Mexico is recognized as a visionary leader in global trade, investment and diplomacy.    Increasingly, its southeast region is at the forefront of its achievements.

Trade

      Mexico leads the world in free trade agreements.   Its FTAs with 32 countries provide preferential market access to more than 860 million consumers.   It competitively will reach about one billion consumers, almost one-sixth of the world’s population, when its FTAs with Japan and Singapore are implemented.   

      The U.S. Department of Commerce reports:

      • Mexico ’s exports have increased by 205 percent since NAFTA.

      •The U.S. accounted for 88 percent of Mexico ’s exports and 63 percent of its imports in 2002.

      • Mexico is on track to overtake Canada as the most important U.S. trade partner by 2010.

Investment

      Mexico accounted for 40 percent of nearly $13 billion invested in Latin America and the Caribbean during Q1 and Q2 of 2003, according to the United Nations’ Economic Commission for Latin America and the Caribbean (ECLAC).    In 2002, Mexico received almost 25 percent of the $56 billion invested in the region.    

      According to Mexico ’s Secretary of the Economy:

      •Manufacturing accounted for 54 percent of the FDI Mexico received during Q1 and Q2 of 2003; financial services, 20 percent; commerce, 12 percent; transportation and communications, 5 percent; and other services, 7 percent.

      •Nearly $120 billion has been invested in Mexico since 1994.

Why invest in Southeast Mexico ?

      Federal laws to protect capital and intellectual property; reforms to streamline administrative processes and institutionalize transparency; macroeconomic stability; economic deregulation; a highly-strategic location; qualified, competitive labor and a vast network of FTAs form the foundation of Mexico ’s popularity with investors.

      Two successful initiatives from the Fox administration have increased Mexico ’s appeal and focused attention on its southeast region:

      •Plan Puebla-Panama improves the quality of life and enhances economic opportunities for citizens of Mesoamerica , a region defined as Mexico ’s nine southeast states and Central America .  Southeast Mexico accounts for 44 percent of Mesoamerica ’s 64 million inhabitants.

      •The Going South Program stimulates direct investment in southeast Mexico through generous  financial incentives and comprehensive support services.       

Plan Puebla-Panama

      Vicente Fox conceived Plan Puebla-Panama during his campaign for the presidency.    

      In 2001, Belize, Costa Rica, El Salvador, Guatemala, Honduras, Mexico, Nicaragua and Panama launched the plan.   The eight countries agreed on eight major initiatives:  human development, energy integration, road integration, international trade facilitation, telecommunications, sustainable development, natural disaster prevention and mitigation, and tourism.  

      Guiding principles of the plan include:

      •Autonomous decision-making based on the countries’ democratic processes.

      •Provision of public information and promotion of public participation for long-term sustainability. 

      •Progress in any initiative must be compatible with the others (infrastructure development considers social and environmental impacts, etc.).    

      Mexico’s involvement in the plan relates to Campeche, Chiapas, Guerrero, Oaxaca, Puebla, Quintana Roo, Tabasco, Veracruz and Yucatán.  Miguel Hakim, Undersecretary for Latin America and the Caribbean , Secretary of Foreign Affairs (SRE), is Mexico ’s Plan Puebla-Panama Commissioner.  

      The Inter-American Development Bank (IDB) provides project financing as well as technical and logistical support, in collaboration with ECLAC and the Central American Bank of Economic Integration, among others.   

      Significant progress has been made since President Fox and Yucatán’s Governor, Patricio Patrón, hosted the Plan Puebla-Panama Summit in Mérida in June 2002.     

Human development

      Top officials signed a memorandum of understanding for a regional health project in September 2003.  

      The countries agreed to strengthen cooperation on improving maternal-infant health, food safety and nutrition; preventing and treating HIV/AIDS and other sexually-transmitted diseases; controlling tuberculosis and sicknesses carried by vectors such as malaria; designing a mechanism for joint purchases of drugs and other medical supplies; and establishing a network of laboratories.   

Additional progress includes a statistical information system on migration and accreditation and promotion of educational projects.  Groundwork was established to include campesino, indigenous and Afro-Caribbean representation in natural resource management.    

      Objectives are to reduce poverty, facilitate access to basic social services among vulnerable populations and contribute to local development.

Energy integration

      A $37.5 million loan for Guatemala to help finance its construction of an electricity transmission line to link its power grid with Mexico ’s was announced in August 2003 by the IDB.  The 64-mile line will connect Tapachula , Chiapas to Los Brillantes in Guatemala .  Initial capacity is estimated at 200 megawatts from Mexico to Guatemala and 70 megawatts in the opposite direction.  

