Weekly Review I January 10, 2024 by PRODENSA

GENERAL SITUATION IN MEXICO

Weekly Review I January 10, 2024

RELEVANT NEWS TRUCK INDUSTRY TO INCREASE SALES BY 32.3% IN 2023 AND TARGETS NEARSHORING AND FINANCING While it managed to increase its sales by 32.2% in 2023, the Mexican truck industry expects to continue growing in 2024 by taking advantage of nearshoring and with advances in financing and in the channeling of public resources to renew the fleet circulating in the country. In a conference with the media, industry representatives said on Wednesday that from January to December 2023, the sector sold 52,488 units. The figure, according to Alejandro Osorio Carranza, director of public affairs and communications of the National Association of Bus, Truck, and Tractor Trailer Manufacturers (ANPACT), reaffirms Mexico’s leadership as a global producer and exporter. “The industry’s achievements show a solid and sustainable recovery after the pandemic, as well as a positive and encouraging outlook for the sector in 2024,” he said. However, he explained that while the industry’s achievements show a solid and sustained recovery in the post-pandemic period, as well as a positive and encouraging outlook for the sector in 2024, there are challenges to be faced in order to maintain strength. “We have passenger and freight vehicles up to 40 years old circulating on our roads and highways, an age that has harmful effects on the environment, but also an important impact on road safety and the economic viability of small and medium-sized transport companies that maintain an obsolete fleet,” he pointed out.

The country must also take advantage of the business and investment opportunities, job creation, and economic spillover that nearshoring brings, he added. Finally, he added that this year it will also be of great importance to advance in the energy infrastructure so that it is adequate and sufficient, in the professionalization of micro and small transport companies. Participating in the conference, Cristina Vázquez, Coordinator of Economic Studies of the Mexican Association of Automotive Distributors, said that the trucking sector expects a market growth of 12.9% by 2024. Another of our challenges will be to continue promoting financing, he said. One of the biggest obstacles to fleet renewal is the lack of resources and financial instruments that should come from national development banks, international development banks, banks, and non-bank financial institutions. “Public budgetary resources are also needed to be able to advance in this purpose. We cannot advance in the renewal of the fleet that Mexico deserves without the correct channeling of resources for this purpose,” he said. SOURCE: FORBES MEXICO

KEYPOINTS OF PRESIDENT ANDRES MANUEL LOPEZ OBRADOR’S MORNING PRESS CONFERENCE December 20, 2023–January 9, 2024

GOVERNMENT AND POLICY • Reform of the Judicial Power: President López Obrador mentioned that he will send an initiative to reform the Federal Judiciary branch so that judges, magistrates and ministers will be popularly elected, arguing that during previous presidential terms, judges, magistrates and ministers have made decisions in favor of white-collar criminals and organized crime groups. The President also celebrated the integration of Lenia Batres to the Supreme Court, calling her an incorruptible woman and a true defender of justice. • Legislative Initiatives: The President pointed out that one of the initiatives he will send to Congress will be to correct the issue of the increase in the minimum wage, while the other issue is regarding pensions. He said that currently a worker retires and after 30 years of work receives only half of his salary, this was done in 1997 with former President Ernesto Zedillo, which was irresponsible. He recalled that during his administration a reform was achieved to increase the retirement quotas. However, for him it is not enough, so an analysis will be made to know how many resources are required. In coordination with the private sector, he hopes a decent pension can be achieved.

KEYPOINTS OF PRESIDENT ANDRES MANUEL LOPEZ OBRADOR’S MORNING PRESS CONFERENCE INTERNATIONAL RELATIONS • Customs Office: The President announced that the headquarters of Mexico Customs will be moved to Nuevo Laredo, decentralizing from Mexico City. A complete administrative complex for customs is currently under construction, including a regiment for 500 elements and housing units. In February, the President will attend the state of the union of the governor of Tamaulipas, Américo Villareal. Subsequently, he plans to officially inaugurate the new customs headquarters on September 21, before the end of his term in office. • Migration Policy: López Obrador mentioned that the immigration issue is addressed weekly, with collaborative teams established during a recent meeting with U.S. officials. The meetings have covered various programs, including visas issued in the U.S., border containment in Mexico, budget strengthening from the U.S. government, regularization of longterm Mexican residents in the U.S., lifting the Cuba blockade, and sanctions towards Venezuela. The President also highlighted efforts to allow returning migrants access to the “Young People Building the Future” program in Mexican companies abroad, expressing intentions to expand its coverage. • Israeli-Palestinian Conflict: The President stated that the Israeli-Palestinian conflict represents a complex challenge in the field of international relations. The Mexican government does not support the use of force or war, considering them irrational actions. Instead, they advocate a ceasefire and express regret for the number of human lives lost in this conflict. Although they could take a stronger position, the Mexican government opts to maintain a neutral position, said López Obrador. The reason for this decision lies in its desire to contribute to the search for a peaceful solution. If they were to take a

