Weekly Review I July 19, 2023

GENERAL SITUATION IN MEXICO

Weekly Review I July 19, 2023

RELEVANT NEWS

SINGAPOREAN COMPANIES WANT TO INVEST IN MEXICO AS A GATEWAY TO LATIN AMERICA

Gerald Singham, Singapore’s non-resident ambassador to Mexico, said Monday that a group of 40 startups and semiconductor and technology manufacturing companies are interested in investing and establishing themselves in the Mexican economy, which is the gateway to Latin America.

“Singaporean companies are willing to establish a presence in Mexico, attracted by its strategic location, skilled workforce and robust manufacturing capabilities,” he said.

Trade relations between Mexico and Singapore are the “gateways” to Southeast Asia and Latin America for companies, which are currently looking to relocate to global value chains.

For Mexican companies, Singapore is the “gateway to Southeast Asia” with a population of 650 million people and growing per capita income, he said at a press conference.

“A sector with tremendous growth is manufacturing with nearshoring, companies see Mexico as a strategic place to optimize their supply chain and access new markets,” he said.

The diplomat explained that to date there are 70 Mexican companies interested in investing in Singapore and 40 companies from the Asian country that are in the process of coming to Mexico to invest in the semiconductor industry, high technology and international payments.

RELEVANT NEWS

He added that Mexico’s strengths in manufacturing, coupled with Singapore’s expertise in advanced manufacturing, offer a compelling proposition for companies looking to optimize their supply chains and access new markets.

“Today, I would like to focus on key sectors of interest, highlighting innovation, trade and the relocation of production chains, where Singaporean companies are eager to collaborate with Mexico,” he added.

Singham explained that innovation has emerged as a driving force for economic progress, and Singapore and Mexico recognize its critical role in shaping their future.

“Singapore, a nation recognized for its dynamic ecosystem and innovation-driven culture, is poised to work hand-in-hand with Mexico to harness the transformative power of technology and innovation, moreover, over the years, the volume of trade between Singapore and Mexico has steadily increased, highlighting the immense potential that our partnership holds,” he considered.

In the post-pandemic era, it is imperative that we strengthen and diversify our trade ties, concluded Gerald Singham.

SOURCE: FORBES MEXICO

RELEVANT NEWS

THESE ARE THE STATES WITH THE MOST (AND LEAST) POTENTIAL TO TAKE ADVANTAGE OF NEARSHORING IN MEXICO

Nearshoring represents a unique opportunity for Mexico, however, not all states in the country have the same possibility to take advantage of the arrival of companies through this phenomenon, as those closest to the U.S. border have an advantage or those that have been specializing in certain industries.

According to the document “Zoom Nearshoring” prepared by Banorte, those entities with strong commercial ties already established with the United States, as well as with a geographic proximity, will be the most benefited, mainly in industries that present “linkages” with the northern region.

Likewise, the financial institution specifies that states with a strong specialization in essential goods for industrial development for the U.S. market will also play a relevant role.

According to Banorte’s “Nearshoring Score”, the state with the best score is Nuevo Leon with 9.3, followed by Chihuahua with 9.1, Baja California with 8.9, Tamaulipas with 8.9, as well as Coahuila with 8.2; while the least powerful were: Tabasco with 5.5, Guerrero with 5.3, Oaxaca, Chiapas and Campeche with 5.

“Moving forward, it will be essential to identify the infrastructure, transportation and communication factors involved in relocating companies and attracting foreign investment, making the most of the geographic and commercial advantages that Mexico can offer manufacturing companies allowing them to boost their productivity and growth.”

In this sense, Banorte considers that nearshoring represents a unique opportunity for the country, but in order to capitalize on it, infrastructure must be improved on different fronts, such as electricity generation, water, roads, ports, among others.

In addition, it states that it is necessary to promote public and private policies that encourage investment; to improve the rule of law; to continue the commitment to human capital formation; and to improve competitiveness;

The bank also states that it is necessary to increase factor productivity; and include other states or regions that are not currently part of the productive chain that has been formed to serve the export sector.

RELEVANT NEWS

THESE ARE THE RATINGS OF THE 32 STATES:

SOURCE: FORBES MEXICO

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

July 11-18, 2023

POLITICAL AGENDA

• Resolution by the INE: The President expressed his condemnation of the resolution by the INE (National Electoral Institute) which prohibits mentioning Xochitl Galvez during his morning conferences. He stated that he will comply with the resolution but protested it, as he believes it restricts his freedom of expression and prevents him from informing the public about a group that seeks to return to power to steal and jeopardize the future of Mexican citizens. He drew a comparison to the Fox phenomenon, implying that this is an attempt to deceive the people. The President emphasized that what matters is not the origin of individuals but their affiliations, track records, and ambitions.

