PRODUCED IN MEXICO

Mexico 2016 | ECONOMY | VIP INTERVIEW

TBY talks to Francisco González Díaz, CEO of ProMéxico, on investments, the Pacific Alliance, and the aerospace industry.

What sectors do you see as most important right now in terms of promoting investment and where are you seeing interest from international investors?

Since 1999, we have had $436 billion dollars in investments in Mexico. From that total, $209 billion has gone to manufacturing, in advanced areas such as automotive, aerospace and electric-electronic, among others. The next portion of investments was made in the services area, including finance and insurance, which puts Mexico in an interesting level in terms of investments. Other relevant sectors are trade and logistics, as well as mining and telecom. Indeed, we are developing the telecom sector rapidly, as it holds a lot of opportunities since Mexico has recently opened up the sector and we are developing interesting new aspects in it; for example, if you have a US phone number, you can now call from Mexico to the US using your data package without paying any extra fare. We are also looking forward to implement this strategy in Latin America.

Mexico already has trade agreements with many TPP signatories. Is the agreement redundant?

TPP has been a milestone for Mexico. In the G20 in 2012, it evolved from a P9 to the TPP when Canada and Japan were included in the negotiations, along with Mexico. We are also evolving in many ways; for example, when we signed the NAFTA treaty in 1994, the Internet was just starting; there were no smartphones and intellectual property was not a main issue. Now, with the TPP, we are setting the basic principles to be able to trade in the e-commerce world. With this trade agreement, we are updating as well the NAFTA treaty and our FTA's with Chile and Peru. We are facilitating the way of doing trade with those countries, and with Japan we are increasing the scope of our trade. This FTA represents new opportunities with six other countries that will bring even more business to Mexico.

Given the relative economic size of its four members, is the Pacific Alliance less important for Mexico than it is for Chile, Colombia, and Peru?

According to the UNCTAD, Mexico has cumulative investments (investment stock) over $9 billion in the Pacific Alliance countries, therefore the interest of businesspeople in these countries is noticeable. We started first with large companies, but SMEs are now also going to those countries. For instance, we have the River Trade project that we started with Chile. We import berries from Chile and fly them to China through Mexican ports. Mexico is an important logistic hub. Our country is the only Spanish-speaking nation with direct flights to China, which strengthens our position as a logistic hub in the Americas. Our next step is fostering our integration in the global value chains of the Pacific Alliance. Another example is consumer goods, where Mabe is a great success story because it is already producing refrigerators in Ecuador and Colombia.

How important will the growth of the aerospace sector be for the Mexican economy?

The aerospace sector means excellent news for our country. If you analyze the growth rate of 17% in the past 10 years, you will see it is a very important figure. It is one of the sectors that has been achieving great goals. Also, if you see the number of highly qualified employees, and technicians who are studying in Baja California, Chihuahua Sonora or Querétaro, developing skills for this specific industry is really worth noticing. This is not only how ProMéxico sees the aerospace industry, but it is also how Airbus, Boeing, Bombardier and other OEM's are looking towards our country. These companies are interested in bringing suppliers from all over the world to produce in Mexico for them. Airbus, for example, is so highly committed to Mexico that the CEO Frederic Garcia is now the President of the board of the transnational company in Mexico. Bombardier is our best promoter worldwide and is continuing to produce in Mexico. This is a well-organized sector; it is new and still growing in the sense that, although there is growth, it is not as large as the automotive value chain. There are 300 aerospace companies in Mexico, and we are expecting another 300 in the next 10 years. We want to be in the top 10 countries in the aerospace sector in the near future.

Mexico has a negative reputation internationally around issues of security, transparency, and rule-of-law. Is this merited, and does it impede investment?

Regarding security, we have to differentiate facts from perception. The facts are that homicide, kidnapping, and armed robbery have been cut by half within the last three years. In terms of rule of law, we are implementing a new system that will bring more transparency. These are the facts. The perception used to be bad, but now tourist and businesspeople numbers are booming, so the perception of insecurity is changing in a positive way.