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Mexico
Investment Goals
Latin America's second-biggest economy is opening up an array of investment opportunities to boost its standing as a global hub, tourist hot spot and high-tech innovator.
Mexico is turning an economic setback into an opportunity. The country is making its greatest investment in 25 years in the national infrastructure to prepare for the eventual upturn in the global economy.
President Felipe Calderón says combined public and private funding in projects ranging from highways to sewage treatment plants and oil exploration is expected to reach $44 billion this year, opening up an array of investment opportunities for domestic and international enterprises.
With the U.S. accounting for almost 80% of its international trade, Mexico has been the first to suffer the effects of the slowdown in the U.S. economy. Growth declined from 4.8% to 3.2% in 2007, hovered around 2.4% last year and is expected to shrink further this year.
However, under a national infrastructure program, Mexico is undertaking more than 300 projects representing $141 billion over a five-year period.
The largest investment — more than $76 billion — will be in oil and gas production, a major revenue earner. The program will also include a sharp increase in public and private investment in transportation infrastructure.
Targets include the modernization or construction of almost 12,000 miles of highway and rural roads, the extension of the railway system by nearly 1,000 miles, the expansion of Pacific and Gulf Coast ports and the construction of at least three new airports.
The infrastructure investment program has been designed to exploit the country's enormous potential as a global logistics hub and an international tourism destination.
As the second-largest economy in Latin America with the highest per-capita income, Mexico has obvious attractions for investors — not least of which are its Pacific and Caribbean ports, its land links to North and South America and the quality of its workforce.
It can deliver goods to the U.S. faster than its Asian competitors. It also offers a skilled but inexpensive labor force and, as a result of the North American Free Trade Agreement (NAFTA), goods made in Mexico can be sold in the U.S. without tariffs.
Efforts are now under way to improve national competitiveness and expand the economy's diversification into high-tech sectors. There is increasing collaboration between research centers and industry, with growing activity in the fields of nano-, bio- and information technologies.
Typical of this trend is AliBio, a startup company that offers biotech solutions for wastewater, agriculture and aquaculture management.
"Biotechnology is certainly one of the most important areas of development in the country," says Alfredo Suárez Rivero, the company's president and managing director. "Mexican universities are leaders in the field, although application of their research is still being developed." AliBio offers its clients biotechnical solutions that provide greater efficiency than chemical ones. "Following market research, I realized that with our technology we could deal not only with regional issues but also with global ones," says Suárez. "So we submitted this suggestion to the board, and they approved an initiative to create a global business plan." Already expanding in Latin America, AliBio is beginning to sell its products in Europe.
Despite the global crisis, Mexico is in a much stronger position economically than it has been for several decades, and financial analysts believe it is well placed to counter the international downturn. The country has strengthened its public, corporate and banking sectors' balance sheets, and a more flexible exchange rate system has reduced its vulnerabilities. International analysts say the system remains well capitalized and supported by a strong regulatory framework.
Finding a balance
A premium-class resort will strengthen Tamaulipas' central region.
The government of the state of Tamaulipas, on Mexico's Caribbean coastline, is developing a mammoth premium-class international tourist resort to rival those in Cancún.
The new vacation complex will be centered around La Pesca (its name means "the fishing"), a quiet town with a population of 1,600 set in an area of natural beauty, rivers, wetlands and lakes, and popular for its trout, snook, tarpon, shrimp, crabs and baitfish. It will stretch for 17 miles along the Gulf of Mexico and will eventually encompass some 7,000 hotel rooms and more than 12,000 villas and condominiums.
The resort will be the first fully integrated tourism development on Mexico's Gulf Coast. The state and federal governments are backing it with the involvement of private-sector developers.
La Pesca's prospects of becoming a successful high-end holiday resort rest partly on the town's strategic location. It is only 160 miles south of the Texas border and about 200 miles east of Monterrey, Mexico's most prosperous city.