stronger stance, they could lose the authority necessary to help achieve peace. This policy of neutrality also seeks to avoid polarization of the conflict. • Call With U.S. President Joe Biden: President López Obrador discussed the need to strengthen the commercial relationship with President Joe Biden during a recent call. He highlighted Mexico’s pivotal role as the main trading partner of the United States. The leaders also addressed the extraordinary situation of increased migrants passing through Mexico to reach the U.S., especially from Venezuela, Haiti, Cuba, and Ecuador. Efforts are underway to address the migrant situation at the border in Coahuila, with ongoing negotiations and settlements with the U.S., Venezuela, and efforts towards bilateral dialogue between Cuba and the U.S. Also, the President expressed satisfaction with the normalization of the situation in Guatemala. • Meeting with U.S. Secretary of Homeland Security and Secretary of State: President López Obrador discussed the meeting with U.S. officials, including Secretary of Homeland Security Alejandro Mayorkas and Secretary of State Anthony Blinken as positive. They addressed economic, border, and migration issues, emphasizing Mexico’s role as a key U.S. trading partner. The President mentioned the need to address root causes of migration and highlighted ongoing Mexican programs in the Caribbe-

KEYPOINTS OF PRESIDENT ANDRES MANUEL LOPEZ OBRADOR’S MORNING PRESS CONFERENCE an and Central America. Regarding the unexpected surge in migrants, President Biden expressed concern about the border situation, with approximately 12,000 migrants per day causing closures. They discussed collaborative solutions and praised the longstanding good relationship between the two countries. López Obrador acknowledged the social nature of the issue and appreciated Biden’s approach to not building a border wall. Teams from Mexican government agencies will visit Washington in January for further discussions. • Mexico City International Airport: In response to a reporter’s question about past issues of tax evasion and money flow from drug trafficking through the customs of the Mexico City International Airport, involving U.S. agents, the President stated that one of his objectives upon taking office was to gain control of ports and airports. Consequently, he transferred port administration to the Navy and land customs to the Secretariat of Defense. Despite criticism, he believes the situation has improved since then. Regarding the alleged involvement of U.S. agents, the President asserted their permanent presence and suggested collusion between Mexican and foreign authorities. However, he aims to strengthen cooperation with the neighboring country, instead of holding them accountable. HEALTH AND PHARMACEUTICALS: • Operation of the Mega Pharmacy: President López Obrador mentioned that medicine deliveries would be made to patients’ homes through a distribution system set up by a megapharmacy, which has a partnership with the Mexican Air Force. The megapharmacy occupies 6,000 square meters of a 55-hectare area, with the rest allocated for medication storage and distribution to around 20,000 medical units.

The distribution system works as follows: 1) If a patient can’t find the required medicine at their medical unit, they call the pharmacy and provide their information; 2) the pharmacy team checks nearby units for the availability of the medication and arranges the nearest delivery; 3) if the medicine is not located within 3 hours, it is sent from the pharmacy and should reach the patient within 48 hours. Regarding imported medicines, some are already in stock, and additional purchases will be made to cover all diseases. The President emphasized that all medicines, regardless of cost, will be made available to everyone. He highlighted the goal of having the entire healthcare system operational before the end of his term, but mentioned that his direct responsibility covers 23 states, as nine state governments declined to participate in the federalization of the healthcare system. • Consolidated Purchase of Medicines: The President informed that the contract with UNOPS is not being terminated. However, he pointed out that UNOPS acknowledged that they could not acquire certain medicines, so it was agreed that they would be purchased by the Federal Government through Birmex and the Secretariat of Health in order to have quality medicines at a good price.

