Weekly Report 121 by PRODENSA

INSITUATIONGENERALMEXICO Weekly Review #121 I September 7, 2022

Mexico published that the new industrial policy is not a thick book of strategies to generate economic growth, but it looks to recognize what has been done in Mexico and to relaunch that powerful brand in the Uni ted States and Canada.

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“It is not about having a very thick book of industrial policy, but a solid foundation to build on the brand, as well as to recognize what has been done in Mexico and

Tatiana Clouthier Carrillo, Secretary of Economy, assu red that the new industrial policy, which will be presen ted after September 8, 2022, will be accompanied by a series of accelerators. “We are waiting for the Treasury to give us the call to say how it entered the legislative proposal to make some accelerators of the economy linked to the industrial po licy,” declared Andres Manuel Lopez Obrador.

After September 8, when the Ministry of Finance and Public Credit (SHCP) delivers the economic package, we will come out with the announcement of the new industrial policy, she commented at the end of her par ticipation in the panel Strategic Alliance: Mexico and the United States held at the 80th anniversary of the Ame rican Society of Mexico. “The Ministry of Finance will be the one to give the face for it since we are proposing that an industrial policy should be accompanied by some accelerators,” said the Forbesofficial.

relaunch the brand, which is very powerful,” said Jose Medina Mora Icaza, president of the Mexican Employers’ Confederation (Coparmex). Since last year, when the economic reactivation plan was worked on between the business organizations and the Ministry of Economy, the importance of having an industrial policy was already clear, said the leader of the employers’ union. “It was decided that the economic reactivation plan would be presented, which was done at the beginning of the year, and we continue working in parallel with the industrial policy, which today is an important date to re view where we are going and we are in the last stage,” he commented. The industrial policy promoted by the Ministry of Eco nomy (SE) is based on innovation and technological-scientific trends, as well as human capital training for new trends and the promotion of regional content and linkages for micro, small and medium-sized enter prises (MSMEs). Also, the new strategy promoted by the government of Andres Manuel Lopez Obrador contemplates detona ting sustainable and sustainable industries in the Mexi can “ForRepublic.thedesign of this industrial policy, the strategies and best practices of leading countries in industrial in novation have been studied and through the analysis of the particular characteristics of Mexico,” added the SE in its analysis.

SOURCE: FORBES MEXICO

INDUSTRYMANUFACTURING

The Commerce Department said Tuesday that “fun ding documents, which will provide specific application guidance (...) will be released in early February 2023. Awards and loans will be made on a rolling basis as soon as applications can be responsibly processed, evalua ted, and negotiated.”

The Commerce Department can use up to $6 billion to support loans or loan guarantees instead of grants and “could be leveraged to support a $75 billion credit pro Commercegram.”

MANUFACTURING SUBSIDY PROPOSALS STARTING IN FEBRUARY

President Joe Biden signed the legislation to boost U.S. competitiveness against China and to subsidize chip manufacturing in the country to ease a persistent pro cessor shortage that has affected everything from was hing machines and video games to cars and weapons.

The department said it plans to use $28 billion to “es tablish domestic production of cutting-edge logic and memory chips that require the most sophisticated ma nufacturing processes available today.”

The U.S. Commerce Department said Tuesday it expects to begin seeking grant applications for semiconductor chip development as early as February under a $39 bi llion government fund aimed at building new facilities and expanding existing production in the country. Congress in August approved $52.7 billion for semicon ductor manufacturing and research and a 25% invest ment tax credit for chip plants, estimated to be worth $24 Thatbillion.credit applies to projects that begin construction after January 1.

Another $10 billion will go to new manufacturing capa city for “mature and current-generation chips, new and specialized technologies, and for suppliers to the semi conductor industry,” which includes chips used by auto makers in automobiles, weapons, and medical devices. The chip bill also includes $11 billion for research and de velopment spending.

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Secretary Gina Raimondo told Reuters in an interview last week that the top priority is to get a team in place to oversee the program and then issue “high-level principles and guidance on how we’re going to execute this program and then we’re going to have a pretty intense engagement period with stakeholders” over “the next several months.” El Economista

ECONOMY • Economic package: President Andres Manuel Lo pez Obrador assured that there will be no increase in any taxes, including electricity, gasoline, diesel, gas, cigarettes, and soft drinks. He affirmed that all priority programs will be able to be financed, and funds will continue to be released for develop ment and welfare programs. Likewise, a budget is contemplated to conclude the works of the Mayan Train, the programs for the Isthmus, Dos Bocas,

• INE and TEPFJ: The reporter of Contralinea, Nancy Flores, pointed out that INE intends to censor more than 200 people who expressed their opin ions, which is a violation of the Political Constitu tion of the United Mexican States in terms of free dom of expression and is particularly focused on people who support the Fourth Transformation. In this regard, President Lopez Obrador responded that a transition process is being carried out, which naturally leads to political confrontation and con frontation of ideas. He added that during his ad ministration, freedom of expression has been ful ly respected, and democracy has been promoted, unlike in previous governments.

