2014 is done. Business in Mexico was quite active in response to reforms in progress by Peña Nieto Administration. Some industries like energy, telecom, antitrust and financial services are on the spotlight, but all together with education, tax and judicial pretend to set a backbone for a new Mexican economy. Of course, foreign investment caps were reduced in some areas.
Mexico kept investment attraction with its free trade strategy, some governments with remarkable interest were UK, China, Japan, Singapore, California and Los Angeles. This strategy was fueled by negotiation efforts with the Pacific Alliance and TPP, and efforts to integrate more with the US.
Most of the attention was attracted to oil and gas, the Mexican Eagle Ford, the solar potential and the liberalization of clean energies, and the moves of related industries to the opportunities. Here is a summary of the energy reform to see the big picture.
Telecoms was another industry that was shaken by the reforms. Historic reform indeed, specially on broadcasting. Reform tried to set fair market conditions for everyone, and some were taken to court. Regulator learned the high cost of constitutional autonomy. All these changes deserved an ethical hacking on the new telecom law and regulation, specially on three hot topics: Telmex on TV, the arrival of Virgin Mobile and telecom antitrust.
Sectors like automotive and manufacturing grew strong during 2014, as expected. Aerospace is now following that path. Mexico is living a manufacturing momentum and if combined with R&D, could take it to the next level: a technology hub. During 2014, the Government announced a $590 Bn infrastructure plan, which is expected to boost in 2015.
The business opportunities are creating great expectations around the services industries. Lawyers, among other services firms, are moving to Mexico. Some of them under new law business models, as the global law industry is being shaken. Mexican legal market will have a very different landscape at the end of 2015. Quite diverse if new law moves from experimentation to business phase.
2015 is expected to be great for Mexico and those who believe in this momentum. Have you found an opportunity yet?
Photo credit by roads and railways series #3 by woodleywonderworks
Last April 29, 2014, Mexican Government published its Infrastructure Plan to be executed from 2014 to 2018. The total budget is US$590 bn in 743 projects. This infographic shows a brief of the content. Some examples of projects are listed for reference only. There is still plenty to review and discuss.
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.
Copyrights 2014 – Alberto Esenaro. Learn more.
Photo credit: La Diana Mexico City by Alberto Esenaro
During 2013, Mexico had a small growth, but was an exiting year, as many of long awaited reforms started. Many of them are in process of being implemented, and many have passed in spite of diversity of opinions.
Mexico expects a better growth for 2014, with foreseeable investment in strategic industries like telecom, energy and communications.
With that in mind, below are the most-read posts of this Blog, as numbers have shown. I am also, including the must-read posts, which regardless of the numbers, were highly shared, commented, liked and influenced the most. Make your own conclusions. Share them if you find that appropriate.
All I wanted for Christmas was the telecom legislation: Now what?
Revisiting the Mexican Energy Reform Part 1 of 3
Chinese Retailer “DragonMart” Fights and Wins a Spot on Mexican Soil
Solar Energy Opportunities in Mexico
Opening of Mexico energy market a benefit to NAFTA partners
The Sweet Spot of the Mexican Telecom Reform (Part 1/3)
What if IFETEL Mexico unleashes the unseen power of free?
5 challenges for the new Mexican telecom commissioners
The $316bn Plan for Mexican Infrastructure
Mexico is migrating towards a universal telecom license
Photo credit: Gas Prices at Their Lowest Levels Since January by KOMUnews
Petróleos Mexicanos (Pemex) has decided to cancel the $10 billion refinery it had planned to build in Tula. According to the Mexico City newspaper El Universal, the government’s oil and gas monopoly has not included the refinery in its 2014-2018 business plan despite announcing that it would in March 2008. The publication pointed out that the indefinite delay was due to insufficient funds. Pemex had already invested around $370 million but required more to continue.
Earlier this year, speakers at the BNamericas Mexico Energy summit pointed out that the lack of investment was affecting the growth of the energy sector. According to CRE commissioner Francisco Barnés de Castro, “[Investment in refining] has fallen behind year after year, decade after decade, and we now have a phenomenal accumulated gap in investment.” As a result, the Mexican national refining system hasn’t been updated to produce up to its full potential.
Critics blame Pemex for the lack of investment as its entire budget goes it to its subsidiary PEP. Of Pemex’s $23.9 billion budget, only 9.28% has been invested in the Pemex Refiacion, causing the facilities and equipment to stay outdated. As a result, only two out of Mexico’s six refineries can process heavy and ultra-heavy crude while the rest are striving unsuccessfully to match NOM-086 standard for sulfur levels in gasoline and diesel. This has driven Pemex to import gasoline and diesel despite Mexico being the ninth-largest oil producer. Officials even predicted that Mexico would become an energy importer by 2020.
This has driven the Mexican government to negotiate more ambitious reforms with the opposition party. Mexico had opened up its energy sector to foreign investors in August, the first move of its kind since 75 years. Officials from both the Institutional Revolutionary Party (PRI) and the National Action Party (PAN) are starting to agree that the state should determine the terms of the contracts offered. This is a change from the parties’ previous plans, which revolved around profit-sharing agreements and disappointed many investors in August. An anonymous official stated, “At the end of the day, Mexico will allow ‘contracts’ in the constitution which will give enough flexibility for a whole range of projects.”
With support from PAN, the ruling PRI has the votes it needs to change the constitution and expand the energy sector’s financing options. President Enrique Peña Nieto is especially interested in attracting investments from oil majors like ExxonMobil, BP and Shell. However, the fate of this decision is yet to be determined. The voting session is expected before December 15th, which is when the Christmas recess starts. As for the terms and conditions of the reform, a secondary legislation is expected to pass in early February next year. The first contracts will be ready early in 2014.
The reform will have a bigger effect that surpasses oil. Once it goes through, investment opportunities in oil sector could open new investments in other sectors bringing many factories along.