Embed Size (px)
Citation preview
Volume 18, Issue 8 Page 1 [email protected]
Mexico’s Infrastructure Strategy: Opening Investment Opportunities
A MONTHLY NEWSLETTER ON NAFTA AND RELATED ISSUES
NAFTA Works August 2013 * Volume 18, Issue 8
INSIDE THIS ISSUE
1 Mexico’s
Infrastructure Strategy: Opening Investment Opportunities
1 Trade Highlights
2 The Electrical
Manufacturing Industry in Mexico
3 NAFTA Related
Events 3 Diario Oficial
4 Success Stories 4 Selected Reading 4 Infrastructure
Projects in Mexico 4 Mexico Economic
Update 5 Profile of Oklahoma 6 Profile of Sonora
On July 15, 2013, Mexican President Enrique Peña Nieto announced a six-year plan to invest over $300 billion dollars in infrastructure with public and private funds in the transport, telecommunications, water and energy sectors. The program aims to boost competitiveness for producers and exporters, promote nationwide economic growth, and foster social development by better integrating more people, regions and markets to the global economy.
The Investments and Infrastructure Plan 2013-2018 (IIP) was designed to transform Mexico into a world-class 21st Century logistics center that attracts further flows of investments. Mexico’s long-term goal is to be ranked in the top 20% of the World Economic Forum’s Global Competitiveness Index by 2030. Currently, Mexico ranks 68th out of 144 countries surveyed. The amount of investment is significantly larger than the six-year plan submitted by the previous administration that involved about $200 billion in infrastructure spending (According to Mayer Brown). Mexico requires even more investments to keep pace of its economic growth, the current program is expected to equal annual investments of 5% of Mexico’s GDP.
The Transport and Communications Infrastructure Investment Program, which is part of IIP, is earmarking about $100 billion to develop Mexico’s transportation and telecommunications infrastructure under the current administration. It will give the private sector greater involvement in carrying out projects to build thousands of miles of new roads, railways, telecoms infrastructure and expanding and upgrading ports and airports. Transportation infrastructure will receive investments of $46 billion and the telecom sector will benefit from resources estimated at over $55 billion. Earlier this year, President Peña Nieto
signed a reform of the country’s telecom laws aimed at opening up the sector to greater competition and allowing more foreign investment.
The program has five lines of action aimed to modernize, expand and maintain the communications infrastructure as well as the different modes of transport, taking into consideration Mexico's multimodal logistics requirements:
In terms of road infrastructure, the goal is to have a safe, complete and integrated road network in good condition that serves as the backbone of the Mexican economy, better connecting the country’s regions and bringing remote communities closer to global markets. Approximately 19,000 kilometers of roads will be built and modernized, including 5,500 kilometers of 34 new highways and expressways which will incorporate smart signaling to increase user’s safety and provide better transit information, and nearly
Continues on page 2
13,000 kilometers of rural roads. As for railways, the program seeks to bring
back passenger rail transport and encourage greater use of freight trains. The plan oversees a passenger rail renaissance in Mexico after announcing new projects that encompass setting up over 567 kilometers of railroads, including three high-speed trains that will link Mexico City with Queretaro, about 200 kilometers north of the capital, and with Toluca, about 50 kilometers to the south. A third line will cross the Yucatan Peninsula to connect Merida with the Riviera Maya, Mexico’s busiest tourist region. Likewise, six massive public transportation projects covering 95 kilometers will be built, such as a light rail in Guadalajara and the
Volume 18, Issue 8 Page 2 [email protected]
third metro line of Monterrey, the country’s second and third most populated cities. The program also has as a key goal of cutting travel costs and times for the freight rail system, which has become a strategic trade thoroughfare with the United States. Thus, the program will build infrastructure covering 322 kilometers that will improve the speed of this competitiveness-enhancing mode of transportation, including four rail bypasses to avoid congested urban areas, shortening rail corridors, and building and modernizing railroads across the country.