5 KEY POINTS OF PRESIDENT ANDRES MANUEL LOPEZ OBRADOR’S Morning Press Conference August 31 –September 6

• National Guard Initiative: President Lopez Ob rador acknowledged the project approval in the Chamber of Deputies. He recalled that, in his gov ernment report, he mentioned that there are cur rently 242 National Guard barracks out of 500 that will be operating at the end of the six-year term, 115 thousand elements have been recruited. He stated that his initiative has the purpose of having the National Guard become part of the National Defense Secretariat, to consolidate this security corps with discipline and professionalism. He em phasized that his government has not been char acterized as violating human rights. He mentioned that it is not true that they are going to militarize the country, since they only seek to prevent this organization from being corrupted as happened with the Federal Police.

• Officially Preventive Prison: The President men tioned that if the SCJN cancels the informal preventive prison it would be an invasion of powers by the Legislative Branch of the SCJN. He affirmed that it is necessary to have confidence and be lieves that they will analyze it well. Furthermore, after being questioned about the people who spent several years in jail without even receiving a sentence, the President mentioned that the legal route that should be taken in this sense is to send a reform initiative to Congress and then seek to implement mechanisms to purify the judiciary and protect victims.

POLITICAL AGENDA

• Mina del Pinabete: The President of the Repub lic stated that the current mining concessions will be maintained. However, no new concessions will be granted. Regarding water, he indicated that it is necessary to put order to generate a balance between development and the care of natural re sources.

• 4th Government Report: The President reiterated that the decision was made to maintain the ener gy subsidy despite the increases in gasoline and diesel worldwide, which means allocating 290 bil lion pesos of subsidy, otherwise inflation would have been 14%. The minimum wage has grown 6070% in real terms during this administration. Re mittances, welfare programs, and the recovery of purchasing power have improved the economic situation of the country’s poorest population. At the same time, he highlighted that Mexico is one of the most attractive places to invest; he pointed out that the growth in the first semester of 2022 is 12%. He highlighted that bilateral trade between Mexico and the US had reached 384 billion dollars this year, surpassing pre-pandemic levels to reach a record. He also mentioned that work continues to strengthen the anti-inflation plan.

• Gas pipeline in Quintana Roo: the President of the Republic pointed out that the CFE is in the pro cess of building two thermoelectric plants for the peninsula, one in Merida and the other in Vallad olid. He indicated that a French company has an agreement with the CFE for the extraction of gas; he assured that the matter will be reviewed.

KEY POINTS OF PRESIDENT ANDRES MANUEL LOPEZ OBRADOR’S

• LitioMX: President Andres Manuel Lopez Obrador said that a plan is being developed for Sonora to become a state for the generation of clean renew able energy, production of lithium batteries, and a reference for the automotive industry. The con struction of a solar energy generation plant, the largest in Latin America, has already begun, and a power transmission line from Sonora to Baja Cal ifornia is also being planned. The company seeks to carry out the exploitation of lithium with a com prehensive plan that involves public and private investment; he announced that Pablo Daniel Tad dei will be the company’s CEO.

ENVIRONMENT AND INFRASTRUCTURE

6 two coker plants that are being built, to modernize refineries, and build new thermoelectric plants in the Yucatan Peninsula. Likewise, the CFE already has a budget to solve the interconnection prob lem in the north and has 34 electricity projects. A debt restructuring is being carried out. He high lighted cases of debt contracted at rates of 6 and 8%, which have been restructured to 1%.

• IMSS-Coplamar: The President informed that there is a program that has to do with traditional medicine and midwives for primary care. He em phasized that the entire public health system for those who do not have social security will be of fered through the IMSS-BIENESTAR program.

HEALTH • COVID-19: Dr. Hugo Lopez-Gatell reported that in the last eight weeks, there have been a reduction in COVID-19 indicators. He mentioned that there could be a reactivation in the number of cases during winter months. He mentioned that from September 8 to 9, the first shipment of vaccines will be made through the COVAX mechanism. By September 30, 10 million 300 thousand doses of vaccines will have been sent. He assured that there will be enough vaccines to cover the entire popu lation.

• In the context of the pandemic, it is necessary to start returning all students at all educational lev els to school; however, he pointed out that actions against Covid-19 must continue.

KEY POINTS OF ANDRES MANUEL LOPEZ OBRADOR’S

• The 2022 - 2023 school year represented the re turn to school of about 24 million students.

