Weekly Review I April 17, 2024

GENERAL SITUATION IN MEXICO

RELEVANT NEWS

MEXICO ASSURES ENTREPRENEURS IT IS PROMOTING ACTIONS TO ATTRACT INVESTMENT THROUGH NEARSHORING

The Ministry of Finance and Public Credit (SHCP) informed that in the session of the Council of the Americas and in different meetings with businessmen of the region, its head, Rogelio Ramírez de la O, assured that the federal government has carried out several actions to promote the relocation of companies to be close to the U.S. market, a phenomenon known as nearshoring.

In the framework of the Spring Meetings of the International Monetary Fund and the World Bank, Ramírez de la O added that the federal government has carried out actions such as the development of industrial parks, the expansion of commercial chains and the modernization and expansion of infrastructure, so that Mexico is well positioned to insert itself into global supply chains.

According to information from the agency, Ramírez de la O also pointed out that sectors with traditionally low exports have increased their manufacturing production, especially in the construction industry.

He added that the national economy maintains solid fundamentals to promote the positive trend of nearshoring and there is a dynamism that is not only benefiting consolidated sectors, but also new industries that are beginning to grow.

Ramírez de la O pointed out that the current administration is also strengthening artificial intelligence to align it with the government’s growth strategy, as a means to facilitate relocation, as well as to strengthen the public sector’s capacity to deploy and offer

more efficient and agile services, develop better civil protection systems to face possible natural disasters, and increase the development of specific industries with great potential, such as semiconductors.

In this context, he stressed the importance of strengthening public-private relations to modernize the partnership schemes between the public and business sectors, in order to establish a more balanced framework that allows for more efficient coordination and better results, without compromising the country’s interests.

Last week, the World Bank reduced its economic growth outlook for Mexico in 2024, from 2.6% estimated last January, to 2.3% in its April update, in light of the scarce flow of investment into Mexico due to nearshoring, due to, among other factors, the lack of water and energy, as well as the absence of a guide for foreign investors to navigate the Mexican system.

“Mexico is a very interesting country because, in theory, it is a country that we are thinking of as the main representative that can be of this relocation of companies or nearshoring. At the beginning there was information, but if we look at the numbers of foreign investment and the announcements of factories starting from scratch, we have not seen big starts, we have not seen increases in manufacturing, in investments in Mexico and that is a surprise,” the World Bank pointed out.

SOURCE: FORBES MEXICO

KEYPOINTS OF PRESIDENT

ANDRES MANUEL LOPEZ OBRADOR’S MORNING PRESS

April 10-16, 2024

CONFERENCE

INTERNATIONAL RELATIONS

• Visit of President Lula da Silva to Mexico: President López Obrador announced that Brazil’s President Lula da Silva, who expressed solidarity with Mexico regarding the issue with Ecuador, would visit Mexico after the elections, but prior to his departure.

• International Reaction to Ecuador’s Actions in Mexican Embassy: The President presented a video featuring diplomatic personnel from the Mexican Embassy in Ecuador, detailing the intrusion into the embassy in Quito. He noted condemnation from all OAS (Organization of American States) countries, including Secretary-General Luis Almagro. Videos of the assault were sent to U.S. President Joe Biden, who initially had a tepid response but later clarified and condemned the events, according to AMLO. The president also celebrated the Canadian government’s change of stance in condemning the break-in at the Mexican embassy in Quito.

• Conflict Mexico-Ecuador: the President announced that Mexico is presenting a case before the International Court of Justice regarding the assault on its embassy in Ecuador. They seek Ecuador’s suspension from the U.N. and a public apology. Mexico has cut all commercial ties with Ecuador and suspended trade negotiations. They will demand protection for their embassy’s integrity and assets.

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

• Israel-Iran Conflict: The President emphasized Mexico’s commitment to seeking peace, advocating for dialogue and an end to war without condemning any party. He suggested pursuing agreements in both conflicts: the Russia-Ukraine and Israel-Palestine conflicts. He urged the United Nations to intervene for a lasting ceasefire. Additionally, he appealed to Israeli authorities to refrain from retaliation and prevent further escalation of the conflict.

HEALTH

• Independent Commission for COVID-19 Investigation: Facing inquiries about the COVID-19 investigation committee’s findings, including accusations by members like Julio Frenk, Amanda Glassman, Julia Carabias, José Ramón Cossío, Enrique Cárdenas, the President labeled them all as adversaries of his administration. He insisted that their claims need evidence before further dissemination. He also accused them of being part of a conservative faction aiming to silence him, citing their current push to halt morning press conferences.

• Contaminated Water in Mexico City: Regarding the inquiries about the closed well in Álvaro Obregón that was affecting the residents of Benito Juárez in Mexico City and the alleged accusations of fuel theft in those wells, the President mentioned that the priority is to protect the population and their safety. Since the complaints began, the Mexico City government has been vigilant, as have the technicians from PEMEX, to investigate and analyze the causes of the impact. They’re examining all nearby PEMEX facilities and emphasizing responsible action to protect citizens, considering recent microseisms as potential causes of infrastructure damage, while investigations continue.