In terms of seaports, the program aims to make Veracruz, Altamira, Manzanillo, and Lazaro Cardenas world-class ports, develop three new ports, and increase the capacity of the port system to support the needs of a growing economy. The program comprises the construction of 12 specialized maritime terminals, including containerized and multi-use facilities to handle super post-panamax vessels, vehicles, fluids and bulk cargo, as well as cruises, in different ports on both the Pacific and the Atlantic coastlines. The investments will improve Mexico’s overall cargo-handling capacity up from the average of 85 containers per hour currently registered. The program also encourages the development of the Mexican merchant fleet and coastal shipping services.
With regard to airports, the goal is to achieve a better service, lower costs and increase frequency in air transportation. It also seeks to solve traffic congestion in Mexico City International Airport and promote regional interconnections. The program includes the expansion and modernization of 19 airports and the completion of the Palenque Airport in Chiapas.
In the telecommunications sector, Mexico is expecting to achieve universal telecommunications and narrow the digital gap access by expanding network coverage and fostering competition. The program also aims to contribute in effectively implementing the recently approved telecommunications reform. Among the projects included in the program are two new satellites to be put in orbit, a tender process for launching two new national television networks, installing a shared fiber optic network, expanding broadband internet access, and transitioning to digital TV.
The flow of investments during the 2013-2018 period could be even higher if a fiscal reform that will be sent to the Mexican congress in the fall this year is approved.
President Peña Nieto’s infrastructure plan brings an ambitious investment agenda that will generate high-value and long-term business opportunities for both national and foreign investors in Mexico. With better infrastructure, more investment and transformational reforms, Mexico will be able to grow at its full potential.
The Electrical Manufacturing Industry in Mexico The electrical manufacturing sector is becoming increasingly important to the Mexican economy due to its growing share in the industrial output and international markets. Additional prospects of further growth bring companies and other stakeholders in Mexico together to cooperate on various topics, such as harmonized standards, to expand production and facilitate trade. These efforts will help to make this sector one of the most competitive manufacturing industries in the world.
Currently, the Mexican electrical sector successfully competes at a global level. In the last decade, Mexico’s exports of electrical equipment have more than doubled, growing from $17.8 billion in 2003 to $37.5 billion in 2012, according to Mexico’s Chamber of Electrical Manufacturing (CANAME). The United States is Mexico’s largest export market, absorbing over 90% of total exports. This makes Mexico the second largest supplier of electrical equipment of the U.S. comprising 25% of its total
imports. Likewise, Mexico imports over $30.6 billion of electrical products, about half from the U.S., strengthening the North American supply chains. However, exports to other markets such as Canada, China, Brazil, and Colombia have grown significantly in the past few years.
Mexico’s network of free trade agreements with 44 countries grants duty free access to the world’s most important markets such as the North American, European, and Japanese markets, making the Mexican electrical industry highly attractive to global investment. Due in part to the highly integrated supply chains in North America, Mexico, the United States, and Canada have agreed to join the Council for Harmonization of Electrotechnical Standards of the Nations in the Americas (CANENA) to provide higher quality services and products in the industry.
CANENA works with other national institutions, such as the National Electrical Manufactures Association (NEMA), the Association for Standardization and Certification (ANCE), and Electro-Federation Canada (EFC) to develop regulations that will facilitate trade among NAFTA partners. Consumers are more likely to buy from international markets if they know products are safe and reliable. Harmonized standards will instill the necessary international confidence in the goods produced by countries that follow these standards.
In addition, the pooling of resources streamlines the development of standards and shortens the length of time for the adoption of new technologies. CANENA also ensures that the benefits of establishing standards outweigh the costs. As a result, these standardized products appeal to investors who know that they will gain more from investment in high quality products.