PRESIDENT

EDUCATION • Public Education: Leticia Ramirez, Secretary of Public Education - Informed that as of September 1, she took the direction of the Secretariat. She as sured that as a principle of the 4T, she will focus on the most vulnerable sectors in the country’s different regions.

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SONORA Sonora is seeking to create a decen tralized and sectorized company under the Federal Ministry of the Navy, which would be incorporated into the Nogales fiscal corridor and the administration of the Ciudad Obregón airport and the Guaymas seaport. In addition to the operations of the new company Lithium for Mexico (Lithium MX) in Sonora, a coordination company focused on transporting the mineral and manufactured products will also be cre ated, informed Governor Alfonso Dura zo Montaño.

Seeking to position Baja California as a platform for the biomedical industry. Entrepreneurs and representatives of the Government of Baja California are pursuing a project to position the state as an incubator for the Biomedical in dustry, for which they are preparing the first “BioMedTech Hackathon,” an event aimed at fostering innovation and pro moting entrepreneurship in this sector.

NUEVOSTATELEON

Heavy rains were recorded over the weekend and this week in Nuevo Leon, which caused the dams to increase in their levels. The rains occurred after the dams got empty in previous months and caused a water crisis in the State.

TAMAULIPAS Foreign trade in Tamaulipas reached a record figure in the movement of exports in the first half of 2022, particu larly to North America, with $12.5 billion dollars and which represents a growth of 16% compared to the same period in 2021.

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The Municipal President, Luis Nava, has es tablished that support for women is a pri ority to make Queretaro the city we want, hence the “Women’s University” is another option for their personal development and a better quality of life for them and their families. The “Universidad de las Mujeres” offers a bachelor’s degree; 16 undergrad uate degrees in person, live streaming, or online; four undergraduate degrees in Health Sciences; and 13 Master’s Degrees online or in person on Saturdays. The ad mission process seeks to provide more opportunities for low-income women or women with some degree of vulnerability to study for bachelor’s or master’s degrees through economic incentives that include free enrollment and discounts ranging from 10 to 70 percent, always according to their socioeconomic profile and calcu lated on a monthly tuition cost of 2,400 pesos. The socio-economic study assesses whether the applicant is pregnant, is head of a household, has a disability, lives in a condition of orphanhood, has been a vic tim or offended by a crime, has no source of income, or belongs to an ethnic group. This benefit will remain in effect for female undergraduate students who present a minimum average of six, and for female master’s degree students a minimum av erage of eight and keep up to date with their payments.

QUERETAROSTATE

JALISCO After more than two years of a pause due to the COVID-19 pandemic, the National Association of Plastics Industries (Anipac), presided by Aldimir Torres Arenas, is re suming its on-site events and from Septem ber 8 to 11, will celebrate the 54th edition of its annual convention in Puerto Vallarta, Jalisco, with businesspeople, industrialists, and other prominent figures of the indus try. Among others, Roberto Arechederra, Secretary of Economic Development of the Government of the State of Jalisco; Luis Fernando Godoy, General Director of Data Analysis and Economic Intelligence of the Ministry of Economy; Carlos Mend ieta, Interim President of the Board of Di rectors of Global Compact Mexico, and Sofia Diaz Rivera, Head of Sustainability of Danone Mexico, will be present. A total of 5,100 companies make up the plastics sector in our country, 13 percent of which are concentrated in Jalisco, making it even more relevant, since together with Mexico City, the State of Mexico, Guanajuato, Nue vo Leon, and Queretaro, they generate 65 percent of the total value of plastics pro duction, which is equivalent to 389 billion 15 million pesos; likewise, the industry ex pects to grow by 4.2 percent this year.

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SAN LUIS POTOSI This Wednesday, through the Tecnologico de Monterrey, campus San Luis Potosi and the Ministry of Economic Development (SEDECO), the official announcement was made to make the state the official host of the seventh edition of Expopartes 2023. The event will be held in June 2023 for two days, offering networking spaces for com panies. The main objective is to promote new agreements in more than 600 meet ings between suppliers and leading com panies in the automotive industry, as well as the development of economic activity in the state and the region. In this sense, both instances expect for this event: more than three thousand visitors, around 210 supplier companies and 25 host compa nies, from SMEs to assemblers, and exhib itors from Mexico, the United States, and Canada. They also showed that compa nies and exhibitors from other states such as Aguascalientes, Zacatecas, Queretaro, Guanajuato, Tamaulipas, Hidalgo, Guana juato, and Jalisco will be able to attend the event to highlight their services and prod ucts.