LEGAL AND JUDICIAL MATTERS

• Pension reform: President López Obrador addressed misconceptions about the Well-being Pension Fund initiative presented by the MORENA Parliamentary Group. He clarified that the aim is to strengthen AFORES, not “steal” from them, ensuring resources for workers’ retirement. This contrasts with past reforms, aiming for retirees to receive 100% of their resources, unlike the 40%-50% under previous administrations. The fund’s financing includes seized assets, profits from state-managed companies, and unclaimed resources, managed by the Bank of Mexico. While he acknowledged the significance of increased employer contributions, he stressed the need for explicit legal guarantees for workers’ retirement benefits.

• Arturo Zaldívar’s Investigation: The President expressed full support for former minister Arturo Zaldívar amid the Supreme Court investigation initiated against him. He criticized the process, noting the acceptance of an anonymous injunction (ampa-

KEYPOINTS OF PRESIDENT

ANDRES MANUEL LOPEZ OBRADOR’S MORNING PRESS CONFERENCE

ro). He highlighted the seriousness of two ministers nullifying Congress-approved laws, attributing it to intervention and violation of power separation by the conservative bloc.

• Preventive Prison: Minister of Interior, Luisa María Alcalde, discussed the Supreme Court’s consideration of invalidating Article 19 of the Constitution to eliminate mandatory pretrial detention, influenced by the Inter-American Court of Human Rights’ ruling. She criticized the Court for overstepping its role and expressed concern over the potential release of 68,000 individuals involved in ongoing legal cases. She emphasized that this decision challenges national sovereignty, as only the Mexican Congress has the authority to amend the Constitution. Additionally, the Ministry of Security and Citizen Protection confirmed that individuals in pretrial detention will be allowed to vote, with electoral activities to be conducted in penitentiary centers, including voting for the presidency nationwide in advance.

ELECTIONS

• Voters Abroad: In response to a specific question about complaints from Mexicans abroad who are not registered with the INE for the 2024 elections, the president requested that the Ministers of Foreign Affairs and the Interior attend the morning press conference on Wednesday, April 17, to provide a report on the progress in regularizing Mexican voters abroad. He emphasized that there is until May 5 to complete the registration process, and necessary actions will be taken to address the issue.

BAJA CALIFORNIA

The work agenda in Asia headed by the Ministry of Economy and Innovation of the Baja California state government began with activities in Taiwan, focused on the semiconductor and technology industry, which included visits to universities and companies established in the Mexican entity to learn about their growth plans, as well as meetings with prospects, the state government reported.

With the objective of promoting new investments, meetings were held with leading semiconductor companies, emphasizing the regional capabilities and high potential by combining talent, infrastructure and the industrial base of California, Arizona and Baja California.

SOURCE: EL ECONOMISTA

SONORA

The economy in Sonora was strengthened in the first months of the year, with investments in already established companies and the start-up of others that were installed last year, according to the president of Index Sonora, Jesús Gámez.

He stated that a harness company is already operating in Obregón and another semi-conductor company is heading to Bahía de Kino. Likewise, those already established in the aerospace, electronics, medical and industrial sectors are expanding.

SOURCE: RADIO SONORA

NUEVO LEON

Nuevo León has become the entity with the highest percentage of Gross Domestic Product (GDP) generated by the manufacturing sector, with 12.6 percent of the total in the country, and the goal now is to strengthen it through nearshoring and artificial intelligence applied to production processes.

Currently, this sector of the economy is the main source of employment in the entity, thanks to the 45 billion dollars of foreign investment that arrived in 2023, and which should increase this year, said the undersecretary of the sector, Fernando Gámez.

SOURCE: MILENIO

CHIHUAHUA

The Bafar Norte Chihuahua Industrial Complex emerges as a real estate solution for foreign light manufacturing companies and represents an alternative for attracting talent, technology, as well as generating added value for the country through new jobs. It is also a form of economic expansion for Chihuahua and focuses the attention of investors in the state.

The Nova Real Estate Investment Trust, launched in 2017 by Grupo Bafar, has an entrepreneurial approach, focused on concretizing strategic expansion plans. Its construction quality, the location of its properties and its diversified portfolio of high quality properties, have placed Fibra Nova solidly on the Mexican Stock Exchange.

SOURCE: PRO CHIHUAHUA

TAMAULIPAS

To encourage the economic development of Matamoros, Tamaulipas and expand opportunities focused on the industrial manufacturing sector, the Committee for the Economic Development of Matamoros (Codem), held a meeting with the president of the national index, engineer Humberto Martinez Cantu, accompanied by business leaders from northern Tamaulipas and south Texas.