Residents of La Pesca, which is 30 miles from the nearest highway, believe that the influx of tourists will boost the number of local jobs and bring about improvements to the town's facilities. Eugenio Javier Hernández Flores, the governor of Tamaulipas, expects 120,000 people to be living in the area in 20 years' time.
Nearby is another international attraction — El Cielo, a 356,000-acre biosphere reserve and UNESCOWorldHeritage Site. Ranging in height from a few hundred feet above sea level to well over 7,500 feet at the peak of the SierraMadre mountain range, the reserve spans four distinct ecological systems and is famous for its spectacular cloud forest.
Tamaulipas, which is a little smaller than South Carolina, is already one of Mexico's most prosperous states, with an economic growth 2% higher than the national average of 3%. Thanks to the proximity of the U.S., it has 15 border-crossing points, five airports and two major seaports, and is responsible for almost 30% of Mexico's international trade.
Governor Hernández says the decision to turn La Pesca into an international vacation resort is intended to bring greater regional balance to the state's economy by strengthening the central region.
The northern part of Tamaulipas is home to a profusion of internationally owned manufacturing or export-assembly plants known as maquiladoras, which employ Mexican workers, while petrochemical industries and oil industry support services predominate in the south.
"Our proximity to the U.S. and our effective trading structure are major assets for companies
interested in producing in Mexico and trading abroad."
Eugenio Javier Hernández Flores
Since the beginning of his six-year mandate in 2005, Hernández has devoted his administration to improving the infrastructure of the state, developing new tourism areas, creating jobs and increasing high-tech education for the young.
Infrastructure projects have included extending and modernizing the state highways and creating a third international airport in the north. Hernández has also initiated the development of new technology parks with the aim of making Tamaulipas a center of software creation.
"Our government welcomes new investors," he says. "We are willing to cooperate with them directly and openly in order to accommodate their needs. Our proximity to the U.S. and our effective trading structure are major assets for companies interested in producing in Mexico and trading abroad."
High-end destination
Campeche embodies the best that Mexico can offer tourists, including the heritage of its ancient civilizations.
Spanish developer GrupoMall is creating Mexico's first archaeological underwater museum at the Campeche Playa Gold Marina and Spa Resort. This is the result of the company's injection of an extra $200 million into the resort, bringing its total investment to $800 million.
Julio Noval García, the company's president, says that it has accomplished more than 80% of stage one of the project and has completed the first condominiums.
When finished, the resort, which is situated in the Champotón area, 40 miles from Campeche City, will have 3,045 luxury condominiums, a 246-room hotel, a lavish boutique hotel, a sports marina with 150 boat slips, a town center, a health-care facility and an 18-hole golf course designed by Jack Nicklaus.
The state of Campeche lies alongside Yucatán and Quintana Roo on the southeastern peninsula of Mexico, embodying everything that Mexico can offer tourists, especially its Mayan heritage.
Campeche Playa is the centerpiece in the state's efforts to diversify and develop a highend tourism sector in preparation for the eventual decrease in its oil and gas resources. At present, Campeche provides 82% of Mexico's petroleum and 34% of its gas, with the prospect of more finds offshore.
Key tourist destinations include the capital city and Calakmul, a Mayan ruin. Both are UNESCO World Heritage sites and together comprise 16 archaeological sites that are open to the public.
Jorge Carlos Hurtado Valdez, the governor of Campeche, has overseen extensive investment in infrastructure. The state is expanding two convention centers, and it seeks investment for an exposition center that could accommodate larger events. Governor Hurtado also points out that Campeche has the lowest crime rate and the best security in Mexico.
Challenge to Long Beach
Lázaro Cárdenas' transport links make it the most important port in Latin America.
By train, a traveler can reach the Central and Midwest regions of the U.S. more quickly from the deepwater Pacific port of Lázaro Cárdenas than from Long Beach, California.
"We want to take advantage of this," says Leonel Godoy Rangel, governor of the state of Michoacán, within which Lázaro Cárdenas lies. "It is already the most important port in Latin America, but it is ready to compete with Long Beach and the Panama Canal."
