Weekly Review I April 5, 2023

GENERAL SITUATION IN MEXICO

Weekly Review I April 5, 2023

RELEVANT NEWS

HOW NEARSHORING WILL IMPACT E-COMMERCE IN MEXICO

Latin America was the region where e-commerce, or e-commerce, has grown the most in the world because it was the region that lagged the most in this area and still has a great margin for growth. The relocation of multinational companies to Mexico, a phenomenon known as nearshoring, will help to boost digital commerce in the country.

According to Mario Miranda, CEO of Ecomsur, the online commerce sector will sooner or later be impacted by nearshoring processes.

“This relocation of companies brings with it a greater investment in infrastructure, new opportunities for logistics, and even commercial needs that should be taken advantage of by e-commerce,” he said.

For example, nearshoring will have an effect on B2B e-commerce. The consulting firm Gartner estimates that by 2025, 80% of business-to-business (B2B) commerce will be conducted digitally. One of the main drivers in Mexico will be nearshoring, as the high demand for supplies, inputs, and everyday items will result in the search for new channels to streamline the buying and selling processes.

The arrival of new supply chains in Mexico will also impact new catalog products. The arrival of new companies and industrial plants will also facilitate the entry into the local market of innovative products that previously took some time to reach Mexico or Latin America. This will be very evident in areas such as household appliances, textiles, electronic equipment, and automobiles.

RELEVANT NEWS

The relocation of foreign companies opens up a panorama of infrastructure for transportation and logistics, not only with the need for new communication routes but also for companies that provide these services.

It is also possible that the need for new air routes and the scheduling of a greater number of flights with the United States will be added. If these objectives are achieved over time, they would definitely be used by e-commerce as well, said the CEO of Ecomsur.

The arrival of new manufacturing has accelerated the construction of industrial spaces or warehouses. According to the Mexican Association of Industrial Parks, there are currently more than 45 parks under construction, which also seek to be used as distribution centers for e-commerce. Having more physical spaces also speeds up the stock and arrival of products in a greater number of cities, Miranda pointed out.

Some estimates, such as that of the Inter-American Development Bank (IDB), calculate that the impact of nearshoring in Mexico will be around 35 billion dollars a year during the time that this phenomenon manifests itself. In the case of e-commerce, it can also be an opportunity to develop new business areas, as well as to reduce the existing gap between large and small cities in the country, concluded the specialist.

SOURCE: FORBES MEXICO

KEYPOINTS OF PRESIDENT ANDRES MANUEL LOPEZ OBRADOR’S MORNING PRESS CONFERENCE

March 29 – April 04, 2023

POLITICAL AGENDA

• Election of INE Board Members: The President commemorated that the election of the new INE councilors was carried out by lottery. Regarding the appointment of Guadalupe Taddei Zavala as President of INE, he stated that he thinks she is a very good choice because she is an experienced woman and her family is progressive and democratic, although he does not know her personally. He called her professional, honest, with integrity, and “incapable of being like the current president who is leaving”. He assured that having been chosen by lottery, makes his election the most transparent.

• Baja California Tour: The President announced that today he will visit Tijuana to supervise the installation of the Welfare Banks. He affirmed that close to 10 billion pesos are being invested in a roadway along the borderline to improve the circulation of vehicles and mentioned that today the issue of landslides in Tijuana was discussed. He acknowledged the work of the governor and the mayors of Tijuana and Rosarito.

• Change in the presidency of the Communication Council: Today, the change in the presidency of the Communication Council was announced in Mexico. The outgoing president, Jose Carlos Az-

carraga, highlighted the actions taken during his term to promote COVID-19 prevention practices, prevent violence at home, encourage the correct use of face masks, and promote physical activity. He also acknowledged the contribution of companies to community development and job creation. The incoming president, Francisco Casanueva Perez, emphasized the importance of companies in improving people’s quality of life by generating jobs and promoting social awareness campaigns. The President of Mexico, Lopez Obrador, praised the work of the Council during the pandemic and its collaboration to prevent COVID-19 deaths. He also called for joint campaigns between society, companies, and the government to prevent drug consumption among young people.

• Retirement from public life: President Lopez Obrador reiterated that when his term ends he will retire from public life. He expressed his confidence that there will be a generational change in which young people will play a preponderant role.