Among the topics discussed, he highlighted the investment interest of a Chinese company to establish itself in the north of Mexico, Matamoros being one of the points of greatest attraction. “The meeting allowed us to reinforce strategies and alliances with index, the industry is a very important sector for the economic development of Matamoros and they told us about the Chinese company’s interest in coming to Mexico, of course our region is ideal; we have the space and the labor force that is needed,” said Grecia Zertuche, director of Codem.

SOURCE: MEXICO INDUSTRY

COAHUILA

“Just on Monday, new data was released indicating that Coahuila is first place in the manufacture of automotive auto parts in the entire Mexican Republic, first place,” said Claudio Mario Bres Garza, head of the Secretariat of Economy of the state of Coahuila.

This was announced by the state official, after detailing that the new private investment of Eagle Rice in Ramos Arizpe consists of four stages.

The first two are two warehouses with a combined roofed area of more than 31,000 square meters.

SOURCE: EL SIGLO DE TORREON

JALISCO

The Government of Jalisco has announced an investment of more than 176 million pesos for the year 2024, destined to promote the film and audiovisual industry in the state. While nationally support has been reduced, Jalisco has experienced an increase in production and economic revenue generated by this sector, with a 470% increase in the last five years.

One of the key initiatives is the FILMA Academy, which seeks to expand its educational reach from 16,000 to 40,000 students over the next decade, offering specialized academic programs in various disciplines related to the audiovisual industry. In addition, the Chapala Media Park will become the new University Center of Chapala of the University of Guadalajara, where film and health careers will be offered, including nursing and gerontology.

SOURCE: EXCELSIOR

SAN LUIS POTOSI

The Government of San Luis Potosí (SLP), through the Secretariat of Economic Development (Sedeco) and the State Roads Board (Jec), will work to improve the infrastructure of the Matehuala Industrial Park.

According to the authorities, the overall project is part of a plan to improve different industrial zones in the state. Therefore, concrete strategies and plans were analyzed to improve the facilities and their proper functioning, ensuring:

• Maintain the industrial estates in optimal conditions.

• Facilitate the transportation of goods

• Improve the flow of people working in them.

SOURCE: INMOBILIARE

AGUASCALIENTES

The governor of Aguascalientes, Tere Jiménez, held a meeting with representatives of the aerospace industry. The objective was to promote the development of this activity in the state.

During the meeting, she highlighted the active participation of higher education institutions in projects related to the sector. These actions seek to prepare and train future generations of professionals.

SOURCE: LIDER EMPRESARIAL

CDMX

A latest report reveals Mexico as the top choice for investment among Spanish companies, followed by Colombia, Chile, Peru, and Brazil. Companies in the region face challenges like inflation impacting sales. Almost 80% of Spanish companies plan to increase their investment in Latin America this year, according to the XVI Report on Spanish Investment in Ibero-America. Regarding Latin American cities, Mexico City remains, for the ninth consecutive year, the metropolis preferred by Spanish companies to establish their central operations in the region. However, this year, Bogotá surpasses Miami for the first time, taking the second spot. Also, Mexico City continues to be the top choice for Spanish executives to reside, followed this time by Santiago, Chile, which stands out for its security, business climate, and quality of family life.

SOURCE: EL ECONOMISTA

STATE OF MEXICO

Walmart unveiled a significant investment plan in the State of Mexico, totaling MXN 1.253 billion, to be disbursed from September 2023 to December 2025. This initiative encompasses the establishment of 45 new projects across 29 municipalities in the state and includes the setup of two last-mile warehouses for e-commerce and supply purposes. The company pledges that this investment will generate over 1,250 permanent direct jobs. The announcement was made with the presence of key figures such as Governor Delfina Gómez Álvarez, Guilherme Loureiro (CEO of Walmart de México y Centroamérica), and Javier Treviño Cantú (Senior Vice President of Corporate Affairs). The CEO emphasized their commitment to offering low prices and an omnichannel shopping experience. Since commencing operations in the State of Mexico in 1966, the corporation has expanded to 439 stores and clubs, along with three Distribution Centers.

SOURCE: MUNDO EJECUTIVO

INVESTMENT NEWS

NATIONAL VOLVO

The automotive company announces its plan to build a new heavy truck manufacturing plant in Mexico. The new plant is set to begin operations in 2026.

CENTRAL MEXICO

UTAS-NOVA

The Chinese supplier is investing 36 million dollars and will create 220 jobs in Aguascalientes. The project is expected to begin construction in September 2024.

INDUSTRIAS OCHOA

The Spanish automotive supplier will invest 18.2 million dollars to expand its plant in Querétaro. There is no information available about job creation.

NORTH

GRUPO FRISA

Grupo FRISA begun the construction of Monterrey Tech Park Industrial Park in Marín, Nuevo León with an investment of 150.2 million dollars and the creation of 1,500 jobs.

EAGLE RISE

The Chinese electronics supplier will invest 197 million dollars and create 700 new jobs with its plant in Ramos Arizpe, Coahuila.

SOURCES: EL FINANCIERO, CLUSTER INDUSTRIAL

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