According to Governor Godoy, it is primarily for this reason thatMichoacán's economic growth is higher than the national average and second only to that of the Federal District of Mexico City. The challenge now is to utilize the port's strategic potential in the greater context of developing the state's economy.
Michoacán has a strong tourism sector and is traditionally a leading producer of corn, wheat, rice and beans. Godoy believes that the increasing price of food, together with the port's prime position, can drive the state's economy upward even further.
A freeway connects the port with major Mexican industrial areas. The governor says that a massive investment is being made in the Kansas City Southern railway, and he is campaigning for the upgrade of Lázaro Cárdenas Airport to international status and for improvement of the 130-mile coast road to the north.
"We have a logistic super-road starting from Lázaro Cárdenas that reaches Canada, and with our road, rail, sea and air links, we have all the modalities to become one of the most important economic centers," says Godoy. "We have the conditions to make this happen, and we hope it will be a lightbulb that radiates throughout our state and then through the country."
"With our road, rail, sea and air links, we have all the modalities to become one
of the most important economic centers."
Leonel Godoy Rangel
The art of saving time and money
Parque Logístico's transport terminal, customs office, distribution center and free-trade zone is the complete gateway to trade with the U.S. and Asia.
The north central state of San Luis Potosí has established a world-class logistics complex, designed to reduce costs and transport times and provide a model for increased competitiveness in Mexico.
Parque Logístico is a privately owned enterprise consisting of an industrial park with offices to rent, an intermodal shipping container terminal, an on-site customs office, a distribution center and the free-trade zone Recinto Fiscalizado Estratégico (RFE).
Grupo Valoran, a leading Mexican infrastructure and real estate developer, and Hines, a privately owned international real estate firm based in Houston, created the enterprise as a joint venture.
"We are developing the most complete industrial and logistics complex in Mexico, and, based on the quality of our projects, we know that we can develop the same concept in other locations," says Federico McGregor, director-general of Grupo Valoran.
Parque Logístico is situated next to Mexico's most important highway, Highway 57, and the principal north-south railway connecting Mexico with the U.S. "San Luis Potosí has an excellent natural logistical position because it is located effectively the same distance from Monterrey, Guadalajara and Mexico City, the three most important cities in the country, which account for nearly 80% of Mexico's GDP," says McGregor.
An important component of the logistics chain is an agreement between Parque Logístico and Kansas City Southern, a railroad company linking San Luis Potosí with Kansas in the North, Veracruz on the Gulf of Mexico, and Lázaro Cárdenas on Mexico's Pacific Coast.
"The Pacific Coast is a natural for products coming from Asia, and Lázaro Cárdenas has ample possibilities to expand," says McGregor. "Parque Logístico's first advantage is its location, and its second is the really stable relationship we have with the rail logistics operator."
However, Parque Logístico is not limited to using only Kansas City Southern, leaving it free to handle loads from various other enterprises.
Filling a niche
You can work, rest or play on Mexico's border-crossing buses.
The only Mexican company legally authorized to operate intercity bus services between the U.S. and Mexico is about to extend its services to Arizona, Nevada and California.
Grupo Senda Autotransporte is already active in and out of Texas, and its third step will be to extend its services to Illinois, Georgia and the Carolinas.
"It has become easier and more comfortable to move from one place to another in a bus rather than a car because we offer Internet service, television and other facilities in our buses," says Chief Executive David Rodriguez Benitez.
"We focus on the economy and luxury sectors, as well as the executive segment, which competes directly with cars and is growing the most right now," he adds. In addition to offering federal passenger transportation from city to city, Grupo Senda has two other business segments providing transport for schools and industrial personnel, as well as package delivery.
Grupo Senda has been in existence as a limited company operating its own buses for 80 years, unlike most other Mexican bus services, which are cooperatives in which the operators own their own vehicles.
In the past 20 years, Grupo Senda has achieved five important acquisitions, doubling its size and becoming the first passenger-transportation enterprise in Latin America to go public.
Degrees of excellence
Culture, research and enterprise go hand in hand at Mexico's universities.
