What are some of the findings from Mexico Top Management Perspectives 2020?
Our Top Management survey in 2020 captured a little over 1,000 responses; it was prepared up until December 2019 and thus does not cover the impact of COVID-19; however, we have conducted this survey 15 years in a row so we have a large amount of data and can draw conclusions around trends. One of the key aspects of the 2020 survey was that eight out of 10 decision makers who responded were looking at a single- and double-digit growth for their companies over the next three years, an opinion that is likely to change in light of recent months' events: oil price collapse, exchange rate volatility, and the COVID-19 economic impact. Undoubtedly, these executives recognize the great opportunity in the Mexican market for their companies to continue growing, although they also see challenges, some of which require government support including economic stability and a comprehensive action among all the different stakeholders. Mexico had been going through a change in the regime with a new federal administration. Its top concerns were maintaining macroeconomic stability, dealing with security, improving the rule of law and reducing corruption. There are still many structural issues that the Mexican business environment is keeping an eye on regarding the development of public policy and how the different stakeholders in the economy—not only the public but also the private sector—play a key role in addressing these concerns.
What are the main concerns of the business community when it comes to the tax reform?
Part of the Top Management survey showed that decision makers believe Mexico requires a comprehensive and extensive tax reform. On the one hand, there are not enough tax collections in comparison to the size of the economy, and we have the lowest tax collections within OECD countries. However, we also have to deregulate and promote flexibility to promote investment and more international trade, which is one of the most important areas for the Mexican economy. Our respondents want a relook of the full tax system, perhaps different areas of taxing the economy. One example would be indirect taxes, which in Mexico means the VAT from sales taxes. Sales taxes are normally imposed on the sale of services and products, and, therefore, it does not matter if one is registered with the tax authorities. This is considered an efficient way of tax collection and reducing the informality in the Mexican economy. That has been raised as a possible area of opportunity for Mexico.
Which industries in Mexico will undergo the deepest transformation and in what way due to the COVID-19 pandemic?
The way we approach business travel, international travel and meetings, and many other ways of working will be challenged and changed. For example, remote working and means of communications between different teams at different locations are now becoming a reality. There is a huge opportunity at this time for decision makers to look at this more as an opportunity rather than a threat and come out stronger in terms of their business models. This should be looked at as a learning phase for them to change and push change into their organizations. I am sure there will be extensive changes. We have been looking, for instance, at the changes in the Chinese market. We had a webcast with our CEO of KPMG in China, who was explaining how after two months of a lockdown in the cities of Wuhan and Beijing, companies are starting to partially resume operations. The new businesses that are resuming operations are starting to question the old traditional models with what they have seen in the last six to 10 weeks in a remote mode with different methods and tools.