Foreign Investment Caps in Mexico (2013 & 2014 Reforms)

Foreign Investment Caps in Mexico (2013 & 2014 Reforms)

Photo credit: Money and Calculator by Images Money

This document describes the caps and foreign investment regulation for diverse activities and industries under Mexican Law, as updated with the recent reforms of telecom, energy and finance sectors. As always, this is for informative purposes and cannot be considered as substitute for a legal advice. Learn more.

Foreign Investment Caps in Mexico (2013 & 2014 Reforms) (99)

Copyrights 2014 – Alberto Esenaro. Learn more.

Mexico is migrating towards a universal telecom license

Mexico is migrating towards a universal telecom license

Photo credit: Wataniya Telecom Antenna by Shafiu Hussain

According to the Mexican Telecom Reform, by December 10, the Congress will enact a law to uniform the current telecom concessions and permits, which could be commercial, public, private and social use. Furthermore, those concessions could be used for rendering any type of service (universal telecom license or “UTL”).

Currently, there is a mosaic of telecom concession titles, according to the date of granting. During last decade, Ministry of Communications (SCT) used renewals of titles for standarizing them into a uniform and convergent title. This UTL was originally pointed out by the 2012 OECD “Review of Telecommunication Policy and Regulation in Mexico”, to remove entry barriers.

As we speak, the Congress is working on the provisions of the Telecom Law to land the concept of the UTL. I hope that some of these questions arise on the Congress, as they arise everyday to the people of the industry.

1. Severability. It is customary in Mexican telecom market that operators have concessions for commercial use and permits for non-profit use. As early telecom law regulated technology, not services, many long-time operators have diverse type of licenses with diverse obligations. This landscape forces the Congress providing for severability on events of default and partial revocation, specially for companies who own licenses associated to spectrum.

2. Cross-ownership. As IFETEL inherited antitrust authority for telecom matters, regulation on cross-ownership becomes relevant tool, and provisions for a License Registry will be crucial. “Groups of interest” might not seem relevant issue for telecom law, but for antitrust telecom will be essential. Will IFETEL implement cross-default on affiliates? It makes sense considering the operation of converging technologies and the blind spot of the authority while verifying on-net breaches to law. Under antitrust logics, one of the relevant markets is broadcasting was advertising. Would this market be inherited to IFETEL for analysing concentrations?

3. Private Use Licenses. It comes to my attention that the Reform mentions that IFETEL will uniform licenses for private use. Will private networks be forced to apply for a license to operate as such? Why? There is no public interest in them if they are not available to the general public. This is an issue that needs to be followed-up on.

While these issues are quite challenging for the Congress and exceptionally challenging for IFETEL to implement, the biggest issue on the Mexican Telecom Reform remains this: Would Telmex get a UTL that includes CATV and/or broadcasting TV?

Vote for this Blog to make the ABA 7th Annual Blawg 100 (Deadline August 9)

Vote for this Blog to make the ABA 7th Annual Blawg 100 (Deadline August 9)

Photo credit: Typewriter Keys by Kristin Nador

American Bar Association (ABA) is making the Annual Blawg 100 List to include the best legal blogs of the World (Blawgs).

If you think this Blog should be listed, please nominate it here for consideration of the ABA. Nominations are due no later than 7 p.m. ET on Friday, Aug. 9, 2013.

But remember that ABA will not receive nominations from:

  • Law bloggers who nominate themselves or nominate blogs to which they have regularly contributed posts.
  • Public relations professionals in the employ of lawyers or law firms who nominate their clients’ blogs.

Please submit nominations and read more details about submitting a Blawg Amici, or friend-of-the-blawg brief, here: http://www.abajournal.com/blawgs/blawg100_submit/

As an incentive to my readers to be considered for nomination, below is a list of the top 10 must-read posts of 2013. Enjoy and decide for yourself the merits of this Blog.

Thanks a lot,

1. Mexican Telecom Reform: The Rise of the STEM Lawyers.
2. Mexico’s Booming Aerospace Sector: an Opportunity for Many.
3. Mexico Opportunities for the Korean Animation Industry.
4. An Overview of the Mexican Legal Market for Foreign Firms.
5. The Sweet Spot of the Mexican Telecom Reform (Part 1/3).
6. President Xi Jinping sees Opportunities for Chinese Companies in Mexico.
7. Honda Announces New Investment in Mexico.
8. Mexico Opportunities for Singapore Tech Companies.
9. Mexico Energy Grid Construction Provides Opportunity for Foreign Companies.
10. So you want to move to Mexico? Immigration Essentials.