Benemérita Universidad Autónoma de Puebla (BUAP) has opened an extensive cultural complex, described as the largest in Latin America.
Enrique Agüera Ibáñez, the rector who inaugurated the complex last November, says it will be the most important cultural center in the country: "There is no government with this kind of complex. It will position our university as one that aims for the best."
Agüera is an academic who thinks big and believes in both the importance of engendering a competitive spirit in society and the need for universities to maintain strong links with the private sector. "We have many contracts with many enterprises, and BUAP receives about $12 million a year in income from our products and services," he says.
He believes the university's new cultural complex will enhance its status as an establishment that seeks the best qualities.
"My purpose," he explains, "is to convince people that public institutions must be as good, or better, than any other supplier in the education market.
"We invest a substantial amount of money in BUAP's facilities and technological equipment, but we cannot leave behind the values of humanism because they are also really important for quality achievement."
The oldest and largest of the state's academic institutions, BUAP has more than 40,000 enrolled students. It was founded in 1578 and became a publicly funded institution in 1937.
BUAP hosts summer courses for the Universidad Complutense de Madrid as one of its measures to develop international relationships.
Universidad de las Américas Puebla (UDLAP) stands out among the country's private higher-education institutions.
With 9,000 students from 35 countries representing all five continents, UDLAP is the only private university in Mexico to offer such a wide array of academic programs, ranging from law and computer systems to music and archaeology. It is also the only one offering a degree in nanotechnology.
"We are a university that provides students with multiculturalism, an understanding of globalization and a practical vision of the modern world," says Dr. Luis Ernesto Derbez Bautista, the rector of UDLAP.
"We also have a business council composed of representatives of leading Mexican companies that advises us of their needs in the labor market, so that we can focus on those needs while training and preparing our students," he continues.
Derbez is in the process of reducing the number of programs linking the university with other educational institutions and concentrating on those connected with countries and regions likely to be more powerful in the future, such as China, India and Eastern Europe.
Seeking Medical Transformations
Mexico's low-cost private medical services, including cosmetic surgery and hair transplants, are attractive tourism incentives.
The economic downturn in the U.S. has increased the appeal of Mexico's medical tourism sector, driven by the greater affordability of treatment south of the border.
Many doctors, dentists and surgeons have established private practices in the Central American state, offering high-quality, low-cost services. Cosmetic surgery is particularly popular among visiting Americans.
"In the U.S., there are 45 million people who don't have medical insurance, and Mexico is capable of receiving about 800,000 a year," says Dr. Jorge Ariel Diaz Ramirez, who for the past 12 years has been working in the field of plastic and reconstructive surgery.
The Kaloni Science Center in Santa Fe, which Dr. Diaz founded and manages, has a medical department and a spa, but its core business is hair restoration. Using patented micro-size tools, Dr. Diaz has developed a technique for transplanting follicles one by one, without altering or damaging the scalp.
"The donor area can be either the head or any other body part, since the extractor works on each individual follicle without leaving permanent scars," he says. "Unlike [in] other extraction processes, not a single follicular unit will be damaged in the procedure."
Other advantages of the technique, claims Dr. Diaz, who is a member of the International Society of Hair Restoration Surgery, is that the practitioner can extract follicles from eyebrows, mustaches and beards. The treatment, he says, is minimally invasive, allowing the patient to return to normal activities the following day.
Dr. Diaz is contemplating an expansion of his practice, either by franchising in the U.S. or by creating subsidiaries. "We are creating a new market for men that is about making them feel and look better," he says.
All monetary figures are stated in U.S. dollars unless otherwise indicated. Director: Lucas Montes de Oca Managing Editor: Beverley Blythe; Editor: Michael Knipe; Art Director: Lisa Pampillonia; Cover Photo: Walter Bibikow / Alamy Images Project Managers: Muriel Guaveia, Federico Bongera, and Mariana Sanchez Project Development: Charlotte Saint-Arroman; Commercial Director: Carolina Mateo