The collaboration of various agencies has resulted in over fifty tri-national standards and 27 bi-national standards with multiple countries. The synchronization of regulations is important for Mexico because of the sector’s vital role in the economy, promoting economic growth, creating high quality jobs, and attracting investments that benefits the entire country. The electrical equipment sector makes up 3% of Mexico’s industrial gross domestic product and has a broad impact in a wide array of industries such as materials and equipment used for generation, transmission, distribution, and lighting fixtures and household appliances.
Additionally, Mexico’s National Council for Science and Technology (CONACYT) and CANAME have recently signed an agreement to collaborate on the promotion of technological development for renewable and alternative energy to achieve higher energy efficiency standards. For example, many households and businesses have already switched to using LED lights and have obtained substantial savings. This year, the Mexican market value of LED lights will reach $390 million.
Mexico’s recent efforts to foster the electrical sector have begun to benefit the industry. It is estimated that in 2013 the electrical industry will increase by 15% due to extensive infrastructure projects and technological developments. Mexico’s efforts to further develop technology for sustainable energy have ranked it in 4th place worldwide, according to Northern Electric Expo.
Under the National Development Plan, the Peña Nieto administration has committed to promote the electrical industry, making technological innovation and energy efficiency improvements a national priority.
Internationally harmonized quality production standards will continue to open new markets for trade and promote investment. Private and public investment in the electrical industry will also contribute significantly in developing technological innovation. Through these improvements, the Mexican electrical sector will continue to rise as one of the world’s most competitive industries.
Volume 18, Issue 8 Page 3 [email protected]
NAFTA Related Events
Latin American Food Show September 4 – 6, 2013 Trade show of exportable food and beverages from Latin America. Location: Hotel Iberostar Cancún. Cancún, Quintana Roo. Phone: 52 (55) 6386-6613/ 6614 E-mail: [email protected]; [email protected] Website: http://www.lafs.com. mx/
ITT Expo 2013 September 10 – 12, 2013 International exhibition of the latest information and telecommunications technology. Location: Centro Banamex, Mexico City. Phone: 52 (81) 8333-4400 E-mail: [email protected] Website: http://www.ittexpo.com.mx/2013/
Expo Franquicia-T September 19 – 20, 2013 International franchising expo in northern Mexico. Location: Cintermex. Monterrey, Nuevo León. Phone: 52 (81) 8369-6660/ 64/ 65 E-mail: [email protected], [email protected] Website: http://expofranquicia-t.com/
Tech Trends Forum2013 September 24, 2013 Expo featuring technological practices and strategies. Location: Cintermex. Monterrey, Nuevo León. Phone: 52 (81) 8358.2000 ext. 5093 E-mail: [email protected] Website: http://www.techtrendsforum.com/ For further information visit: http://www.sdchamber.org/events-and-programs/chamber-events.html?go=1380610800
Diario Oficial Notices http://dof.gob.mx
Notice announcing TRQ’s to import flat-rolled products of iron or non-alloy steel, plated or coated, and ultra-pasteurized milk in tightly sealed containers and powder for preparation of beverages, originating from Costa Rica. July 1st.
Clarification to the Resolutions concerning the countervailing duty order imposed on imports of liquid caustic soda from the USA, regardless of the shipping country (Mexican tariff item 2815.12.01). July 2nd.
Official announcements for obtaining third party authorization to perform interchangeability and/or bio comparability drug testing, or to assist in the sanitary control of establishments. July 2nd.
Amended 2012 General Rules for Foreign Trade. July 8th.
Resolution that declares the initiation of the sunset review of the countervailing duty order imposed on imports of steel chains of welded links from China regardless of the shipping country (Mexican tariff item 7315.82.02). July 8th.
Amendment to the notice announcing the allocation mechanism to import beans under TRQ’s. July 12th.
Notice establishing the bluefin tuna catch quota in the Mexican waters of the Pacific Ocean and marine waters of federal jurisdiction covered by the regulations of the Inter-American Tropical Tuna Commission. July 15th.
