FOR TODAY AND TOMORROW

Mexico 2016 | DIPLOMACY | INTERVIEW

TBY talks to Enrique Peña Nieto, President of Mexico, on the future of Mexico's trade partnerships and education reform, as well as his ambitions for the second half of his term.

Enrique Peña Nieto
BIOGRAPHY
Enrique Peña Nieto was born on July 20, 1966 and holds a BA in law from the Universidad Panamericana and an MA in business administration from the Instituto Tecnológico de Estudios Superiores de Monterrey (ITESM). Nieto joined public service at an early age, occupying several positions in the government of the State of Mexico. From 2000 to 2002, he was Secretary of Administration and from 2003 to 2004, he was elected Representative of the 13th District in the 65th Session of the State of Mexico. In 2005, Nieto ran for the governorship of the State of Mexico and was elected governor of the State of Mexico for September 16, 2005 to September 15, 2011. During his term as governor, he achieved significant progress in infrastructure and public services, particularly in health, and reduced public debt whilst increasing expenditure targeting works and programs without increasing taxes. In 2011, at the end of his term as governor, he campaigned for the position of President of Mexico and won the elections on July 1, 2012.

What will be the significance of the recently signed Trans-Pacific Partnership (TPP) for the Mexican economy?

The agreement will allow Mexico to bolster its economic and commercial presence in 11 markets of one of the most dynamic regions in the world. The TPP will give us access to trade and business preferences with six new partners in the Asia Pacific region, namely Australia, Brunei, Malaysia, New Zealand, Singapore, and Vietnam. The TPP also allows for better integration of our businesses in the productive chains with our most important partners in the US and Canada, contributing to the goal of turning North America into the most competitive region in the world. With our main partners in Latin America, the TPP will consolidate preferential access of Mexico to the countries of the Pacific Alliance in Colombia, Chile, and Peru. Once the TPP and the Pacific Alliance come into effect, Mexico will have a total of 13 FTAs with 52 countries and preferential access to a market of 1.3 billion people. I am convinced that the TPP will strengthen the commercial history of Mexico, consolidating us as an export platform to the world.

Mexico made a historic sale of 100-year euro-denominated bonds in 2015. Given the country's mixed history with foreign creditors over the last century, why should investors feel confident about this sale?

Around 10 or 15 years ago, it would have been unthinkable for Mexico to issue a 100-year bond. We have succeeded now because we have taken multiple prudential measures against the international economic situation, including preventive adjustment of public spending and the implementation of a hedging program against oil prices. In an environment of uncertainty and financial volatility, Mexico has maintained economic growth, macroeconomic stability, and implemented at least three reforms that have given us the best shield against the challenges we are experiencing, namely in the energy, telecommunications, and finance sectors. This has generated great confidence in the growth potential of Mexico among investors, both now and in the long run. Proof of this was the issuance of bonds in the euro market for a period of 100 years in April 2015, with which the Mexican government became the first sovereign issuer in a euro transaction to that term at such a historically low cost.

Education reform, a key part of your reform package, has faced a number of obstacles in its implementation, particularly with resistance from teachers' unions. Do you consider this reform a success?

The purpose of the Education Reform is to make quality education a real factor in personal development, providing every young Mexican with the necessary tools to write their own success story and contribute to the greatness of the country, making it more productive and competitive. We are working tirelessly to bring this reform to every school and student in Mexico. We are making regular teacher evaluations, as well promoting a culture where the best teachers are rewarded for their accomplishments. The reform is designed to support teachers, train them, and encourage them to better convey their knowledge. Currently, the performance evaluations have been implemented by almost 96% of the teachers in Mexico, including teachers in states such as Michoacán, Guerrero, and Oaxaca, where some groups of teachers are still resistant to this important transformation. Thus, during 2015, more than 360,000 participants were evaluated either for entry, promotion, and evaluation and/or performance assessment in both primary and middle education. My government has always been open to dialogue with those who oppose reform in order to improve it overall. This dialogue has been premised that there is no turning back in its execution. Dialogue is key to finding points of agreement in order to improve the quality of education and improve policy evaluation tools. In addition, we have initiated the issuance of Certificates of National Education Infrastructure, which will provide up to MXN50 billion ($2.7 billion) over the next three years. We have already started investing in the “Escuelas al Cien" program for the rehabilitation of educational spaces. This effort will allow us to provide the right educational conditions to support learning at the highest standards, including better infrastructure, educational materials, and computers with internet access to more than 33,000 educational institutions.

What are your most important goals for the second half of your term?

For the second half of my term, my government will continue working on the implementation of structural reforms. Beyond the current low oil prices, we are committed and determined to implement energy reform in a timely manner. The current environment of low oil prices does not stop or limit the implementation of energy reform in whatever step needs to be enacted. Proof of this is that in the third international public tender of contracts for hydrocarbon extraction, which was held on December 15, 2015, wherein 25 contracts were allocated within Round One with 100% allocation. We will also continue to work on strengthening the rule of law and access to justice for all. We are currently involved in the transformation of the traditional writing and inquisitorial system to a more oral and accusatory one. By the middle of 2016, the new penal system for all entities in the country will have to be implemented, which will make the application of justice in Mexico more expeditious and efficient. Along with this, we have initiated a profound insight into the current laws and the means to achieve greater efficiency in everyday justice and access to justice, which affects common citizens. We remain committed to macroeconomic stability to protect the heritage of Mexican families. To achieve this, we will continue applying a disciplined approach to public spending that is sensitive to the priorities of the population and focused on assisting the most vulnerable of the country. My government will remain committed to implementing an austerity budget that reduces government spending rather than transfers costs to the pockets of Mexicans. We will do more with less, investing public resources in strategic areas that are useful and bring the most social benefit. We will also speed up the phases of the National Infrastructure Program and apply innovative financial instruments such as the Fiber E Program or Certified Investment Projects that allow us to attract more private capital flows. We will also work to spur growth and economic development of the states that are lagging behind. For the first time in the history of Mexico, special economic zones will be created in states that have low human development but high production and logistics potential. Once the law for this is approved, I will propose the creation of the first special economic zones in Puerto Chiapas, Puerto Lázaro Cárdenas, in neighboring municipalities of Michoacán and Guerrero, the Isthmus of Tehuantepec, and from Salina Cruz (Oaxaca) to Coatzacoalcos (Veracruz). This measure will generate new poles of industrial development that will increase productivity, generate quality jobs, and reduce poverty. We will continue to face challenges, both internal and from abroad. To overcome them, instead of backtracking, we must continue with determination, commitment, and transparency in the way that we have set. My government is aware that we do not only work for the Mexicans of today, but for those of tomorrow so that they have the necessary tools to stand out among nations, having taken advantage of the conditions that allow us to reach our full potential.