• 2024 Election: President Lopez Obrador accused the INE of attempting to silence him and infringing on his freedom of expression and right to dissent, fundamental in a democracy. He pledged to review the INE’s resolution before deciding on his response. The President called on Claudio X. Gonzalez to expedite the investigation into contracts awarded to Xochitl Galvez’s companies while she was a government official, totaling around 1.5

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

billion pesos over nine years. He criticized Gonzalez’s transparency investigations, suggesting they target the 4T and lack concrete evidence, alleging manipulation by certain media outlets. Lopez Obrador criticized media outlets, claiming they are influenced by economic powers and often spread falsehoods. He suggested that if they don’t want him to speak about them, they should refrain from speaking about him. The President emphasized the importance of the country’s transformation and expressed interest in cooperating with “Mexicanos en Unidos en Contra de la Corrupcion” regarding the investigation into Galvez’s companies, which received approximately 1.4 billion pesos. This cooperation will occur before the INE’s notification.

• Altos Hornos: Al cuestionarle de las negociaciones con Altos Hornos, el presidente señalo que espera que Alonso Ancira recapacite, facilite las cosas y que acepte entregar la empresa a otros inversionistas que quieran hacerse cargo. En este sentido, comento que le pidio al secretario Ramirez de la O hablar con empresarios acereros para convocarlos a que puedan ellos quedarse con Altos Hornos. Como Altos Hornos le debe al gobierno una cantidad considerable de dinero, el gobierno ofrece, para mantener la fuente de trabajo, que se pueda hacer una restructuracion de la deuda que tienen y que se haga un plan para que los nuevos dueños vayan pagando poco a poco. El presidente dijo que se esta buscando la solucion en beneficio de los trabajadores. El acerotiene demanda y cada vez va a haber mas demanda por la integracion de America del Norte y el TMEC.

BAJA CALIFORNIA SUR

• During his visit to Baja California Sur , President Andres Manuel Lopez Obrador emphasized the government’s focus on social programs and ensuring peace and security in the state. Approximately a thousand National Guard members have been deployed, and new barracks have been established in four municipalities to address security concerns. The President explained that the growth of tourism has led to increased demand for electricity, prompting the government to invest in a power generation plant to meet the needs and prevent blackouts. He emphasized that the energy generation for Baja California Sur comes from both wind and gas sources. Governor Victor Manuel Castro Cosio highlighted the government’s investment of over one billion pesos in security, collaborating with various security forces to combat violence effectively. The water issue was also addressed, with significant investments from the federal government to tackle water scarcity and improve access for residents.

• In the Q&A session , the President addressed concerns regarding mining and water management in the region, assuring that no new mining con-

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

his tour in September. Regarding Colombia, he stated that one of the key topics for discussion in cooperation will be addressing drug trafficking and implementing welfare programs to tackle the root causes of violence.

• President Biden: President Lopez Obrador expressed gratitude to President Biden for his decision not to impose tariffs or other restrictive measures on bilateral trade due to concerns about the protection of the vaquita marina. The resolution was made by President Biden the previous day, avoiding any sanctions against Mexico.

cessions have been granted except for an extension of an existing one, which was supported by a local consultation. He stressed that water for domestic consumption is the priority and pledged to review specific water-related cases in Mulege and Guerrero Negro.In conclusion, President Lopez Obrador underscored the government’s efforts to prioritize the well-being of the people, focusing on education, healthcare, and job opportunities through various social programs in the state.

INTERNATIONAL

• Latin America: During his tour of South America, a reporter asked President AMLO about the cooperation with Colombia concerning security and the fight against drugs. The President mentioned that he will visit Colombia and Chile as part of

• Texas Government: Andres Manuel Lopez Obrador commented on the measures taken by the Texas government, which involved installing floating buoys on the Rio Grande to deter immigrants from entering the United States. He suggested that there is no need for significant action and instead advised Mexican nationals not to vote for the Texas governor or Republican lawmakers who support such measures. He referred to these actions as merely political posturing aimed at deceiving the American people, portraying themselves as strict on immigration to prevent the arrival of immigrants, who are wrongly blamed for drug trafficking into the United States.

ECONOMY

• Food prices and basic necessities: A reporter questions President Lopez Obrador about the lack of price reductions in processed foods, citing resistance from certain actors. The president defends his administration’s efforts, stating that inflation has decreased, and agreements have been reached with major retailers to keep the prices of essential goods below 900 MXN. He also emphasizes control

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

over fuel prices and the need to regulate domestic gas prices to combat inflation. Additionally, the government aims to boost food self-sufficiency by supporting the agricultural sector, providing price guarantees for key crops, and distributing free fertilizers to increase food production.

