MEXICO Trends and Developments Contributed by: Javier Domínguez, Santiago Carrillo and Gabriel Torres, Ritch Mueller
all-time high of USD36,872 million, partly reflect - ing the confidence of foreign investors in Mexico in the context of company relocation, nearshor - ing is no longer considered a key driver of the country’s economic growth. Infrastructure and other hurdles As discussed above, to capitalise on the oppor - tunity offered by nearshoring and overcome the identified obstacles, both the Mexican government and the private sector must focus their efforts on addressing the deficiencies that potential investors identify as hindrances to locating their production chains in Mexico. As part of the survey mentioned above, BBVA Research and AMPIP asked industrial parks to identify the main obstacles that could limit for - eign investment. Of the parks surveyed, 91% reported issues with electricity supply, and 63% reported problems with water availability. Fitch Ratings’ analysis aligns with AMPIP’s find - ing that the primary hurdle Mexico faces regard - ing the nearshoring boom is a lack of access to electricity. Changes in legislation and public policy related to the electricity market during the current presidential term have limited the indus - try’s growth by restricting the entry of private capital. The projected demand growth for the 2024–30 period is expected to reach up to 17,000 MW of installed capacity, driven by the need to meet future energy requirements for the addition of new industrial parks and expanded square foot - age. With regard to water, officials from the Nation - al Water Commission ( Comisión Nacional del Agua ) have stated that the imbalance in the dis - tribution of rainfall, combined with the lack of hydraulic plans at the state level that are prop -
erly integrated at the federal level, have led to water shortages in different regions of the coun - try. Shortages have occurred, particularly in the northern region, which is of greatest interest to new investors due to its proximity to the United States. The other issue that developers and investors in the GRI Club conferences have identified as a barrier to nearshoring is the lack of clar - ity regarding local, state and federal processes and costs associated with obtaining permits and licences required for developing infra - structure and industrial parks. Regulatory and bureaucratic barriers related to certain permits and licences in some municipalities, states, and especially at the federal level, create significant uncertainty about the time required to obtain such permits and licences. Regarding the costs associated with the necessary infrastructure, the lack of support and compliance from authorities at the three levels of government, as well as the ever-increasing requirements, increase the cost of projects in ways that are often unexpected and cannot be budgeted for in advance. UBS bank officials have noted that the devel - opment of industrial infrastructure is one of the key indicators that determine the impact of nearshoring during this initial phase. Consider - ing the discussion in the previous paragraphs, the lack of infrastructure is one of the primary obstacles identified by key market players. In this regard, UBS officials agreed that Mexico has not experienced a significant increase in indus - trial infrastructure development. Actions taken by the Mexican government to overcome existing hurdles and uncertainty In this scenario, local governments and the fed - eral government have sought to design strate - gies to attract as much foreign investment as
697 CHAMBERS.COM
Powered by FlippingBook