Mexico’s Southeastern states are beginning to emerge as attractive destinations for foreign direct investment.

          From automobiles to software; electronics to wood furniture, the Southeastern states demonstrate daily their ability to perform on a world stage.

          Volkswagen and DaimlerChrysler have major automobile assembly plants here. The state of Puebla is famous worldwide for its textile and apparel industry. Yucatán is developing clusters in aerospace and electronics. Throughout the region there are examples of manufacturing excellence and success.

          Two major government initiatives are facilitating development in the region. The Marcha Hacia el Sur (March to the South) provides financial incentives to investment projects that create new jobs. The project identifies and promotes investment projects encouraging regional development to foster steady jobs. Eligible states are Campeche, Chiapas, Guerrero, Oaxaca, Puebla, Quintana Roo, Tabasco, Veracruz and Yucatán.

          The Plan-Puebla Panamá is an intitiative between Mexico and the Central American nations of Belize, Costa Rica, El Salvador, Guatemala, Honduras, Nicaragua and Panama. It provides financial support for projects that improve the region’s infrastructure, which facilitates job creation.

Campeche

          Campeche is characterized by warm-humid weather with abundant rain in the summer throughout the state. Its main cities are Campeche, Ciudad del Carmen and Champotón. It has two international airports.

          The main industrial activity in the state consists of fishing, aqua-culture, petrochemicals, manufacturing and mining.

          In the last four years, Campeche has attracted 49 domestic and foreign investment packages for areas such as aquaculture, fishing, agriculture and manufacturing. The state has also attracted Chinese investment for the cultivation of corn and rice.

          Campeche’s geographical location with regard to the United States is advantageous. Florida can be reached in just 30 minutes by plane and 48 hours by boat.

          State incentives for foreign investment include:

          •A 2 percent payroll tax and fees for registration in the Public Register of Property and Commerce.

          •Preferential rates for property tax and taxes on the acquisition of real estate by companies making new investment in production.

Chiapas

          Major industrial activities in Chiapas include petrochemicals, power generation, agriculture, maquilas and assembly.

          The state government promotes opening business to attract domestic and foreign investment by offering incentives such as legal security for investment. State incentives for foreign investment include:

          •Specialized training

          •Housing programs in industrial zones

          •Labor market surveys

          •Reconditioning of industrial infrastructure

          •Technical studies

          Main sectors for foreign investment include textiles, auto parts, electrical, agricultural and tourism. The textile industry in Chiapas has great opportunity for development due to the young workforce for labor intensive tasks, the availability of industrial supplies (water and electric power) and the artistic skills used in making garments.

Puebla

          Major industrial activity in Puebla includes automobiles and auto parts, metals, processed food, textiles and clothing, chemicals and wood furniture.

          Puebla is one of Mexico’s more attractive states for Foreign Direct Investment. Throughout the last decade it consistently maintained its position among the top 10 states in the country in terms of FDI received.

          In 2002, the most recent year for which complete statistics are available, Puebla ranked 5th among the main recipients of FDI in the country. This is the result of a solid promotional strategy by the state government to attract new firms, offering help in the formalities required for setting up business and establishing lasting relations so that everyone may benefit.

          The Puebla state government is aware that each investment project is different, so it has worked on a made-to-measure package basis in order to offer each investor the most suitable package of incentives for project needs. But the best incentives it offers are its solid infrastructure, quality of life and the dynamic prowess of its industrial and commercial sectors. The state’s 1 percent payroll tax is one of the lowest in Mexico.

Quintana Roo

          Cancún airport is the country’s second most important and receives the biggest volume of international charters. There are also other airstrips that are used mainly for tourist services, such as the ones at Xcalak, Pultikú, Mahahual, Kohunlich, Tulum and Punta Pájaros.

          The volume of freight transported through the state’s ports reached eight million tons, the most important port being Puerto Morelos, which has facilities for handling containers, a commercial dock and a ferry terminal, as well as bays for loading and unloading freight and storage facilities.

          Major industrial activities in Quintana Roo include trade and tourism, agriculture, forestry and fishing, construction and manufacturing.

          The state offers financial incentives for investment, such as:

          •Tariff and duty free imports of supplies, machinery and equipment for producing goods for exportation.

          •Skilled labor at competitive costs.

          •Abundance of natural resources.

          •Planned tourist infrastructure.

          •Sea and air transport.

          •Integrated financial structure.

          •Protection for technological innovations and trademarks

          State incentives for foreign investment include:

          •10 percent Value Added Tax (Border Zone Scheme).

          •Taxation on company profits (called Income Tax) at a rate of 32 percent.

          •Support with risk capital.

          •Access to risk capital schemes through the development bank.

Tabasco

          The main cities in Tabasco include Villahermosa, Cárdenas, Comalcalco, Huimanguillo and Macuspana. There is one international airport in the state.

          Industrial activity includes cattle production, agriculture, aquaculture, tourism and chemicals. State incentives for foreign investment include:

  •The government provides investors with direct support.

