Weekly Review I November 29, 2023 by PRODENSA

GENERAL SITUATION IN MEXICO

Weekly Review I November 29, 2023

RELEVANT NEWS CONGRESSMEN PREPARE INCENTIVE PROPOSAL TO ACCELERATE PRODUCTION OF HYBRID AND ELECTRIC VEHICLES IN MEXICO The Climate Change and Sustainability Committee of the Chamber of Deputies is preparing a bill to promote the sale and production of hybrid and electric vehicles in the country through incentives and incentives, which could be presented on December 15, said Edna Gisel Diaz Acevedo, president of said committee. “The minute we have in this commission has to do precisely with these hybrid and electric vehicles, which may have a stimulus for the industry, a little have heard what is happening in the United States and other countries that is stimulating the industry to produce hybrid and electric vehicles, which they said we were going to produce by 2030″, she said in an interview. She noted that discussions are being held with manufacturers of these types of vehicles to fine-tune the terms, and there is talk of increasing fiscal and tariff incentives, as well as public policies to motivate the market. “When we say that there will not be an exhorbitant burden, we do not intend to give a stimulus or release taxes to the entire industry, but a significant stimulus of tax exemption, for example, we are considering that it is not something that affects the budget of the fiscal package of our country,” she added. The congresswoman did not mention how much investment might be required to carry out this proposal, although she pointed out that they will seek the support of other commissions such as Economy, Finance, Energy, Environment, Infrastructure and Mobility to address other issues such as freight infrastructure and clean energy.

“I think that Mexico is already late and in addition to having a history of low budgets to invest in science, technology and innovation, what is being done is to pull and make great efforts before the end of this legislature,” he said. He was also confident that the proposal could be approved by December 15 in its last meeting of the Commission to be submitted to the Senate. For his part, Jose Zozaya, president of the Mexican Automotive Industry Association (AMIA), said in an interview that this type of initiative could boost Mexico’s participation in the global production of hybrid and electric vehicles, in addition to boosting sales. “In general terms, we are trying to promote these types of vehicles and energies, we will have to see the scope of these fiscal and non-fiscal incentives, both types are needed, for production and consumption, and we can attract these new plants to our country to produce for the world,” he said. SOURCE: EL FINANCIERO

KEYPOINTS OF PRESIDENT ANDRES MANUEL LOPEZ OBRADOR’S MORNING PRESS CONFERENCE November 22-28, 2023

POLITICAL AND LEGAL ISSUES • Who’s Who in the Lies: Elizabeth Vilchis clarified that there was no toll rate increase on the Mexico-Acapulco highway, despite an announcement from the Federal Highways and Bridges Agency (CAPUFE). She highlighted that the President had already assured there was no increase. • Increase in Pensions for the Elderly and Negotiations on Minimum Wage: In January, pension payments for the elderly will see a 25% increase, as announced by President Lopez Obrador. Additionally, ongoing positive discussions with the private and labor sectors are anticipated to result in a minimum wage increase by December. • Prosecution’s Lawsuit Against Emilio Lozoya: President Lopez Obrador addressed a reporter’s inquiry about a judge dismissing the Prosecutor General’s demand for the property of ex-PEMEX director Emilio Lozoya. He expressed a commitment to finding a solution for Lozoya to rectify the financial damage caused. The President lamented the judge’s decision, highlighting his belief that the Judicial Power serves economic interests. He stressed the necessity of judicial reform, emphasizing his intention to submit the reform initiative to the new Congress next year, allowing the people to participate in selecting magistrates.

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

JUDICIARY ISSUES • Appointment of the New Magistrate of the Supreme Court (SCJN): President Lopez Obrador responded to criticism of the nominated candidates for the Supreme Court vacancy, affirming their compliance with constitutional requirements. He emphasized the Senate’s role in the appointment process, expressing no preference among the three women aspirants. The President underscored their proven social activism experience, assuring that their decisions would not align with the interests of major corporations in the energy sector. • Supreme Court Reform: President Lopez Obrador addressed comments from ministers suggesting that being elected through popular vote is not viable for judges. He argued for a constitutional reform to allow the public to elect judges, emphasizing the need to prevent an elite-dominated political system. The President criticized the current system for its proximity to law but distance from justice, highlighting corruption issues, and advocated for democracy as the best method for reform.