      Nearly half of Mexico ’s electrical energy is generated in Chiapas .  Comisión Federal de Electricidad reportedly will use its own budget to construct Mexico ’s 20-mile portion of the line and expand the Tapachula substation.  The IDB estimates the total project cost at $55.8 million.

      Environmental and social impact studies and a strategic environmental assessment were performed to analyze direct and indirect consequences.   Participative workshops were held to inform citizens.

      Based on these efforts, an environmental and social management plan was prepared to ensure viability and to adopt prevention and mitigation measures.  No populations will be resettled.  The line’s path was altered to protect an archeological site. 

      The Mexico-Guatemala interconnection supports objectives to reduce the region’s energy costs, expand service coverage (especially to rural areas), strengthen integration and diversify trade.    Some 85 percent of Mexico ’s trade with Central America is transported via Chiapas .  

      The interconnection also complements the plan’s SIEPAC project to build a 1,137-mile transmission line to connect the power grids of Costa Rica , El Salvador , Guatemala , Honduras , Nicaragua and Panama . 

Transportation integration

      Due to the advances achieved during the first phase of the road integration initiative, it was renamed the transportation initiative to include ports and airports.    Highway cargo transport services will be optimized and integrated with maritime and air transport services.  

      Advances in road integration relate to the countries’ agreement on the International Mesoamerican Highway System, a 5,613-mile network of two main corridors along the Atlantic and Pacific Coasts and secondary and connecting routes.   

      Satisfactory transit conditions were found on 2,299 miles of the network in April 2003.   The remaining 3,314 miles require $4.3 billion in improvements.  Governments, multilateral and bilateral institutions have financed 54 percent of this amount in public works projects now underway, according to the IDB.

      Objectives are to promote physical integration of the region, facilitate transportation of people and goods and reduce transportation costs.

International trade facilitation

      A project to modernize customs and border crossings is underway.  It involves the design and implementation of a standard computerized process for international transit of goods with a single declaration for all control agencies and a common operating procedure at the countries’ borders.   

      Small and medium companies account for 96 percent of businesses, 54 percent of employment and 34 percent of production in Mesoamerica , according to the IDB.  A project to improve the international competitiveness of these companies through strategic alliances was approved in April 2003.

      The application of sanitary and phytosanitary measures to improve trade in agricultural products also is in progress.   This system will strengthen regional coordination of each country’s agrosanitary operating structures.

Other initiatives 

      Planned regional telecommunications projects include harmonizing regulatory framework, developing a fiber optic network and building the Mesoamerican Information Highway . 

      Mesoamerica accounts for 2 percent of the planet’s land mass but 10 percent of its biodiversity.   Progress in sustainable development includes increased use of environmental impact studies and data collection of precipitation and other climatic factors. 

      Progress in natural disaster prevention and mitigation includes increasing public awareness of disaster prevention and establishing an insurance market for catastrophic risk.    Various tourism projects are underway.

      Mexico and its nine participating state governments are developing strategic programs and projects for 2004.    Primary themes are health, investment, infrastructure, education and tourism. 

      Objectives are to further develop opportunities in southeast Mexico , leverage its competitive advantages and promote investment with regional vision.   For more information on Plan Puebla-Panama, contact Ma. Teresa Pérez, chief of public information, mperezj@sre.gob.mx.

Going South Program

      Campeche , Chiapas , Guerrero , Oaxaca , Puebla , Quintana Roo , Tabasco , Veracruz and Yucatán also are the primary participants in the Going South Program, which is credited for creating more than 65,000 jobs since 2001.    The program complements Plan Puebla-Panama.

      Financial incentives are granted for employee training and facility development.  Support services include feasibility studies for investment projects, site selection and links with other federal government programs as well as development banks for financing and guarantees.    

      Yucatán led the program in 2002, receiving eligible investments of more than $2.5 million and creating 8,673 jobs.

      Yucatán was the first state to receive 2003 incentives.    More than $600,000 was authorized for six companies, which are generating nearly 1,000 jobs:   Apparel Contractors Associates in Yucatán, John Michel Apparel and JRA (Jordache), all apparel maquiladoras; Tubos Flexibles, a division of Grupo Carso’s Industrias Nacobre; Productos de Concreto Peninsulares; and Envases Luminicos Peninsulares.          

      Yucatán and other state governments collaborate with the Fox administration on incentives and services.  