Companies suspended from IMMEX have a second chance

Companies suspended from IMMEX have a second chance

Photo credit: SpaceX Rocket Manufacturing by Steve Jurvetson

IMMEX is an export incentive program set by Federal Government to grant benefits to manifacturers in Mexico for importing on a temporary basis, free of import tax (variable) and VAT (16% sales tax), the material, tools and machinery necessary to process, transform or repair export goods or rendering export services.

Today, Ministry of Economy (SE) published the black list. This is the list of companies that missed either of these obligations: Presenting the annual report with the operations made under IMMEX or missed their regular tax obligations.

Either way, SE has suspended such IMMEX Programs and they cannot apply the benefits until they are in good standing. Also, there is a deadline to comply or being removed from the Program: August 30, 2013.

IMMEX is a great edge for manufacturers in automotive, textile, food, electronics and others alike. However, if the Program is not taken care of properly, could be a mess for the holder of the Program, its clients and suppliers, because in IMMEX everyone in the chain is deeply linked. If a company part of the chain does not apply the IMMEX benefit, the other companies will not apply them either, resulting in paying at least 16% more for all materials.

Mexico’s Booming Aerospace Sector: an Opportunity for Many

Mexico’s Booming Aerospace Sector: an Opportunity for Many

Photo credit: Leaving on a jet plane by McPig

For years, Mexico has been quietly but steadily building itself into a manufacturing powerhouse, and automobile manufacturers have known for decades that Mexico’s highly skilled and ethical workforce are among the world’s best. It’s a well known fact that the automobile industry in Mexico is expanding at an astounding rate to meet demand and that there are plenty of opportunities in Mexico for foreign auto makers and foreign auto parts manufacturers.

However, one industry that is also booming and might not be receiving as much press as the automotive sector is the aerospace sector.  And just like in the automotive industry, there are opportunities for many foreign companies.

But first of all, it’s necessary to have a look at why a foreign company would want to set up shop in Mexico. Sometimes, some companies will set up shop abroad to take advantage of lower wages; however, this can prove to be disastrous if the workforce is not highly skilled or educated.   Mexico has a highly educated, highly skilled, and hard-working pool of human resources, making them the ideal employees for high tech and specialised manufacturing.  While their wages may not be as low as the wages employees in Asian countries may receive, they are still much lower than their U.S. and European counterparts.  Therefore, foreign companies get the best of both worlds:  great value for money.

Foreign companies operating in Mexico also get to take advantage of the free trade agreements that Mexico has with dozens of other countries.  This means access to virtually all markets in the Americas, the European Union, and some Asia-Pacific countries.

The third reason why companies, especially aerospace companies, should consider Mexico is the fact that companies can be 100% foreign owned, which is not the case in other countries trying to attract investment.  This means that the company has full control over how their business is conducted.

Opportunities

So what are the opportunities that exist in Mexico’s aerospace sector?  Well, the first big opportunity is the ability to enter the United States market without having to pay the wages that U.S. engineers and employees will expect in factories.   In other words, it’s a cost effective way to be a part of the American market and meet the needs of American clientele.  Furthermore, Mexico’s effective transport links make it easy to import raw materials if needed and export the finish product across the border.

The second opportunity for foreign companies in the aerospace sector is to set up factories for the Mexican market:  instead of paying costly shipping fees and high wages, some helicopter manufacturers from Europe have decided to make the helicopters for their Mexico clients right there in Mexico.

At present, there are over 250 companies in the aerospace sector operating in Mexico: Manufacturing and maintenance firms are expanding and the numbers of companies coming in is expected to grow as Mexico’s government is actively promoting the aerospace industry.   Making things especially attractive for foreign firms is the fact that the country provides a “soft landing” for businesses in high-tech manufacturing.  Red tape is cut to such an extent that manufacturing can start weeks or months after a deal has been signed; in other countries, this process can take years, affecting a company’s bottom line severely.

Finally, another good reason why an aerospace company should do business in Mexico is IP protection.  In an industry where design is so imperative, a rival company stealing a proprietary design can be devastating.  Mexico’s laws are strict where intellectual property is concerned.

Mexico’s aerospace industry shows absolutely no signs of slowing down and only growth is predicted; companies that take advantage of what the Spanish-speaking country have to offer will find that the opportunities are almost limitless.

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