KITE Invest met with the Trade and Investment Commissioner, Mario Alberto González Alvarez from ProMéxico’s UK branch in order to discuss not only trade and investment between the two nations, but also, some of the strategic characteristics and opportunities that Mexico offers. As the investment promotion agency of Mexico, KITE Invest was able to discuss with ProMéxico UK the great advantages of Mexico’s relation with the UK and of the upcoming Dual Year.
KITE Invest: According to the International Monetary Fund, Mexico is the 14th largest economy in the world. In your opinion what is driving Mexico’s growth?
ProMéxico: It is a series of elements that are driving Mexico’s growth. For the past 20 to 30 years a process has been underway to position Mexico within the arena of the international market economy, and standing behind values such as free trade and liberalization of goods and services.
The impetus behind this has been the concept ‘open for business,’ as well as, the strengthening of the internal micro-economic environment, having a solid banking system, taming inflation, and improving the education system.
Specific examples of sectors of growth are advanced manufacturing, automotive, aerospace and also creative industries, such as video games and film. The development of these sectors is a reflection of the increasing presence of Mexico in the world commerce. In the past Mexico was focused on looking inward, now Mexico is looking outward.
KITE: Historically, Mexico, due to geographical location, has had strong ties to the United States, what measures is Mexico taking to expand its reach to other markets?
ProMéxico: Of course Mexico’s relationship with the United States is a unique one; historically and geographically Mexico is strongly linked to the US. The US is Mexico’s largest commercial trading partner with 80% of all trade going to the US. This is positive for the success of many industries, precisely due to the proximity.
On the other hand, during the world economic crisis Mexico realized the value in diversifying its trading partners and the risk of depending on one main trading economy. Although the US accounts for 80% of Mexico’s trade, this is down from 90% in the 1990s and Mexico’s presence in other markets will continue to bring this dependency down.
It is for this reason the Mexican government has implemented diversification strategies, such as the creation of ProMéxico, which has the main task of placing Mexico in the minds of other economies.
KITE: The agenda to diversify is also exemplified by the series of reforms taken by the Peña Nieto administration. Could you share with us your views on the reforms being taken?
ProMéxico: It is important to state that the idea of reforms has been in the minds of the public and private sector for many years. The current government has been able to galvanize the support with the ‘Pact for Mexico’ and take advantage of the fact that Mexico has changed since the global economic crisis.
Overall, the reforms aim to increase the productivity of factors that historically have dragged the economy to less than optimal growth rates. With the reforms the potential growth of Mexico has increased by around 5% per annum.
KITE: How has Mexico changed?
ProMéxico: Over the last 20 to 30 years the political transition to democracy, the validation within several industries, and the mindset of the Mexican society have all played a part in the change and setting the stage for the reforms. The current government has been able to push through reforms, although it has been difficult, because the political context was created.
KITE: The reforms are underway, and in your opinion when do you think we will see the results of the reforms?
ProMéxico: The reforms were set into motion knowingly that the true impact of the reforms would not be seen for several years. By the end of this current administration, around 2018, the Mexican people would be able to see the reforms impact on GDP growth.
While increments of growth will be seen this year and the next, the big difference is the rise in investors’ confidence is Mexico, and this shows the real future potential. At the end of the day, Mexico knows that these reforms have the potential to unlock productivity and help boost the GDP growth.
KITE: What is the specific role of ProMéxico within all of this?
ProMéxico: ProMéxico is within the Ministry of Economy and is the official promotion agency of Mexico. Currently and in terms of the reforms, ProMéxico’s function is to promote the reforms that have been carried out, as well as, what business opportunities that have developed from these reforms.
ProMéxico has footprints around the world, and in the case of my office, our job is to change the perception of Mexico that the UK society holds, by providing accurate information that will enable the UK public to see Mexico through a different lens.
KITE: In terms of the UK, how do see Mexico’s relationship with the UK and what are you expectations of the upcoming year that has been deemed the Year of Mexico in the UK, the UK in Mexico?
ProMéxico: The relationship between Mexico and UK is a very strong one. In terms of trade and investment the relationship was boosted by the free trade agreement that was signed with the European Union in 2000, and since then this has helped the Mexican and British business communities come together.
Today, there are over a thousand UK companies within Mexico in numerous sectors. To give an example of the extent of the relationship between the two, the bilateral trade is currently at USD$4 billion per year, which is up by 200% since the early 2000s.
With respect to your last question, the governments of both countries have initiated an effort to promote mutual knowledge by means of the 2015 Dual Year. It occurred when both countries realized that the momentum was building, and that although trade was good, it was minimal to real the trade potential. It was with this understanding that the two countries came together and set the goal to try and boost bilateral trade and investment, tourism, and also strengthen ties culturally, and academically as well.