KEYPOINTS OF PRESIDENT ANDRES MANUEL LOPEZ OBRADOR’S MORNING PRESS CONFERENCE SECURITY AND SAFETY: • Kidnappings in Tamaulipas: The Secretary of Security and Citizen Protection, Rosa Icela Rodríguez, reported on the kidnapping of 32 migrants in Tamaulipas, stating that the motive was extortion to their families. Immediate and coordinated action was taken by various authorities. The individuals were located in Río Bravo after a deployment by the authorities. Operations and investigations are ongoing to apprehend the culprits. Tamaulipas Governor Américo Villarreal denied the involvement of police forces in the kidnapping. INFRASTRUCTURE: • Damaged Roads: When asked by a reporter about the plan for the construction of roads damaged by the transportation of materials for the Tren Maya, President Andrés Manuel López Obrador stated that the commitment is that as of March or April the affected roads will begin to be improved so that they are in good condition before the end of his term of office. • Highway Plan 2019-2024: The Secretary of Infrastructure, Communications, and Transportation, Jorge Nuño, provided updates on the progress of the 2019-2024 Road Plan. With 551 projects completed so far, representing a 225 billion pesos investment, there’s an 82% overall progress. The national road network has seen 8,115 km added or upgraded, overcoming pandemic-related challenges. Notably, 14 federal highways are in progress, set for completion before June. Rural roads witnessed 53 projects covering 1,752 km, with 4 ongoing and 49 completed. The Labor-Intensive Roads Program, active in 10 states, aims for 417 roads. Additionally, the Highway Program, involving 30 projects, is expected to conclude by June next year, completing many unfinished highways from previous administrations.

NEWS BY STATE

BAJA CALIFORNIA The Governor of Baja California, Marina del Pilar Avila Olmeda, held a work meeting to analyze the progress of the mega-works carried out with the support of the government led by the President of Mexico, Andres Manuel Lopez Obrador, in the city of Tijuana, such as the Otay II border crossing, the Elevated Viaduct, among others, which have a combined federal investment of 15,600 million pesos. The state governor pointed out that the works are undergoing significant development, for which she reiterated the state administration’s willingness to expedite them without slowing down and prioritizing the well-being of Tijuana residents, especially those who will benefit from projects that improve the binational environment, road mobility, and water supply as a human right. SOURCE: SAN DIEGO RED

SONORA Industry in the state of Sonora has experienced a significant increase in investment during the year 2023, with a record of 2,539 million dollars (mdd) from January to September. In this regard, the president of Canacintra Hermosillo, Silvia Alvarez Amaya, noted that this growth is driven by the industrial sector, which has experienced an increase of 3.7%. In addition, an additional increase in investments is anticipated thanks to the nearshoring phenomenon. SOURCE: MEXICO INDUSTRY

NEWS BY STATE

NUEVO LEON During the month of November, manufacturing in Nuevo Leon continued its pace of expansion, as shown by the manufacturing economic expectations indicator. It is noteworthy that all indicators were in the expansion zone for the second consecutive month.

TAMAULIPAS Consolidating the project announced by the Federal Electricity Commission (CFE) in power transmission lines will give Tamaulipas a boost to attract investments for the relocation of manufacturing plants, called Nearshoring, by sending part of the 8 thousand megawatts to these plants to reach the state and the northeast of the country.

According to information published by Caintra Nuevo Leon, the index of new orders decreased with respect to the previous month, however, it is placed at 53 points and remains in expansion. Meanwhile, the physical volume of production also presented the same pattern and reached 52 points. Both indicators continue their streak of 11 consecutive months in the expansion zone. SOURCE: MEXICO INDUSTRY

The Secretary of Energy Development continues in this process, said its head, José Ramón Silva Arizabalo, by proposing this scheme not only to interested foreign companies but also to the hydrocarbon and renewable energy sector, whose expectation is to land in this state in the following months. SOURCE: MILENIO

