By TBY | Mexico | Sep 20, 2017
In the last five years, just five states in Mexico—Mexico City, Nuevo León, Baja California, Querétaro, and Puebla—attracted more than 80% of the country’s FDI, and all are located in […]
In the last five years, just five states in Mexico—Mexico City, Nuevo León, Baja California, Querétaro, and Puebla—attracted more than 80% of the country’s FDI, and all are located in the north and center of Mexico. In order to foster employment, attract FDI, and develop value chains in other regions of the country, President Enrique Peña Nieto created the federal law on special economic zones (SEZs).
Mexico faces two realities in terms of economic and social development. According to the UNDP, states like Querétaro or Nuevo León have human development indexes compared to countries like Argentina and Costa Rica. On the other side, states in the south of the country, such as Oaxaca or Chiapas, have the same human development indexes of countries such as Botswana or Gabon.
In order to amend these inequalities, the government of Mexico has designated four SEZs. Some of the benefits that these areas will offer are tax incentives, a special customs regime, an agile regulatory framework, infrastructure, human capital, financing, innovation support programs, and preferential conditions for businesses in these zones.
The first zone is the Inter Oceanic Industrial Corridor on the Isthmus of Tehuantepec in the states of Oaxaca and Veracruz. Another will be the Lázaro Cárdenas port and its surrounding municipalities in the state of Michoacán, one of the most important gateways to markets in the Pacific Ocean. The third one is the corridor between Campeche and Tabasco, on the Gulf of Mexico and rich in oil. Finally, Puerto Chiapas, in the country’s least developed state of Chiapas, will host the fourth SEZ.
President Peña’s objective is to have at least one company operating in each of the four SEZs by 2018, allowing the development of communities of Mexico’s four poorest states to match development of more industrialized areas of the country.
According to official data of Mexico, in three decades, the GDP of states in the northern part of the country and the Bajío area has grown 47%. Au contraire, the southern states have seen GDP increase only by 7%, despite their abundance of natural resources and strategic location to enter new markets. The purpose of these SEZs is to complement social policies with economic policies, allowing the creation of new job opportunities, an increase in productivity, and the attraction of investors into the region.
SEZs have proven to be successful in various regions of the world. Examples of successful SEZs include Colón, Panama; Manaus, Brazil; Incheon, South Korea; Suzhou and Shenzhen, China; Katowice, Poland; and Tangier, Morocco, among others.
After the approval of this initiative in December 2015, the Mexican authorities expect to begin construction of SEZs by October 2017, so companies can start operations by September 2018.
In an interview with TBY, Abraham Zamora Torres, Director General of Banobras, mentioned, “At this point, we plan to have one bidding process in the middle of 2017 to invite international and national investors to be the general managers of each of the zones.“ He added that this is an excellent opportunity for international investors to be in charge of building, maintaining, and promoting the industrial zones.
These zones will have autonomous and independent courts with an exclusive jurisdiction. For the operation and administration of the SEZs, the government created the federal regulatory commission for strategic economic zones, a decentralized figure of the Ministry of Economy, which will authorize, regulate, and promote the efficient development of the zones and productive performance of established companies.
The creation of the SEZs, if implemented successfully, proposes an alternative to underdeveloped regions of Mexico that are way behind compared to states of the north and Bajío areas. It is a new proposal for areas that, in the past, were subjects of ineffective social assistance and poverty eradication programs.