• Investment in Sonora: President Lopez Obrador announced the Sonora program’s plan to start constructing a gas pipeline and a liquefaction plant in Puerto Libertad. This project, involving a US company in partnership with the Federal Electricity Commission (CFE), is considered significant as it represents a $13 billion investment. He explained that during the previous administration, excessive gas transportation contracts were made, and the CFE must use the surplus volumes. The new plant will help utilize the excess gas and, at the same time, be considered an investment by the Commission, making it a partner in the complex and generating profits for the public company. These profits will be used to maintain a fair electricity price for consumers. The necessary permits have been obtained, and consultations with local communities are underway. The project is expected to create 13,000 direct jobs and 20,000 indirect jobs.

• Peso-Dollar : In a conference, President Lopez Obrador mentioned that the peso’s exchange rate is 16.81 pesos per one US dollar, which he described as “strong.”

SOCIAL

• Civil Society: reporter Nancy Flores from Contralinea discussed the magazine’s investigation into the “dirty war” promoted by various societal groups through media and legal actions. She specifically mentioned Mexicanos contra la corrupcion e im-

punidad, founded by Claudio X Gonzalez, alleging that it is funded by the U.S. government and several business groups. President Andres Manuel Lopez Obrador responded, stating that the strategy to counter these actions is to inform the public and trust the people. He denounced how the upper and middle classes, along with media outlets, pay significant amounts to promote their messages due to their displeasure at losing government contracts. He also accused certain prominent journalists of earning money to protect elite interests. The President revealed that the media implements coordinated strategies against his government while they previously used their influence to support candidates from other parties. Additionally, he pointed out the relationship between national and international media, asserting that correspondents from renowned outlets are funded by Mexican reporters such as Krauze, Castañeda, and Aguilar Camin.

HEALTH

• Blood Bank: President Lopez Obrador discussed a public tender for laboratory and blood bank services, which saw a significant increase in the number of studies offered. The tender was re-

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

structured to promote participation by local companies and prevent exclusivity. Companies previously sanctioned for corruption and monopolistic practices are prohibited from participating. The Secretary of the Public Function reported that out of 158 companies, 102 followed the law, while 19 engaged in corruption, and 6 practiced monopolistic behavior. The government is taking measures to prevent disqualified companies from participating through rigorous scrutiny of documentation. Further, potential legislative reforms are being considered to identify beneficiaries and prevent sanction evasion. Investigations are ongoing for the remaining six companies involved in irregularities.

• IMSS-Bienestar: During the conference, the Chief of Government of Mexico City emphasized the benefits of federalization, reassuring that the medical community transitioning to IMSS-Bienestar will experience improved conditions, including job stability and better incomes. He vowed

to address any discontent from doctors to meet their demands. The Director General of IMSS, Zoe Robledo, reported progress in 11 states with the IMSS-Bienestar 2023 Plan, such as increased productivity, additional specialist doctors, improved medical supply, and completed healthcare projects. 22 entities have signed agreements to expand IMSS-Bienestar operations, transferring hospitals and health centers. Over 5,000 specialist doctors have been added, and significant investments have been made in medical equipment and rehabilitation. The focus remains on enhancing healthcare services and supporting the medical community.

• Heath System: President Lopez Obrador addressed the issue of multimillion-dollar contracts linked to Roberto Madrazo and the government of the State of Mexico. He suggested filing a complaint with the Federal Attorney General’s Office (FGR). However, he emphasized that the change of government in the State of Mexico would benefit health institutions by incorporating them into IMSS Bienestar, leading to the cancellation of such contracts linked to corruption.

• The President also discussed past corruption in the health sector, mentioning progress made in cleaning up and achieving significant savings in medication purchases. He highlighted the need to address public-private partnership contracts for hospitals, where the government pays significant leasing fees. The President warned against the influence of those with contracts, which can make cancellation difficult, and encouraged the public to reject corrupt figures and influence-peddling in the government.

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

SECURITY

• Security in Jalisco: In his response to the explosive attack, President Lopez Obrador referred to it as an ambush and condemned the use of means related to the search for missing family members. He expressed the federal government’s support for the government of Jalisco and expressed confidence that the strategy of using the National Guard as a security mechanism will yield results. The President attributed the insecurity to the irresponsibility of previous governments in addressing social issues, leading to conditions that lure young people into organized crime. He also mentioned how some officials, like the former Secretary of Public Security, Genaro Garcia Luna, conspired with criminal elements.