• Security in Oaxaca: Governor Salomon Jara highlighted positive developments in security, noting that the state ranks fifth with lower crime rates per capita and a 33% decrease in violent deaths of women during his first year in office. The Secretary of National Defense, Luis Crescencio Sandoval, presented a crime report, indicating Oaxaca’s rankings in various categories with trends either decreasing or increasing. Secretary Rosa Icela Rodriguez reported progress in combating violence against women through the implementation of a comprehensive strategy, resulting in a reduction of such crimes, especially femicides. INFRASTRUCTURE

SECURITY • Advances in Security: The Secretary of Defense shared information about the capture of a high-priority criminal associated with the Sinaloa Cartel. This individual, chief of bodyguards for “Los Chapitos,” had played a role in attacks against the Armed Forces during the operation to detain Ovidio Guzman. President Lopez Obrador thanked the United States for recognizing this capture and highlighted the ongoing collaboration, particularly in combating fentanyl trafficking.

• Sonora Hydrological Plan: Andres Manuel Lopez Obrador outlined efforts to ensure water availability, including the construction of an aqueduct, a new irrigation district, and improvements to dams. The state administration in Sonora is actively working on the plan with full government support. Specific initiatives include the installation of pipes in the irrigation district to facilitate water distribution, purification, and the installation of distribution tanks in marginalized areas. Rehabilitation work is also underway in the existing district

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

• Hydroelectric Plants: President Lopez Obrador highlighted the fulfillment of hydroelectric plant rehabilitation, combined-cycle plant construction, and a solar power plant in Sonora. A program is in progress to strengthen the Federal Electricity Commission (Comision Federal de Electricidad, CFE), with further details to be announced the following week. Two hydroelectric plants are being constructed in Yucatan (Merida and Valladolid), aiming for completion before the end of the administration. • Passenger Trains Decree: The President signed a decree allowing 18,000 kilometers of railways for passenger trains. Negotiations with current concessionaires are necessary, giving them preference for proposing a service project. Freight trains continue, and two companies have the potential to invest in a passenger train project. Grupo Mexico handles freight transport, and the concession for passenger trains might go to another company, potentially the Tren Maya. • Inauguration of Projects: The President announced that the Mexicana airline will commence operations in the country on December 26. Additionally, he highlighted several inaugurations scheduled for December, including the Isthmus train, a section of the Maya Train, the Santa Maria Dam in Sinaloa, and three water supply systems, among others. He also announced that the Maya Train’s segment 3, from Campeche to Cancun, will begin operating on December 15, 2023, with tickets available for purchase starting December 1.

ECONOMY • Customs of Mexico: President Lopez Obrador announced the modernization of customs, emphasizing the growth in communication, transportation, and trade relations. He explained the decision to centralize customs in Nuevo Laredo due to the anticipated increase in flow across the northern border. Additionally, he mentioned the construction of a dedicated complex, emphasizing its completion before the end of his administration. • Mexico’s Border: The President outlined that the border region benefits from a reduced IVA and income tax, with standardized gasoline prices. He highlighted the higher minimum wage in the border area compared to the national average. Additionally, he mentioned that a new salary increase for the upcoming year will be announced in early December, pending proposals from the business sector. • Rescue of Altos Hornos: Regarding Altos Hornos de Mexico, the president stated that the Secretary of Finance is reviewing the matter. He mentioned a U.S. fund interested in collaborating on the company’s rescue, offering facilities to renegotiate its debt with the government. While the debt won’t be canceled, favorable terms could be provided for new investors to preserve jobs.

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

• Economic Development of the South-Southeast: President Lopez Obrador highlighted the remarkable growth of the southern-southeastern region compared to the northern region, citing a 6% versus 3% increase, showcasing the government’s attention to this area. He discussed the benefits of the trans-isthmian train during the Asia-Pacific Leaders’ Summit and provided updates on the Tehuantepec Isthmus Project, including the upcoming inauguration of a passenger train and the potential concession for managing both ports. The President also shared plans for a significant investment by Danish entrepreneurs in green hydrogen production in Development Poles, nearing finalization. NATURAL DISASTERS • Report on the Reconstruction Plan of Acapulco: President Andres Manuel Lopez Obrador addressed various updates on the reconstruction efforts in Acapulco after Hurricane Otis. Key points include the distribution of relief supplies, electricity restoration, progress in education, healthcare, and efforts from multiple sectors, including the private sector’s contribution to economic recovery. The president emphasized collaboration between the public, social, and private sectors, expressing gratitude for their support. He pledged sufficient budget allocation for Acapulco and stressed the importance of guaranteeing internet coverage in remote areas through initiatives like Altan Redes and the Internet for All program.