• Judicial Branch: There was criticism of irregularities and corruption cases in the Judicial Branch. It was reported that in a statement by the Presiding Minister of the Supreme Court, Norma Piña, she indicated that citizens need to know their rights in order to be able to demand them. For these reasons, it has been suggested to modify the election

KEYPOINTS OF PRESIDENT ANDRES MANUEL LOPEZ OBRADOR’S MORNING PRESS CONFERENCE

ECONOMY

process of the ministers of the Judicial Branch, since in some occasions they act as judge and party and there is no accountability to the citizens. The President was asked if he would support the reform so that these positions would be elected by popular vote. In view of this position, the President informed that a comprehensive reform of the Judicial Branch is required. He indicated that the Executive Branch has implemented the necessary modifications to avoid corruption and past practices such as the bribes received by legislators for managing public budgets for their entities. He commented that this is an integral structural problem of the Judicial Branch that comes from the legal profession and schools. He criticized the suspension of the electoral reform by Minister Javier Laynez Potisek.

• Socioeconomic evaluation: The President of Mexico has stated that the country has economic and financial stability and is one of the most attractive countries in the world for investment. There are optimistic growth estimates, and several economic indicators suggest positive trends. The number of workers enrolled in the IMSS is over 21 million, with an average monthly salary of almost $16,000 pesos. The Mexican peso is the strongest currency in the world against the US dollar, and remittances are estimated to exceed 60 billion dollars this year. There has been significant growth in foreign direct investment, and the country is expected to achieve a 3.5% growth rate in 2023. Mexico has grown more than countries like China and the United States on average, and there has been a reduction in federal crimes and vehicle theft. The President also emphasized the government’s efforts to increase the minimum wage, control inflation, and support the purchase of basic goods. Additionally, projects have been funded through anti-corruption efforts rather than an increase in debt.

• Welfare Bank: The Minister of Welfare, Ariadna Montiel, released data on social programs in Mexico. The elderly care program has more than 11 million beneficiaries and an annual investment of 339,341 million pesos. In addition, there are programs for people with disabilities, working mothers, and children with disabilities. Around 7 million people already have a Banco del Bienestar card. The Benito Juarez scholarship program, the Jovenes Construyendo el Futuro program, and the Escuela es Nuestra initiative were also mentioned,

KEYPOINTS OF PRESIDENT ANDRES MANUEL LOPEZ OBRADOR’S MORNING PRESS CONFERENCE

as well as the Sembrando Vida and Produccion para el Bienestar programs. In terms of connectivity, Internet for Wellbeing coverage and access to cellular telephony in remote areas were reported. In addition, mention was made of the efforts of Financiera del Bienestar and Banco del Bienestar to promote remittances, loans to micro-entrepreneurs, and savings. Banco del Bienestar’s coverage reaches 1,652 branches.

INTERNATIONAL

• Relationship with the USA: Mexican President Andres Manuel Lopez Obrador addressed the issue of interventionist positions by American lawmakers regarding fentanyl and proposed actions against organized crime with a presence in Mexico. He refuted the misconception that undocumented migrants are responsible for transporting fentanyl into the United States, citing a graph showing that a significant number of Americans, particularly Republicans, believe this falsehood. Lopez Obrador and the Secretary of Foreign Affairs, Marcelo Ebrard, emphasized that Mexico is not the problem but part of the solution to the fentanyl crisis, and the United States should acknowledge its own role in the issue. The President also discussed his cooperation with American legislators to stop the trafficking of fentanyl from China and addressed the legalization of cannabis in the NBA. In response to a reporter’s question about Senator Graham’s accusations that Lopez Obrador denies the drug problem in Mexico, the President argued that the Senator is in denial and that the United States must address the root causes of drug addiction, including promoting values and awareness campaigns. Ebrard also discussed Mexico’s efforts to reduce

the availability of weapons from the United States.

• Meeting with Central and Latin American countries: The President mentioned that tomorrow there will be a virtual summit with ten Central and Latin American countries and the President of ECLAC with the main objective of discussing commercial exchange to combat inflation and high prices.

• Pacific Alliance: The President commented that there will be a meeting with the President of Chile, Colombia, and others, a space that he will take advantage of to make a proposal and see what to do with the Pro Tempore presidency of the Alliance. He reiterated that he maintains that the legitimate president of Peru is Pedro Castillo and that he suffered a coup d’etat by the political class of the country, defenders of national and foreign corporations.