In the last thirty years, the Gross Domes tic Product in Aguascalientes has grown an average of 4%, informed the Secretary of Economic Development of the State, Manuel Alejandro Gonzalez Martinez, who specified that this six-year term will con clude with a state GDP between 3 and 3.5%, due to the economic impact suffered by the COVID-19 pandemic. This administra tion received in December 2016 an econ omy with an approximate growth of 4.5 and 5%, which percentage was maintained in the following exercises, but in 2020 it plummeted by almost 8.5% which implied the disappearance of 4 thousand econom ic units, so several years are still required to recover that dynamism, he admitted He added that in the year 2021 there was a re covery of the loss and in this 2022, despite the prevailing conditions in the country and the world, with high inflation and sequels of the pandemic, the economic improve ment will still take two or three more years to access sustained growth. The head of Sedec said that manufacturing is the main contributor to the state’s GDP with 46-48%, including the automotive industry, textiles, furniture, space, and all those dedicated to transforming machines-mind-hands. Then, the construction industry contributes 10% to 12% of the GDP, while commerce and services account for 30 to 32%, the latter being responsible for the largest number of economic units in the state, he recalled. So far, the accumulated economic growth has been almost 4% in the last three de cades, but as a six-year term, the approx imate closing will be 3%. However, INEGI’s quarterly indicators are not available to accurately determine the increase in the state’s GDP, he pointed out.

AGUASCALIENTESSTATE

“Mexico and Brazil are the two powers of Latin America, we have bridges that unite us, we are very similar in culture, in wealth and I think it is important that we increase our relationship. We have a long way to go together, that is why Brazil is for us the ninth trading partner of the State,” said Di ego Sinhue Rodriguez Vallejo. Present at the panel, Fernando Estellita Lins de Salvo Coimbra, Ambassador of Brazil in Mexico, spoke of the strong trade relationship that exists with Guanajuato and how it can im prove investment between the entity and the South American country. “We have a solid relationship; we have companies that have decided to settle in this fabulous state and are very happy to be here. I would like to tell you, Mr. Governor, and the business people and their team, that the Brazilian embassy is ready to collaborate and cre ate bridges to facilitate business and dy namic cooperation”, explained the Brazil ian diplomat. CAMEBRA is a non-profit civil association created in 1987 with the commitment to support and promote the sustained economic development of Mexi can and Brazilian companies by facilitating and commenting on successful business relations between companies and institu tions of both countries.

GUANAJUATOSTATE

The State of Guanajuato and Brazil pro mote the exchange of investments and strengthen their ties of friendship, said the Governor of the State, Diego Sinhue Rodri guez Vallejo, who led the opening ceremo ny of the Doing Business with Brazil Panel, organized by the Chamber of Commerce of Mexico Brazil (CAMEBRA). This meeting aims to promote investment by Brazilian companies in Guanajuato and Guanajuato companies in the South American coun try. “We are not only making Guanajuato an ideal destination for investors or pro ductive projects, but we are also promot ing the internationalization of our young people so that they can complement their education, technical and professional.

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CDMX In the morning conference at the Na tional Palace, he touched for the second time, in a little over a month, on the suc cession of Claudia Sheinbaum in Mexico City, a process in which, he made clear, all Morena members have the right to participate. Lopez Obrador accepted as suggestions of possible candidates the Secretary of Security, Rosa Icela Rodri guez, the Secretary of Government of Mexico City, Marti Batres, and the Mayor of Iztapalapa, Clara Brugada, whom the President had already uncovered at the beginning of August, where he also in cluded his Secretary of Welfare, Ariadna Montiel.

STATE OF MEXICO

This Monday, the theoretical exam was held for more than 5 thousand applicants to fill one of the 142 vacant positions of Investigation Police in the Attorney Gen eral’s Office of the State of Mexico (FG JEM), who will wait until September 9 to know the results. According to the insti tution, more than eight thousand wom en and men attended the call; however, the only ones who passed the first filters were 5 thousand 413 applicants, who were summoned at the Forum Zina facil ities in the municipality of Zinancantepec to take the exam.

NESTLE PURINA Nestle Purina recently announced that it will invest 2 billion pesos to expand operations at its plant lo cated in Silao, Guanajuato. With this capital injection, two new production li nes will be created, and 150 direct jobs will be ge nerated. CDMX TEMPUR SEALY Tempur Sealy announced a US$3.5 million invest ment in its plant located in Toluca, State of Mexico. The investment consists of a 50% expansion of the production area to 19,000 square meters, including manufacturing and office space.

CENTRAL MEXICO

DONALDSON Donaldson Filtration Solutions confirmed an invest ment of more than 1.5 billion pesos for the cons truction of a plant in Leon, Guanajuato, which will generate more than 600 jobs. The company specializes in manufacturing indus trial filters for various sectors such as mining, agri business, aeronautics, automotive, auto parts, and food, among others.

ECONOMYRECOVERYECONOMICANDINVESTMENTS IN MEXICO