The International Chamber of Commerce (ICC) is the prevailing global body that emplaces rules and sets guidelines for international business codes of conduct. ICC Mexico’s President, María Fernanda Garza, met with KITE Invest to discuss the reforms that are and will continue to elevate Mexico’s economy within the international economic arena, and the steps being taken to ensure best practices and international standards.
KITE Invest: The current administration in Mexico has set out an ambitious reform agenda, the most notable of which is the privatisation of the energy industry. Analysts’ predictions find that Mexico’s economy will be the world’s seventh largest by 2050, with Mexico possibly overtaking the UK economy. What are your thoughts on the Government’s reform program and its ability to drive economic growth and social welfare?
Maria Fernanda Garza: The reforms have long been underway, as it took years to overcome various barriers. The reforms were very ambitious, but they have finally gone through, and now Mexico is at the challenge of implementing them correctly and to international standards.
Results will become visible in the medium term, because the reforms were so extensive and changed so many structural components; Mexico will not be able to see the changes for a few years to come. One change that has already begun though, and will grow more next year, is the interest from foreign investors to invest in Mexico.
Potential growth will follow in the years to come.
KITE: Over the last year and a half Moody’s, the S&P and Fitch have all upgraded Mexico’s credit rating. Do you believe this is related to the reforms?
MFG: Certainly. The increased credit ratings have a direct correlation to the reform agenda, as it was seen that the issues that had plagued Mexico in the past were going to be overcome. In years to come even higher ratings are expected as the results from the reforms become more tangible.
KITE: The Government claimed that annual growth for 2014 would be 2.7%, but as the first half of the year the growth rate recorded was 1.7%, therefore it seems unlikely that the higher estimate will be achieved. Taking this into consideration, what is your outlook on Mexico’s growth in the upcoming year?
MFG: In 2015, I believe we will start to see more growth. This year did not see as much growth because many of the potential investments were retained until the results of the reforms were seen.
There have been very positive signs in the Mexican economy over the last few months, in particular. For instance, internal consumption has grown steadily, and is expected to continue. Also the United States’ economy is growing more than was expected, and as the Mexican and US economies are so interlinked, this will definitely affect Mexico’s growth.
KITE: Along the lines of how the Mexican economy is set to grow, what sectors do you see investment opportunities for foreign investors, especially British investors?
MFG: Traditionally, the UK has invested in manufacturing, mining, and banking. In the last few years, HSBC has increased its capital by 30%, which indicates how HSBC sees the country by the fact that they are willing to invest more in Mexico, because of the opportunities they see here.
KITE: The International Chamber of Commerce has been promoting commerce, investment, and helping global enterprises mainstream and achieve international standards for almost 100 years. In terms of Mexico, what are the ICC’s priorities?
MFG: The ICC’s priorities in Mexico are aligned with ICC priorities worldwide. The way we function is through different working commissions that are all linked to the development of commerce worldwide.
The ICC realises that commerce has been one of the main links between countries and cultures, and by promoting international commerce it will help support and achieve a level of international peace. Furthermore, the ICC sees the importance of standards and a common set of rules as measures to avoid business conflicts. It is this set of commerce rules and regulations designed by the ICC that all international companies abide by today.
In Mexico the ICC is currently, due to the privatisation and opening of sectors by the reforms, collaborating with various government agencies to determine rules, taking into consideration international standards and best practices. We aim to assist Mexico not only with external commerce, but also internally, and assure that the rules are designed for Mexico in a way in which businesses are able to comply.
KITE: What is your estimation of how global companies perceive Mexico?
MFG: The reforms have been very well accepted worldwide, and moreover, Mexico has become an example for a lot of countries due to the relatively short amount of time that it took to pass the reforms.
Mexico is perceived very well and is attracting a lot of attention. Additionally, Mexico is in a prime geographical location being next to the largest world market, as part of Latin America, and its Pacific reach; it is understandable why Mexico is garnering this interest.
KITE: In terms of security, how is the issue of perception affecting the inflow of foreign investment?
MFG: It is a very important moment in Mexico’s history, and Mexico is much more than its insecurity issues. When internal political issues are mixed with external matters, people do face the challenge of understanding the situation correctly.
KITE: How would you say the UK views the Mexican business community?
MFG: Despite the newness of the reforms, the Mexican business community has been greatly exposed to the global business world. Foreign investors will find that the Mexican business community is more international than might be perceived.
For instance, Mexican companies CEMEX, Gruma, and Mexichem have all been investing in the UK in recent years. It is with these types of investment examples that I believe next year’s ‘Dual Year’ will provide a better platform to communicate not only for Mexican business opportunities, but also the opportunities that Mexican companies have in the UK.