• Blinken and Mayorkas’ appearance: The President commented on the questioning of Secretary Blinken and Alejandro Mayorkas in the U.S. Senate regarding the domination of drug cartels in certain areas of Mexico. He stated that while there are regions with higher risks, life in Mexico remains unchanged. The President criticized Senator Graham

KEYPOINTS OF PRESIDENT ANDRES MANUEL LOPEZ OBRADOR’S MORNING PRESS CONFERENCE

for not addressing the consumption and distribution of fentanyl in the U.S. and the involvement of American drug cartels. He questioned whether there are programs promoting education and job opportunities for young people. The President reiterated the government’s commitment to preventing fentanyl from entering the U.S. and called for attention to be paid to gun control.

INFRASTRUCTURE

• Comprehensive report on Section 3 of the Tren Maya: Javier May, General Director of FONATUR, reported on Section 3, which runs from Calkini to Izamal and consists of 159.7 km. The consortium of Section 3 reported on the progress made, stating that the embankment, earthworks and 69 drainage works are completely finished and there is 80% progress in the construction of 33 vehicular crossings. The General Director of CFE, Manuel Bartlett, said that in October of this year the 19 electrical connection works will be finished and on November 30 more works will be finished between Cancun and Chetumal.

HEALTH

• Reform regarding cosmetic surgeries: Regarding the Reform to Article 79 of the General Health Law, the President was informed of the approval by the Health Commission of the Chamber of Deputies of the reform regarding cosmetic surgeries. It was requested to regulate misleading advertising in social networks and the intervention of PROFECO and COFEPRIS to detect the advertising of this type of products.

SECURITY

• Situation in Ciudad Juarez: The President expressed his condolences to the families of the migrants who died in the fire in Ciudad Juarez and investigations are being carried out to know the details. The Minister of Security will present a report on the situation and the exact number of victims. The Attorney General’s Office has been asked to continue with the investigation and to determine responsibilities. The issue of migration has been discussed with the presidents of the United States and Mexico has invested in Central America to address the root causes of the phenomenon. The President assured that his government will not allow the violation of human rights.

• Tragedy in Ciudad Juarez: Lopez Obrador announced that he will visit Ciudad Juarez and will have a meeting with doctors from the state to ensure that they do not lack anything. He said that he will be accompanied by the heads of SSA and IMSS, who will stay there to attend to the population.

• Emilio Lozoya Case: The President responded to questions regarding the Emilio Lozoya case and the advances in the same, indicating that it is important to have protected witnesses and reparations for damages in the cases being dealt with by the Prosecutor’s Office. He also pointed out that Emilio Lozoya does not want to pay damages and that money from PEMEX was given to PAN legislators to approve the 2013 energy reform. Regarding the agronitrogenados case, it was reported that 200 million dollars will be returned as reparation for damages. In addition, it is expected that the final sentence in the Garcia Luna case will be issued in June and the government will wait to see what is resolved.

NEWS BY STATE

BAJA CALIFORNIA

In order to strengthen public policies as well as the generation of clear rules, procedures and simplified services, the first Ordinary Session of the Council for Regulatory Improvement of the State of Baja California was held. It seeks to raise the levels of productivity and economic growth in the municipalities of the country, by reducing obstacles and costs for businessmen and citizens when they carry out their activities and procedures.

SONORA

The Sonora government reported that it has already begun coordination work with the private sector in China due to the arrival of Asian companies for nearshoring. “I had a meeting with a group of Chinese businessmen who participate in world leading companies in the field of electromobility and see our state as a point of interest for the battery factory, eventually for the manufacture of heavy machinery,” added the Governor of Sonora.

SOURCE: PREGONERO BAJA CALIFORNIA, EL ECONOMISTA

NUEVO LEON

Developers in Nuevo León are preparing for the demand for industrial real estate, in view of Tesla’s arrival. Giovanni D’Agostino, president in Mexico and regional director for Latin America of Newmark, estimated that there are 31 speculative projects in the planning phase, totaling more than 482,000 square meters. In the first quarter, the highest demand was from the automotive industry, with 30.5% of industrial buildings.

COAHUILA

Coahuila’s Secretary of Economy, Claudio Bres Garza, assured that at the close of the first quarter of 2023, the entity is carrying 18 new investments; the official referred that the economic trigger will continue to occur in the entity thanks to nearshoring and the Free Trade Agreement with the United States and Canada.

These investments represent more than one billion dollars and of the 18, three will be located in La Laguna, which will continue to be promoted as well as the other four regions of the state so that the number of companies that each one needs can arrive.