Notice formally declaring some municipalities of Aguascalientes as Anastrepha fruit fly free territories. July 15th, 30th.
Modification of the parameters for the proper development of self-regulatory mechanisms and measures referred to in article 44 of the Federal Law on Protection of Personal Data held by private parties. July 16th.
Notice announcing the submission to the SCT of unsolicited proposals on a highway development project between the cities of Tampico and Tuxpan, according to the Law on Public-Private Partnerships. July 17th
Notices modifying the TRQ to import barley and malt. July 22nd.
Notice amending the TRQ to import duty free powdered milk originating from the WTO members. July 25th.
Resolution that is accepts and declares the initiation of the antidumping investigation on imports of sheet steel plate originating from China regardless of the shipping country (Mexican tariff items 7208.51.01, 7208.51.02, 7208.51.03, 7208.52.01, 7225.40.01 and 7225.40.02). July 26th.
Amendments to the agreement that establishes the technology standard for digital terrestrial television and the policy for the transition to digital terrestrial television in Mexico. July 31st
Mexican Official Standards
Draft PROY-NOM-090-SCFI-2013, portable lighters, disposable and refillable – safety specifications. July 3rd.
Draft PROY-NOM-192-SCFI/SCT1 - 2013, telecommunications - televisions and decoders specifications. July 5th.
Draft PROY-NOM-009-ENER-2013, energy efficiency in industrial thermal insulation. July 10th.
NOM-059-SSA1-2013, good manufacturing practices for medicines. July 22nd.
Official announcement to participate in the process for obtaining approval as a testing laboratory or certification body for the NOM-010-SESH-2012. July 23rd
NEWS on the U.S.-Mexico Cross-Border Trucking Pilot Program
On July 25th, the Federal Motor Carrier Safety Administration (FMCSA) granted provisional operating authority to the Mexican carrier Sergio Tristan Maldonado, operating as Tristan Transfer, to participate in the program after having cleared its Pre-Authorization Safety Audit by federal officials. With two drivers and one truck, Tristan Transfer became the 13th Mexican trucking company allowed to deliver international door-to-door shipping services.
Volume 18, Issue 8 Page 4 [email protected]
Bachoco Acquires U.S. Breeding Operation Industrias Bachoco, Mexico's leading producer and processor of poultry and other food products headquartered in Celaya, acquired breeding assets in Arkansas of Morris Hatchery Inc., a U.S. company. This operation has a capacity of around 350 thousand laying hens that produce hatching eggs. Rodolfo Ramos, Bachoco's Chief Executive Officer, stated: "This is a strategic acquisition for our Company for several reasons; first, it will rapidly reinforce our supply of hatching eggs for our Mexico and U.S. operations; secondly, it represents a step towards our organic growth, and; lastly, this operation is located in a region far enough from our current breeding complexes, thereby increasing dispersion and reducing sanitary risks for our operations."
Apple Leisure Group to Develop Tourist Resorts in Mexico Apple Leisure Group, a Newtown Square, PA-based travel and tourism services company that also owns tourist resorts, will invest $600 million in six new resort developments in Baja California Sur, Jalisco and Quintana Roo. The funds will be used to construct new facilities and expand existing properties that will create more than 4,000 jobs in Mexico.
Mondelez to Invest In Mexico Mondelez International, a U.S. multinational confectionery, food and beverage conglomerate based in Chicago, plans to invest $600 million in the northern state of Nuevo Leon. Mondelez will build the world's biggest cookie plant which will have five production lines and will start operating in mid-2014. Mondelez International, one of the world's largest food companies, was formerly known as Kraft Foods Inc. Pirelli Aims Second Phase of Mexico Investment Pirelli initiated the second half of its $400 million investment in the company’s Silao, Mexico factory towards so-called “green performance” tire production to be completed by 2017. The investment forms part of the company’s strategic industrial plan presented in 2011. Overall, the initial project and the new project in Mexico will have a production capacity of 5.5 million units and create 1,400 direct jobs and about 400 indirect jobs. The first phase of the Silao facility was inaugurated in May 2012 and tires produced there serve the U.S., the Canadian, and the growing Mexican markets.