• Migration: President Lopez Obrador expressed his commitment to providing assistance and support to migrants through Mexican consulates in the United States. He emphasized the importance of strengthening consular services and ensuring that migrants are not subjected to high fees and commissions when transferring money. The government is working on mechanisms to improve the financial services for migrants. Additionally, discussions are planned with relevant government agencies to address the issue. The President also highlighted the need for a comprehensive tax reform that includes migrants in the taxpayer base and provides them with legal recognition. Overall, the focus is on enhancing support for migrants and addressing their specific needs while promoting better financial and legal inclusion.

INFRASTRUCTURE

• Mexico – Toluca Train: During a morning conference, officials provided updates on a railway project comprising 58 km in five segments. The first two segments are completed, while the others are in various stages of progress, with the project expected to be fully completed by December 2023. The project aims to enhance connectivity and benefit the population by providing faster travel times, affordable fares, and increased safety in public transport. The federal investment of 97 billion MXN has primarily been allocated to civil and electromechanical work, railway equipment, and other necessary expenses. The President emphasized the administration’s focus on supporting lower-income sectors and the positive impact of combining public and private investments for the benefit of all citizens.

NEWS BY STATE

BAJA CALIFORNIA

The president of national INDEX, Luis Manuel Hernández González, mentioned that of the 154 million dollars that would reach the country through nearshoring, around 7% would be invested in Baja California. He commented that a large part corresponds to companies that are already installed in national territory. “It will arrive in organic growth, it means that the companies that are currently established are going to be generating spaces to be able to operate there,” he added.

SOURCE: INDUSTRIAL NEWS

SONORA

The Federal Electricity Commission (CFE) and Mexico Pacific Limited make a historic investment of more than 15 billion dollars in energy infrastructure. This investment includes the construction of a gas pipeline and a liquefaction plant in Puerto Libertad, generating more than 13,000 direct jobs and 20,000 indirect ones. The governor of Sonora, Alfonso Durazo Montaño, mentioned that this investment places Sonora as a leader in the production of liquefied natural gas and could position Mexico as the fourth largest producer in the world.

SOURCE: CLUSTER INDUSTRIAL

NUEVO LEON

The Governor of Nuevo Leon, Samuel Garcia started the expansion of the toll booths in Puerto Colombia, in its crossing to the United States, which will increase from 7 to 13, which will further strengthen ties with Texas, as a trading partner and position the Colombia Customs as the first nationally.

The President affirmed that this crossing has become the epicenter of foreign trade and “nearshoring” in Mexico.

CHIHUAHUA

The Competitive Intelligence Platform announced that during the month of March, the manufacturing industry was the one that highlighted Chihuahua, with a 5.5% increase compared to last year.

Currently, the manufacturing industry is the second fastest-growing economic sector in Chihuahua City, the first place is currently occupied by the construction industry.

It is expected that the industry will continue to grow with the arrival of more companies this year, especially in the manufacturing industry.

SOURCE: ENTRELINEAS

SOURCE: EL ECONOMISTA

TAMAULIPAS

The arrival of the Tesla electric car factory in Nuevo Leon will bring benefits to Tamaulipas, according to the national industrial sector, since the investment and supply to the plant will cause the economy to grow in the state for the next 4 years, according to the National Council of the Maquiladora and Manufacturing Export Industry (Index).

Its president Luis Manuel Hernandez Gonzalez mentioned that this northeastern region has traction in the industry with the arrival of the complex announced by billionaire Elon Musk last March. He pointed out to take advantage of the situation generated this year and what will come in 2024 to prepare local talent.

The automotive industry has its eyes set on the Central region of the State, said the councilman president of the Economic Development Commission of the Monclova City Council, Leonardo Hernandez.

He explained that this company is from the automotive industry and manufactures auto parts for the assembly of automotive vehicles; the southeast region of Coahuila is an important cluster in this sector and Monclova, due to its proximity, offers an option for the installation of satellite companies that provide parts and supplies.

SOURCE: MILENIO

COAHUILA

SOURCE: EL SIGLO DE TORREON

AGUASCALIENTES

Aguascalientes ranks 12th nationally, in terms of the manufacturing sector indicators presented by the National Institute of Statistics and Geography, which reveal that in Mexico there was a variation of -1.7%, and that in May 2022 the activity represented 947 million 693 thousand, while this year, there was a record of 931 thousand 191.

As for the Central-Bajio-West region, Aguascalientes, in May of last year recorded 24 million 817 thousand pesos, now, 29 million 130 thousand, which represents a variation of 17.4%.

