ALEJANDRO MURAT

Mexico 2021 | ECONOMY | VIP INTERVIEW

TBY talks to Alejandro Murat, Governor of the State of Oaxaca, about developing infrastructure projects, generating a competitive atmosphere for business, and natural gas.

What are the main infrastructure projects that the state is currently developing?

The most important aspect is infrastructure projects, as today we have more than 100 infrastructure projects in the state for MXN3,500 million and around MXN10,000 million in government infrastructure projects, especially the Inter Oceanic corridor and three highways: one that connects Oaxaca to the coast; one that connects Oaxaca to the East; and one that connects both oceans. Moving forward, the 100 infrastructure projects will strengthen our economy, especially in terms of tourism experiences with a cultural center that will be built by top architects from Mexico who are recognized around the world. We are also building public goods infrastructure like a new transport system for the city of Oaxaca in the metropolitan area. Also, regionally speaking, we are building important regional highways on the coast and renovating markets. We have been able to renovate more than 31 and are moving forward with new markets. Also, we are doing infrastructure in public services like water, sewage, and electricity, which are all extremely important for our state. In 2019, the fundamentals of our economy were not where we would like them to be, and we were seeing some deterioration. In January 2020, I closed a deal with some banks to achieve this financing. We did not know the pandemic would occur, but it was the best countercyclical policy we could implement. This is now the fourth year of growth that we have been able to sustain. This year, it is especially important as the economy is projected to contract by perhaps 10%, so there are only six states growing this year. One of them is Oaxaca because of all this infrastructure we are generating. Now that our policies on the pandemic are more controlled, the second part of the plan is our tourism sector, which is extremely sensitive to changes in the economy. Now that we have a yellow rating for the pandemic, we were able to generate a 60% occupancy rate in our hotels during the last Day of the Dead. We hope to maintain this level of growth. Hopefully, we will have a vaccine soon and, moving forward, Oaxaca will be able to be extremely strong in tourism. Before the pandemic, we had more than 36 flights operating in the state, which was a record, and our airports were growing at a rate of about 60%. This year, two important media operators focused on tourism and recognized Oaxaca as the best place in the world to visit for travel and leisure, which gives us excellent momentum. We have been able to push forward some great media coverage through important brand names like Netflix and others to push the brand of Oaxaca worldwide.

What challenges did you face positioning the state of Oaxaca as a magnet for investment?

The most important part is generating a competitive atmosphere for business. When I started my government, the plan was to generate an atmosphere that invites private investment for the state and goes beyond our normal fast wins and strengths in tourism, namely our gastronomy and history, our great indigenous people, and our biodiversity. We lacked a platform to maintain a level of growth in the primary, secondary, and tertiary sectors and subsequently established an action plan to strengthen those three areas. For example, in the primary sector, which is agriculture, this year we will complete our first agro park and consolidate two new plants to export different foods like limes, milk, and mangos, where Mexico is the top producer but was not generating added value. We are now generating the added value so that we will be able to export. In the secondary sector, which is the most important for us right now, the Inter Oceanic corridor will clearly be significant. It will not only change Oaxaca and the south of Mexico but will be a world player; it is more than a canal. Many try to compare this project to the Panama Canal, but that is only one line of business. The most important part is that we will have a value-added industrial corridor, which is its most important competitive and comparative advantage compared to other corridors in this hemisphere. Other advantages include connectivity, which is why we are building these two highways, and we also have two airports in the region. Then, there is energy; the most important element here is that natural gas has arrived. We have an important investment there, and if any industry wants to set their plants up there, we will have natural gas and the only refinery on the Pacific coast for the entire hemisphere, which is another competitive advantage. We are the main producer of wind energy on the entire continent, and with these three energies we will have one of the cheapest energy sites in the world, which is clearly an advantage for industry. We also have competitive labor and more than 200 universities around the state. We are also extremely competitive in terms of salary prices. Another big element is the special economic zones, which are areas of around more than 100ha that will have fiscal and regulatory benefits. If we include Mexico's 11 international treaties, then we clearly have the right stuff to have an advantage, commercially speaking, in addition to the fiscal and regulatory advantages. The special economic zones will be private, public and private, or public and will be ready by the end of this year. All these create the right atmosphere to generate investments in the right sectors, including the third, which is the services sector, and we are extremely excited about that. We will have an agro park by year-end 2022, and the first investment announced by then. We will see the execution of the first stage next year as well as the train, which will cover 300km. We should be moving around 1.2 million containers at the first stage, and this should generate more momentum. The next stage will be a new port with the biggest depth around the world and a train with more technology features. It is important to have the first stage ready so that it can become a reality. Oaxaca will have two big global projects starting in 2021 with the right atmosphere, and we will have different beaches with different experiences. When the pandemic is over, we will have a new highway, new airport, and new terminal at Oaxaca costing around MXN1 billion. All these elements will generate a new atmosphere for Oaxaca.