  •Land and real estate belonging to the state or municipal government made available for lease, rent or sale.

          •Training grants through the State Employment Service (3 months’ salary).

          •Provision of public services: water, sewerage, paving.

Veracruz

          Veracruz is regarded as an attractive destination for long term investment, with a government that is committed to sustainable economic growth and development.

          Veracruz is a key location linking domestic and international trade. It is also a natural point of access to the Gulf of Mexico, Central America and South America and the east coast of the United States, as well as the Pacific ports and the markets of Asia via the Isthmus of Tehuantepec.

          State incentives for foreign investment include:

          •Up to 50 percent off the payroll tax.

          •Legal framework to provide security to foreign investors.

          •Economic Promotion Law with incentives for industrial plant modernization and to help the installation and launching of new businesses

          The port of Veracruz has a capacity of 12 million tons a year. It serves as the main gateway of Mexico to the Atlantic Ocean. The Port of Veracruz is linked by highway and railroad to the country’s capital, Mexico City. The Gulf Basin represents a potential market of 30 million people.

          The road system is efficiently linked to air, sea and rail transportation systems. The state road network consists of nearly 10,000 miles. Three of the most important seaports in Mexico are located in Veracruz. They are strategically distributed along the state’s coastal line and operate 28.48 percent of the maritime cargo nationwide. These seaports ship different kinds of goods in bulk, in addition to fluids, iron tubes, motor vehicles, motor vehicle parts, and general cargo. It is important to mention that Coatzacoalcos is linked by highway to Salina Cruz, Oaxaca, bringing together the Atlantic and the Pacific oceans through the Isthmus of Tehuantepec.

          Veracruz has three airports. Two of them are for domestic flights and the other is international. Domestic airports are located in Poza Rica and Coatzacoalcos, meanwhile the international one is located at the City of Veracruz.

          There are four industrial parks in Veracruz. The industrial city Bruno Pagliai, located in Veracruz; the industrial park Ixtac, located in the Córdoba-Orizaba area; the Córdoba-Amatlán park, located in Amatlán township; and the Morelos Petrochemical Park, located in Coatzacoalcos. Veracruz is also the most important producer of electric power in Mexico due to the nuclear plant of Laguna Verde.

          Veracruz produces maize, beans, sugar cane, coffee, rice, honey, fruit, and tobacco, cattle, and fishing. In addition, the state’s economy is based on oil extraction and its derivative processes. Veracruz has the fifth position nation-wide regarding manufacturing industry production. There are a total of 14,749 industries established in Veracruz. Main exports are coffee, tea, natural fertilizers, inorganic and organic chemical products, sugar products, vinegar, spirits, fruits, mechanical machinery, oil, and plastic products amongst others. On the other hand, main imports are ironworks, cauldrons, reactors and cereals.

          The major sources of foreign investment are from the United States, Spain, Italy, Switzerland, Panama, and Germany. There are 129 companies with foreign capital based in the state.

Yucatán

          Yucatán is an important producer of corn, beans, sorghum, oranges, mangoes and lemons. The industrialization of Yucatán is centered on the production of consumer goods. Promotion by local groups and authorities has attracted some assembly plants.

          Yucatán boasts a good seaport infrastructure with five main seaports and four shelter ports. There is an international airport. Yucatán has an important tourist industry with numerous major Mayan civilization ruins that for decades have attracted international visitors.

          The Port of Progreso offers great investment opportunities, including:

          •Terminals and docks for big draught vessels.

          •Bays for handling refrigerated containers in order to facilitate the transportation of perishable goods.

          •Specialized team for handling cargo.

          •Development of logistical and multimode transportation services.

          •Tourist cruisers and ferries to link the Yucatán peninsula with the main locations along the eastern coast of the United States, the Gulf of Mexico and the Caribbean.

          •Development of terminals and warehouses for containers and general cargo.

          •Terminals, installations and transportation of people in tourist activities.

          Yucatán’s competitive advantages include:

          •Strategic location in southeastern Mexico, with world class transport (less than two hours by plane and 36 hours by sea from Miami).

          •Skilled and stable labor force available (low levels of staff turnover and absence from work, 90 percent not unionized).

          •Highly competitive operational costs, which, in proportion, are 50 percent lower than in the United States.

          •Abundant water and electricity.

          •Excellent telecommunications. The state is also Mexico’s newest information technology corridor.

          •Education and training.

          •Reliability, security and an exceptional standard of living.

          •Preferential access to a market consisting of almost one billion consumers (including Japan and Singapore), through the global network of Mexican free trade agreements.

          State incentives for foreign investors include:

          •The state government covers training costs for a certain period of time (minimum one month, maximum three months) valued at 1.5 minimum salaries in force, per person to be trained.

          •Training Support Program (PAC) created to support the training of employed workers from micro, small and medium companies. Up to 50 percent of the training is financed, maximum $150.00 Mexican pesos per hour.

          Main sectors for foreign investment include textiles and clothing, aerospace, medicine, furniture and lumber, information technologies and agriculture.