SOURCE: EL ECONOMISTA, EL SIGLO DE TORREON

QUERETARO

The state administration launched the Economic Development Program, which includes five sub-programs to be implemented in the current fiscal year. According to the rules of operation, the program is focused on the secondary and tertiary sectors, as it aims to generate environments that strengthen the competitiveness, productivity, development and growth of both sectors. The initiative integrates the subprogram to Promote Investment and Generate Employment (Profige), the subprogram for Business Competitiveness, the State subprogram for the Development of Technology and Innovation (Pedeti), the subprogram for Regional Strengthening (Profore) and the Program to Support Economic Sectors (Pase).

GUANAJUATO

Guanajuato is preparing a portfolio of 18 projects with a total value of 1.5 billion dollars and with them would be concretizing the goal of reaching the 5 billion of this administration, revealed the head of the state Secretariat of Sustainable Economic Development, Ramon Alfaro Gomez. In a press conference at the Industrial Transformation Mexico (ITM) Hannover Messe, the local secretary explained that from 2018 to September 2022, there is an investment amount of 3.5 billion dollars and precisely, the goal is to reach the goal of capital raised by the administration of Diego Sinhue Rodriguez Vallejo, which is 5 billion, by the first quarter of 2023.

SAN LUIS POTOSI

In the fifth ordinary session of the City Council of the Capital, the opinion presented by the Government and Economic Development Commissions was approved, with which the latter will monitor the application of programs, projects and public policies in favor of the economic growth of the municipality. In her speech, the Councilwoman President of the Economic Development Commission, Aurora Zamora, pointed out that as of the publication of this reform, the Commission she presides will be able to make proposals to promote the municipality of San Luis Potosi at national and international level: “We have the obligation to contribute so that each process and effort of this Government yields the best results for the citizens of San Luis Potosi”, she said.

CDMX

The Congress of Mexico City approved reforms to the Law on the Right to Access, Disposal and Sanitation of Water, through which the Digital Agency for Public Innovation (ADIP) and the Water System of the capital will develop a platform for the online processing of water feasibility resolutions according to the established polygons. According to the initiative presented by the head of government, Claudia Sheinbaum Pardo and approved this Wednesday in general and in particular, the objective is to digitalize and simplify existing procedures before the Water System of the capital.

STATE OF MEXICO:

During the 59 days of the electoral campaigns, the seven political parties participating in the electoral process in Mexico, through two candidacies, will have the right to broadcast 4,838 free spots of 30 seconds each, on each radio and television station with coverage in the state, to make their electoral proposal known to the citizens. In accordance with the model of transmission guidelines and the specific guidelines of the messages corresponding to the political parties for the pre-campaign periods, they had 1,800 spots in each radio and television station, 2,352 in the inter-campaign periods and now 4,838 for the campaign period of the electoral process in progress.

SOURCE: EL ECONOMISTA, MILENIO

INVESTMENT NEWS

NORTHWEST: ZF GROUP

Germany’s ZF Group dedicated to engineering processes has announced a $194 million investment in Ciudad Juarez, Chihuahua, for an expansion project that is expected to create 500 new jobs.

GPO. EMPRESARIAS MEXICANAS

Mexican-based group has announced its plans to invest over a $100 million dollars for the construction of a new energy park in Dulce Amparo, Chihuahua.

MAINLAND HEADWEAR HOLDING

Hong Kong-based company specialized in the manufacture of high-quality textile products has announced its plan to invest in Sonora and when finished, it is projected to generate over 2000 jobs in the area.

NORTHEAST

PASLIN

Paslin, a Chinese automotive manufacturing company, will invest $10million in an expansion project in Ramos Arizpe, Coahuila to create 70 new jobs in the manufacture of auto parts.

FORVIA

Forvia, a French automotive company, will invest $147 million in Apodaca, Nuevo Leon to open a new manufacturing plant, creating 1500 new jobs in the region.

UBER

Uber, the US-based ride-hailing and technology company, has announced an expansion project in Nuevo Leon, located in the northeast region of Mexico. The investment amount of $65 million has been announced

STANDARD ELECTRICAL CABLE & WIRE

Taiwanese Standard Electrical Cable & Wire dedicated to the manufacture in the textile area has announced a $10 million investment in Villa de Reyes, SLP, for an expansion project that is expected to create 1000 new jobs.

CDMX MERCK

German-based pharmaceutical company has made clear its plants to expand its operations in Mexico with an announcement of an investment of over 20 million dollars in the State of Mexico.

SOURCES: CLUSTER INDUSTRIAL, MEXICO INDUSTRY, EL FINANCIERO, CODIGO F