NEWS BY STATE

CHIHUAHUA The municipal administration emphasized that for the current administration headed by Mayor Marco Bonilla, the development of the industrial sector is of utmost importance, which is why, during 2023, the Municipal Government promoted different programs and investments with the objective of boosting the economic development of Chihuahua City. Through the Chihuahua City Invest project, 32 firms were established with a total investment of 40% of the State’s Foreign Direct Investment (FDI). The State of Chihuahua ranks fourth in FDI, with 5% of the national total. SOURCE: HERALDO DE CHIHUAHUA

COAHUILA In this start-up of 2024, which coincides with the first days of the government of Manolo Jiménez, the 100 Días Pa’delante program was structured so that works and actions reach all regions of the State, informed the Government of Coahuila. Governor Jiménez emphasized that development will be evenly distributed; therefore, within the strategies for the first 100 days of his administration, priority works for each region of Coahuila were established. SOURCE: VANGUARDIA

NEWS BY STATE

SAN LUIS POTOSI Where will SLP’s new industrial zone be located? The Government of the State of San Luis Potosí has confirmed the construction of a new industrial zone for the state, which will boost and diversify the economic offer of the region. In this sense, Ricardo Gallardo Cardona, state governor, announced that the first 400 hectares of land reserve are already available for its construction; a zone that, through nearshoring, will boost the installation of new companies and detonate progress in the region. SOURCE: LIDER EMPRESARIAL

AGUASCALIENTES The municipality of Aguascalientes will conclude 2023 with the approval of eight new subdivisions in the western and southern areas of the city. According to Óscar Tristán Rodríguez Godoy, secretary of Municipal Urban Development, construction of two shopping centers will begin in 2024. Rodríguez Godoy highlighted the approval of Plaza Canteras, located on Boulevard Juan Pablo II. This project, of approximately 8,000 square meters, will be smaller in scale and will not include anchor stores, but rather coffee shops and convenience stores. This approach seeks to provide services close to the residents of specific areas, reducing the need to travel to large shopping centers in the city center. He also mentioned another project under development, although it has not yet been officially unveiled. SOURCE: HERALDO

NEWS BY STATE

QUERETARO In order to meet the demands of the population in terms of drinking water, drainage and sanitation, while strengthening the hydro-agricultural sector in Querétaro, the National Water Commission (Conagua) carried out various works in the area of hydraulic infrastructure. Among the actions carried out were the maintenance of the La Llave, San Ildefonso, Constitución de 1917 and Centenario dams, with an investment by the Mexican Government of 9,312 million pesos, benefiting more than 10,000 hectares and 2,828 users of the Irrigation District 023, as well as the Centenario Irrigation Unit. SOURCE: MYS NOTICIAS

JALISCO According to figures from the Mexican Social Security Institute (IMSS), Jalisco is the national leader in the registration of new employers. The Entity accumulated 14,272 in the current administration, surpassing Mexico City and Nuevo Leon, which had 12,070 and 10,189, respectively. Through a press release, the State Government indicated that as of last November, there were 107,862 employers in the State, 2,187 more than at the end of 2022. SOURCE: INFORMADOR

NEWS BY STATE

CDMX Economic Impact in Mexico City for the Magic Kings Celebration. The Government and business owners in Mexico City estimated that the economic activities related to the traditional “Día de los Reyes Magos” will generate between 3 billion and 5 billion pesos in spending. These activities include the purchase of toys, electronics, sweets, clothing, gatherings, and the sale of the traditional “Rosca de Reyes”. SOURCE: ARISTEGUI NOTICIAS

STATE OF MEXICO Investments in the State of Mexico. Investments in the State of Mexico did not cease in 2023. According to the latest data revealed by the Secretariat of Economy, from January to June of that year, the state attracted $1,329.9 million in Foreign Direct Investment (FDI). Although FDI showed an annual increase in 2022 in the State of Mexico, reaching $2,292.6 million compared to $2,292.6 million in 2021, it still does not surpass the levels generated in the pre-pandemic years. Additionally, the State of Mexico ranked fifth nationally in terms of the highest investment attraction during the first six months of 2023. In this regard, out of the $29,040.8 million received by Mexico, the State of Mexico contributed 4.6% to the total. SOURCE: LÍDER EMPRESARIAL