      For each job created in Yucatán, combined federal and state incentives per employee total $837 for labor-intensive investments, $1,372 for capital-intensive investments (at least $50,000 per job created) and $2,264 for highly capital-intensive investments (at least $100,000 per job created).   Federal incentives also include $713 per employee for handicapped labor. 

      Yucatán grants $13,371 per investment for transporting machinery and equipment to the state.   

      Extra incentives, such as specialized employee training programs designed by companies and funded by the state, are granted on a case-by-case basis.   Incentives are granted in pesos.   Dollar amounts may vary based on exchange rates.

FDI in Yucatán

      Yucatán led Mexico ’s Gulf and Caribbean states in FDI from 1999 to 2002.   Of the $559 million invested in the region, $222 million was invested in Yucatán.    Nearly 90 percent came from the U.S.     

      Yucatán’s services sector received 54 percent; manufacturing, 35 percent and commerce, 11 percent. Yucatán’s FDI has contributed to its 1.1 percent compounded annual growth rate in employment for the last three years.  

      There are 334 companies with FDI in Yucatán.     The U.S. accounts for 68 percent.   Other leading investors are Canada , Spain , China , Great Britain , Italy , France , Germany and Holland .  

      Yucatán is the industrial, commercial, financial, medical and academic center of southeast Mexico .   Yucatán had 10 maquiladoras in 1990.  Today it has 100. 

      Guy Puerto, Yucatán’s secretary of industrial and commercial development, explains the state government’s strategy for stimulating FDI includes cluster developments that integrate productive channels in the most competitive sectors:    

      •Produce inputs in the same industrial areas.

      •Eliminate waste (defined as costs that don’t add value).

      •Outsource production to small and medium companies.

      •Sell to domestic and export markets.  

      Yucatán’s leading sectors for FDI are textiles and apparel, furniture, information technology, agribusiness, medical, aerospace and contract manufacturing (any sector).   For more information on Yucatán FDI and incentives, contact Bernardo Cisneros, undersecretary of promotion and development, bernardo.cisneros@Yucatan.gob.mx.

Human capital

      Labor relations in Yucatán are characterized by low absenteeism and 90 percent union-free maquiladoras.   Employee turnover is among the lowest in Mexico .  

      The state’s minimum daily wage is $3.64, also among the lowest in Mexico .   Its average hourly wage for skilled labor is $1.41, 28 percent less than Mexico ’s national average.    Salaries for executives and managers are 10 to 20 percent less than in northern and central Mexico .

      Yucatán has seven universities, 17 technical institutes and numerous training facilities.   Degrees include computer science, engineering and medicine.   Many college graduates speak English.

World-class transportation

      The ISO-9001 certified Port of Progreso-Yucatán is one of Mexico ’s leading container ports.  Its recent $120 million expansion is a fundamental platform of economic growth for southeast Mexico .  The port’s expansion transformed the Gulf of Mexico into NAFTA’s newest superhighway. The port expects to handle four million tons of cargo in 2005, up from two million tons in 1995.    

      Four to six day transit times are available from the port to distribution centers in Florida , New Jersey and Texas .   Ships transport cargo between Yucatán and the U.S. , Central America and the Caribbean , on average, daily.    

      Merida International Airport is southeast Mexico ’s most important cargo airport and the country’s third in cargo volume.   It accommodates 747s and 777s.   It has two runways, making it one of Mexico ’s safest airports.  There are non-stop flights to Miami , Houston , Mexico City and other major Mexican cities.  

      The state has more than 7,500 miles of highways and 400 miles of railroads.

      Electricity is available in 90 percent of Yucatán.  It has 1,084 megawatts of electrical generating capacity with less than 20 percent utilized.    Natural gas also is available.   Yucatán’s annual water supply is 42 billion cubic meters with less than 5 percent utilized. 

      There are four industrial parks, including Yucatán Industrial Parks (an AMPIP member), many stand-alone buildings, undeveloped sites and construction companies that build-to-suit for lease or purchase.   The land is flat and solid.   There are no earthquakes, floods, air or water pollution.

      About half of Yucatán’s 1.73 million inhabitants live in Merida , the state capital and Mexico ’s closest major industrial city to the U.S. East Coast.  Merida is one of the safest and most secure cities in Mexico with one of the country’s lowest crime rates.

Susanna Werner is the U.S. Representative for Yucatán’s Secretary of Industrial and Commercial Development.    She has specialized in Yucatán since 1999 and U.S.-Mexico business, trade and investment since 1994.    Contact her at susanna.werner@Yucatanmexico.net or 828-225-8505 and visit www.sedeincoyuc.gob.mx for more information.