4%, Quereta ro: 4.3% and Mexico City: 5.4%. Queretaro: 4.3%. State of Mexico: 4.2%.

The Government of Jalisco has managed to position the state as a reliable and pros perous destination in Mexico for new in vestments, proof of this is that during the first semester of 2022 the state captured 1,904.6 million dollars (mdd) of Foreign Di rect Investment (FDI), which represents an increase of 117.7% compared to the same semester of 2021, according to preliminary figures from the Ministry of Economy. At a national level, in this period the figures show a preliminary increase of 49.2%, this means that Jalisco is positioned above the national average and ranks third as the state with the highest attraction of foreign capital, only behind Mexico City with $9,356.2 mdd and Nuevo Leon with $2,661.3 MDD. This is the result of a solid internationalization agenda promoted by the Growth and Economic Development Cabinet and the Secretariat of Economic Development (SEDECO), which has shown international investors that there are guar antees and stability in the state to grow their businesses.

SANSTATELUIS

JALISCO

By sector, manufacturing accounted for 37.4 percent of the accumulated amount of foreign direct investment in the first half of this year, mainly due to activity in the basic metal, chemical, plastic and rubber, food, beverages, and transportation equipment manufacturing industries. In turn, trans portation-related services captured 24.6 percent, 14.3 percent corresponded to fi nancial and insurance services, while com merce captured 7.2 percent. Thus, Pueb la, together with Mexico City, Nuevo Leon, Jalisco, State of Mexico, Baja California, Chihuahua, Tamaulipas, Guanajuato, Que retaro, and Veracruz, accounted for almost 80 percent of the preliminary Foreign Di rect Investment figure of 27,511.6 million dollars that entered the country between January and June.

10 NEWS BY

AGUASCALIENTES INEGI presented the main results of the Monthly Indicator of Industrial Activity by State for April 2022, highlighting that the states that showed the most pronounced monthly increases in their industrial activi ty, in real terms, were: Morelos, Colima, Ta basco, Hidalgo, Tlaxcala and Puebla. Like wise, INEGI referred that, in April 2022, and with seasonally adjusted series, the entities that registered the most signifi cant growth at annual rate, in real terms, in their industrial production, were: More los, Hidalgo, Tabasco, Sonora, Michoacan and Oaxaca. In the specific case of Aguas calientes, data compiled and released by INEGI indicate that in April 2022 it had a percentage variation with respect to the previous month of 0.9%, while with re spect to the same month of 2021 it was -7.9% (Seasonally adjusted figures).

QUERETARO According to the Swiss-Mexican Chamber of Commerce and Industry, the Bajio re gion is in the interest of Swiss companies because it has conditions that enable the growth of various sectors including man ufacturing; in this regard, upon presenting the labor report for the first half of 2022 in the region, OCCMundial, the Online Ca reer Center, reported that the economic sector that generated more jobs in the Ba jio was the Manufacturing Industries with 43% of the vacancies offered in the region. It announced that on its platform, the re gion, comprising Aguascalientes, Guana juato, Queretaro, and San Luis Potosi, reg istered 40,602 job offers from January to June of this year, which represents a 20% increase compared to the same period in 2021. Employment in the central region of the country represents 10% of the na tional total, which places the region in fifth place in the generation of jobs in the coun try, below Mexico City (30%), Nuevo Leon (14%), Jalisco (10%) and the State of Mex ico (10%).

GUANAJUATOSTATE

11 NEWS BY STATE

CDMX

The Ministry of Economic Development (Sedeco) and the Digital Business Agen cy (ADN) Yellow Section signed a collab oration agreement to provide discounts on the creation of digital tools and training in online sales to make Micro, Small, and Medium Enterprises (MSMEs) in Mexico City more competitive. The head of Se deco, Fadlala Akabani Hneide, explained that this type of alliance is part of the strategy that the capital’s government has undertaken to promote e-commerce in order to encourage local consump tion of items made by entrepreneurs and companies in the City, which has allowed the economy to strengthen and continue to recover.

Since the highest peak of the “fifth wave” of the Covid-19 pandemic, active cases have decreased by 82 percent in the State of Mexico, according to data from the Ministry of Health of the Federal Government. Since July 16, 2022, when one of the maximum peaks of this fifth wave of contagions occurred, the entity went from 24,865 to 4,474 active cases, according to data from the daily techni cal reports issued directly by the federal agency.

STATE OF MEXICO

- LEADGO

The multinational company Unilever will invest 5.5 billion pesos, which will culminate in 2024, and aims to expand production and export capacity in the plants located in Tultitlan and Lerma.

Arrived in Peto, Yucatan, where they held the groun dbreaking ceremony for their new operations plant. Vertical Knits invested 90 million pesos and will ge nerate 1,700 direct and indirect jobs.

The Chinese company Leadgo-Mexico concluded its installation in Ramos Arizpe to produce acces sories for the wind power, aerospace, and transpor tation industries. The new industrial complex inves ted 5 million dollars and began with 150 employees.

CDMX - VERTICAL KNITS

IN MEXICO

NORTHEAST - HOME DEPOT Home Depot presented its positioning plan until 2025 in Nuevo Leon, where they will invest 1.9 bi llion pesos in a new plant. They will be generating around 500 direct jobs.

ECONOMYRECOVERYECONOMICANDINVESTMENTS

- UNILEVER

CENTRAL MEXICO - BCS AUTOMOTIVE BCS Automotive Interface Solutions invests 1.2 bi llion pesos in El Marques, Queretaro for its facili ty. The brand, which is collaborating with Tesla on a wireless electric charger, will generate 1,100 new jobs in the state.

ALVAROGARCIA HR, Vice President NEW RULES

The new Inspection rules incorporate the new self-evaluation tools and indicate that those companies with an approved self-evalua tion checklist will be exempt of any ordinary inspection.

13 LABOR

INSPECTIONSFORIN MEXICO.

Starting today employers will only have up to 30 days, as opposed to the previous 90 days, to offer evidence of compliance after find ings during an inspection, but those 30 days will be only as an ex tension, for all general labor compliance, the employers will only have 5 days to provide evidence. This is a critical change as it is reducing the time employers, or the legal representative, must is sue written response or observations to the inspection.

The Mexican authority has made relevant changes to the official Labor Inspection Regulations.