FOREIGN AFFAIRS • Israel-Palestine Conflict: The President mentioned ongoing efforts led by the Secretary of Foreign Affairs, Alicia Barcena, to secure the release of detained Mexicans. He celebrated negotiations for the release of detainees and the delivery of aid, expressing hope for continued progress. • Migration in Latin America: President Lopez Obrador discussed the need for a development program for Central American countries during a bilateral meeting with U.S. President Joe Biden at the Asia-Pacific Leaders’ Summit in San Francisco. The program, similar to the Alliance for Development, aims to address the root causes of migration in the region. Additionally, there is a commitment from the U.S. government to regularize around 12 million undocumented immigrants, mostly Mexicans. However, the president expressed disappointment with the opposition to this measure in the U.S. Congress and mentioned plans for further discussions on the topic with President Biden. • Fentanyl Trafficking: President Andres Manuel addressed discussions with the Chinese President on fentanyl precursors. The focus was on aiding the U.S. by intensifying surveillance on these precursors to prevent their use in drug production. The plan involves enhanced communication between governments and tackling fake invoices for precursors, which can come not only from China but also from Canada and the U.S.

NEWS BY STATE

BAJA CALIFORNIA Strengthening Business Relations between Baja California and Ireland. As part of the economic promotion tour in Europe, and with the objective of strengthening the relationship with the Irish business sector investing in Baja California, the Secretary of Investment Management of the Secretary of Economy and Innovation (SEI), Rodolfo Andrade Pelayo, accompanied by the PROBAJA Trade and Investment Delegation, participated in the Economic and Business Forum between Ireland and Latin America. Working meetings were held with the Irish companies Smurfit Kappa and Aptiv, where they expressed interest in expanding their facilities in Baja California. SOURCE: INDUSTRIAL NEWS BC

NEWS BY STATE

CHIHUAHUA Of the 1.518 billion dollars (mdd) that the state of Chihuahua received in Foreign Direct Investment (FDI) in the accumulated to the third quarter of 2023, the manufacturing industry captured 84% of the total, that is, 1.269.2 mdd, according to the Ministry of Economy.

NUEVO LEON After boasting that Nuevo Leon has attracted around 42 billion dollars in foreign investment in two years, state authorities assured that another 50 or 60 companies are interested in setting up operations in the state by 2024. During the presentation of the Nuevo Leon Competitiveness Award 2023, the state’s Secretary of Economy, Ivan Rivas, pointed out that, if the arrival of these companies were to materialize, it would mean the attraction of 15 billion pesos. SOURCE: TELEDIARIO

Likewise, from January to September of this year, mining was in second place with 143 million dollars (9%); in third place, financial services with 68 million dollars (5%); then, commerce with 23.7 million dollars (2%); and energy with 10.1 million dollars (1%). SOURCE: HERALDO DE CHIHUAHUA

NEWS BY STATE

COAHUILA Taking into account the above, the state president recalled that the investment destined for strategic infrastructure during these six years amounted to 9,218 million pesos. Likewise, he said that during his administration as head of the State Executive, he has worked so that the infrastructure would detonate growth in our state, allowing an efficient and safe transit in all the regions that make up our state. SOURCE: EL SIGLO DE TORREON

TAMAULIPAS At the monthly meeting of the Ciudad Madero Business Council (CEM), the director of Imeplan, Maria Silvia Montalvo Tello, stated that there are currently more than 60 projects that will help the economic and tourist detonation. Among them is the metrobus that will connect the municipalities of the southern metropolitan area of Tamaulipas. SOURCE: EL SOL DE TAMPICO

NEWS BY STATE

AGUASCALIENTES In order to strengthen ties of friendship and cooperation in different areas of development, the governor of Aguascalientes, Tere Jimenez, signed a collaboration agreement with Ana Maria Bentaberri Alpuy, mayor of the Department of San Jose, Uruguay. “For Aguascalientes, it is a pleasure to share with Uruguay all our strengths; we know that we are very similar to San Jose in several areas and we will work together so that our people continue to grow,” said the governor during the protocolary act that took place virtually. SOURCE: EL SOL DE CENTRO

GUANAJUATO The State Government, through the Ministry of Sustainable Economic Development (SDES), delivered in-kind support to merchants in the southern region of Guanajuato. The administration headed by Governor Diego Sinhue Rodriguez Vallejo aims to support families engaged in popular commerce with material resources that contribute to their livelihood and the generation and preservation of jobs. SOURCE: GOVERNMENT OF GUANAJUATO

NEWS BY STATE

QUERETARO Eaton announced an investment of US$85 million to expand its manufacturing operations in Queretaro. The move also seeks to increase its regional workforce to close to 300 positions, as well as increase local manufacturing capacity by 50%.