Lego Expands Investment in Mexico The Denmark-based company Lego will invest $125 million to expand the packing plant it has been operating in Nuevo Leon since 2008. The new investment will generate 1,000 direct jobs and 300 indirect jobs. Since its inauguration, the plant has doubled the number of people working there. This factory will now have a pre-packing zone and a final product packing line on 51,000 square meters with the capacity to produce 250,000 boxes every day, to be shipped mainly to the U.S. market.
The Pacific Alliance: An Example of Lessons Learned Authors: Carl Meacham and Carlo Dade. CSIS. July 2013
The Pacific Alliance, a recent initiative in Latin America which currently includes Chile, Colombia, Peru, and Mexico, appears to be opening a new, more pragmatic route to economic integration. The booming economies of Latin America's newest trade bloc may offer guidance on future regional integrations efforts, as well as offering a lessons or two for their former American and European "teachers."
http://csis.org/files/publication/130711_CDadeCMeacham_PacificAlliance.pdf
Infrastructure Projects in Mexico
Lazaro Cardenas Containers Terminal Sponsor: Hutchison Port Holdings (HPH) Location: Michoacan Project Value: $38 million
Hutchison Port Holdings (HPH) announced an investment of $38 million in equipment for Lazaro Cardenas Containers Terminal in Michoacan, with the purpose of increasing its efficiency and operating capacity. Three RTG container cranes will arrive to this port in Michoacan; these cranes have the capacity to load over 60 tons and operate 32 containers per hour each. In addition, three RTG 100% electric cranes will start operating in mid-August. Lazaro Cardenas Port moves 24% of total cargo in Mexico, which makes it the fastest growing port in the country.
Business opportunities: engineering, construction materials, specialized equipment.
Northeast Combined Cycle Sponsor: Federal Electricity Commission (CFE) Location: Nuevo Leon Project Value: $870 million
CFE will call for an international bidding by the end of this year for a combined cycle central based on gas and water vapor located in Escobedo, NL to generate electric power for local consumers. With an investment of $870 million, the power plant will have 1,034 MW capacity and will be the country’s thirteenth largest in generation capacity. The plant is expected to be built following PIE scheme, where the company that wins the bidding builds the plant and sells all or part of the energy produced to CFE.
Business opportunities: financing, engineering, construction materials, electrical equipment, turbines.
Success Stories Selected Readings
Volume 18, Issue 8 Page 5 [email protected]
Oklahoma
In 2012, Oklahoma's exports to Mexico reached $620 million, up $443 million from their level in 1993 and an increase of 18.1% in comparison with the previous year. Among all U.S. states, Oklahoma was ranked 32nd as an exporter of goods to Mexico in 2012. In 19 years of NAFTA, Oklahoma's exports to Mexico have increased by 251%, while those to the rest of the world rose 169%. This means that the export growth rate to Mexico is 1.48 times higher than its export growth rate for the rest of the world. Since NAFTA was implemented, Oklahoma's sales to Mexico have grown at an annual average rate of 6.8%. Mexico is an important trading partner to Oklahoma. It was ranked as the 2nd largest export market for goods from Oklahoma in 2012, illustrating the impact of NAFTA for Oklahoma's growing businesses. Mexico accounted for 9.4% of Oklahoma's exports worldwide in 2012.
Exports to Mexico 1993 - 2012 (Millions of US Dollars)
Source: US Census with adjustments made by the World Institute for Strategic Economic Research (Wiser), and SE-NAFTA. 1993-1996 by SIC and 1997-2012 by NAICS.
Volume 18, Issue 8 Page 6 [email protected]