GUANAJUATO

Guanajuato has become the entity with the highest attraction of Asian Foreign Direct Investment (FDI) in 2022, registering a total of 832.8 million dollars, said Alejandro Hernandez, Undersecretary of Investment Attraction of the Secretariat of Sustainable Economic Development of Guanajuato.

In the current era, the relocation of production chains - or Nearshoring - has become popular in Mexico. This term refers to moving production operations to geographically strategic locations, a strategy that has demonstrated its potential to boost the country’s development and growth.

SOURCE: EL SOL DE LEON

SURCE: EL SOL DE CENTRO

QUERETARO

The state has a portfolio of 59 investment projects with the intention of arriving in the state, which, if completed, would represent investments of 86,797.2 million pesos.

Meanwhile, this year 33 investment projects have been materialized in the state, totaling 119,153.5 million pesos, which will generate 9,962 jobs in the short and medium term.

SOURCE: EL ECONOMISTA

CDMX

The Mexico-Toluca Interurban Train, integrated into Mexico City’s mobility network, will connect various transportation modes and benefit 18 marginalized neighborhoods. The first phase of operation is scheduled to start on September 14th, covering a 29-kilometer stretch in 16 minutes. The overall journey will span 58 km, reducing travel time by up to an hour and a half. The project involves seven stations and 20 modern electric trains, with a total investment of 97 billion pesos. This initiative aims to facilitate travel between the densely populated and economically dynamic regions of Mexico City and the State of Mexico.

SOURCE: CAPITAL 21

STATE OF MEXICO

The Association of Entrepreneurs and Citizens of Mexico (ASECEM) and Sister Cities of Wichita held a business meeting in Tlalnepantla to strengthen their industrial and commercial exchange. The event aimed to enhance their productive and technological collaboration, sharing experiences, training, and investment opportunities. After 50 years of sisterhood, Wichita and Tlalnepantla seek to consolidate their economic ties and foster mutual growth. The gathering involved students from various universities in Wichita, showcasing different industries such as manufacturing, chemistry, food, agriculture, and restaurants. Mexican entrepreneurs also presented their productive sectors, exploring possibilities for exporting to the neighboring country and vice versa. The meeting aimed to promote cross-border cooperation and foster productive partnerships between the two cities.

SOURCE: LA JORNADA ESTADO DE MEXICO

INVESTMENT NEWS

NORTHWEST LINAMAR

Canadian company Linamar will invest $60 million in specialized equipment for producing electric vehicles at its plant in Gomez Palacio, Durango, creating 200 new jobs boosting economic development and sustainability in Gomez Palacio.

MEXICO PACIFIC

The CFE and Mexico Pacific Limited have finalized a historic investment of over $15 billion in energy infrastructure in Sonora, Mexico, creating 13,000 direct jobs and 20,000 indirect jobs, and ensuring $25 billion in revenues for CFE. The partnership involves the construction of a gas pipeline and a natural gas liquefaction plant, providing a significant boost to the country’s energy sector.

QUALCOMM

Qualcomm, the wireless technology chip manufacturer based in San Diego, has announced plans to open its first facility in Tijuana, Mexico, this coming autumn. The facility will primarily focus on engineering for internal research and development projects.

NORTHEAST PARQUE INDUSTRIAL PARTNERS

First-stone event for the “Industrial Partners” Industrial Park, with an initial investment of 8 million USD, aiming to attract automotive and electromobility-related companies to the region. The park covers 70 hectares and will feature 20 industrial warehouses for rent.

SA AUTOMOTIVE

US company specializing in automotive interiors and serving major clients like Tesla, Ford, GM, and others,

will invest $16 million to establish a plant in Ramos Arizpe, Coahuila. The new facility will create 500 direct jobs.

ONEST LOGISTICS

Mexican company Onest Logistics invested $3.5 million to adapt warehouses in Nuevo Leon for a foreign client in the consumer sector, as part of their specialization in capitalizing on nearshoring opportunities.

CENTRAL MEXICO

EXA INDUSTRIAL

Mexican company Exa Industrial will invest $56 million to expand operations in Torreon, aiming to meet market demands in the automotive and semitrailer manufacturing sector.

CDMX BARDAHL

American company BARDAHL unveiled a comprehensive improvement project for its Toluca plant, geared towards enhancing production processes, boosting its position as a leading automotive fluid producer, and creating more job opportunities in the region.

SOURCES: CLUSTER INDUSTRIAL, SAN DIEGO UNION TRIBUNE, MEXICO INDUSTRY, EL FINANCIERO