JALISCO Because Portugal and Jalisco have similarities such as the size of their population and industrial sectors that complement each other, businessmen and authorities of Jalisco agreed with the Ambassador of Portugal in Mexico, Manuel Carvalho, to form a working group to promote exports and attract investment between the two markets.

SOURCE: INFO CHANNEL

“Portugal is very interested in our relationship with the United States and Canada, in the area of supply and supply chains; that is where they see the opportunity that Jalisco is a state where investments can be made. They have been participating in other states such as Puebla, San Luis Potosi and Queretaro, but they also see Jalisco as a great opportunity,” said Miguel Angel Landeros, president of the Western Mexican Foreign Trade Council (COMCE), to El Economista. SOURCE: EL ECONOMISTA

NEWS BY STATE

CDMX 30% Increases in Rental Prices in Roma and Condesa While the average rental price increase in Mexico City is 10 to 15%, specific neighborhoods, particularly Roma and Condesa, are experiencing more significant hikes due to heightened demand and decreased availability in the traditional market. The rise in prices is making it more challenging for individuals to afford rental properties, with the average cost reaching 15,000 pesos per month. Digital nomads and foreigners are contributing to the increased demand, resulting in annual rental price increases of 20 to 30% in these popular neighborhoods. Additionally, the growing preference for short-term rentals on platforms like Airbnb is reducing the supply of traditional rental housing, further impacting rental prices.

STATE OF MEXICO Lopez Obrador seeks to open his “super pharmacy” in a disused Liverpool store warehouse in the State of Mexico A former Liverpool Distribution Center, a department store chain, is on the verge of becoming the headquarters for the Mexican government’s “central pharmacy,” aiming to stock medications from around the world. The facility, spanning over 42 hectares in Huehuetoca, State of Mexico, is transitioning to the Center for Federal Storage and Distribution of Health Supplies (Cefedis). It comprises two industrial warehouses of 94,000 square meters and numerous unused shipping points. Described by President Lopez Obrador as “the world’s largest pharmacy,” Cefedis will be twice the size of Amazon’s largest warehouse in Mexico, located in Tepotzotlan. SOURCE: EL PAIS

SOURCE: EL ECONOMISTA

INVESTMENT NEWS NORTH SURMAN INDUSTRIAL PARK The Periferico Business Park in Torreon, Coahuila, represents a 20-million-dollar investment, accommodating 38 industrial lots and two large commercial macro lots. This development, marking the 67th investment in Coahuila for 2023, aims to foster economic growth and security in the region, with potential for both industrial and commercial clients. CENTRAL MEXICO NHK SPRING Japanese automotive supplier NHK Spring is set to begin constructing a new plant in Irapuato, Guanajuato, in early 2024, investing $50.5 million. This facility will produce motor cores for electric vehicles and is expected to boost electromobility and employment. GRUPO ORIENTAL Grupo Oriental invested $5 million in Xochitepec, Morelos, inaugurating the Bimex Innovation Center for producing electric bicycles. This project, promoting sustainable mobility, is anticipated to create up to 800 direct and 300 indirect jobs.

SIEMENS Siemens plans to double its production in Queretaro over the next five years with a $53-million-dollar investment. This expansion in the Kaizen industrial park aims to enhance energy solutions and will begin production in the third quarter of 2024, increasing the workforce by 35% and advancing Industry 4.0 processes.

MSC MSC, a U.S. company specializing in metallurgy, maintenance, repair, and industrial supplies, inaugurated a Shared Services Center in Queretaro with an investment of 399 million pesos. This center, located in Empresalia, will offer technology, financial, and accounting services, and support U.S. customers, creating 500 highly specialized jobs. SOURCE: CLUSTER INDUSTRIAL