FDI in Mexico

Overview by Globlatrade.net:

FDI in Figures

Mexico is one of the emerging countries most open to foreign direct investment. However, over the last few years, its competitiveness has been slowed down due to the increase of organized crime and a lack of reforms in the energy, professional and financial fields.

The areas where foreign investments are concentrated the most are the border towns with the United States (where assembly factories are located), as well as the capital. The Yucatan peninsula continues to receive foreign investments thanks to its tourism appeal. These investments come especially from the United States and Spain (mainly from the banking sector). The sectors receiving significant foreign investments are finance, automobile industry and electronics services.

During 2010, the major investors in Mexico were the Netherlands with 7.461 million dollars, or 52% of total FDI and the United States with up to 30%. This reflects Heineken’s significant acquisition of the beer operations of the Mexican group Femsa. Spain, on the other hand, has significantly reduced its investments in the country. With nearly 14.362 million dollars of FDI in 2010, Mexico’s appeal has again increased, compared to the last two years. According to the 2010 global competitiveness report of the World Economic Forum, Mexico ranked 28th in terms of foreign investor confidence.

 
Foreign Direct Investment 2007 2008 2009
FDI Inward Flow (million USD) 27,440 23,683 12,522
FDI Stock (million USD) 273,831 297,001 309,523
Performance Index*, Ranking on 141 Economies 100 101 97
Potential Index**, Ranking on 141 Economies 58 59 -
Number of Greenfield Investments*** 213 346 317
FDI Inwards (in % of GFCF****) 11.9 9.2 -0.6
FDI Stock (in % of GDP) 25.4 27.3 35.4

Source: UNCTAD

Note: * The UNCTAD Inward FDI Performance Index is Based on a Ratio of the Country's Share in Global FDI Inflows and its Share in Global GDP. ** The UNCTAD Inward FDI Potential Index is Based on 12 Economic and Structural Variables Such as GDP, Foreign Trade, FDI, Infrastructures, Energy Use, R&D, Education, Country Risk. *** Green Field Investments Are a Form of Foreign Direct Investment Where a Parent Company Starts a New Venture in a Foreign Country By Constructing New Operational Facilities From the Ground Up. **** Gross Fixed Capital Formation (GFCF) Measures the Value of Additions to Fixed Assets Purchased By Business, Government and Households Less Disposals of Fixed Assets Sold Off or Scrapped.

 

FDI Inflows By Countries and Industry

Main Investing Countries 2009, in million USD
United States 6.4
Spain 2.6
Canada 1.5
United Kingdom 265.0
The Netherlands 1.9
Belgium 332.0
France 300.0
Main Invested Sectors 2009, in million USD
Manufacturing Industry 5.2
Financial Services 3.1
Extractive 699.0
Trade 1.3
Transportation and Communication 68.0
Hotels and Restaurant Services, Technical, Community and Professionals 3.4
Construction 520.0
Electricity and Water 200.0
Agriculture and Fishing 100.0

Source: International panorama of the Proméxico agency

 
Form of Company Preferred By Foreign Investors
The most common forms of creating a business company are the Limited Liability Stock Corporation (Sociedad Anonima, S. A.) and the Limited Liability Company (Sociedad de Responsabilidad Limitada S.R.L.).
Form of Establishment Preferred By Foreign Investors
Subsidiaries and assembling plants for the "maquiladora" (assembly plant)  industry.
Main Foreign Companies
IBM , Coca-cola, Motorola, Wal-Mart, Inditex Group, BBVA-Bancomer , Santander Group, Procter&Gamble , L'Oreal ; etc.  Also, 500 of the most important Latin American enterprises have been installed in Mexico.
Sources of Statistics
General Direction of Foreign Investments

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Why You Should Choose to Invest in Mexico

Strong Points
- Mexico forms a bridge between North America and Latin America due to its geographical location;
- Mexico has an extensive variety of natural resources allowing for the development of all types of industries at competitive prices;
- Mexico is very open to direct foreign investments;
- Labor costs are not high and in general, there is a skilled labor force;
- Positive structural reforms have been made during the current presidential term;
- Mexico is the world's 8 th tourist destination.
Weak Points
- The country depends excessively on its partnership with the United States;
- There is a high level of corruption;
- During the last few months, violence has increased especially the drug cartels;
- The country is encountering significant structural problems (economic and social).
Government Measures to Motivate or Restrict FDI
The Mexican Government has created an open and safe environment for foreign investors. The recently undertaken economic policies should allow investors to manage the safety of their operations despite the unfavorable global external environment.

Public tresury funds have been made available to private companies that have been heavily affected by the crisis. Thus in November 2008, the Mexican government saved the Vitro company, one of the world's biggest glass producers, which was having liquidity problems because of its debts. The amount disbursed to save it was evaluated at 100 billion dollars. The cement corporation, Cemex, in turn registerd a 15 billion dollar debt, a debt which is higher than the value of the company, due to the collapse of the world construction sector.

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Experts Views (1)
  • Nuevo Leon, Mexico: General Industry

    While Mexico City has more industrial output than Monterrey, the large concentration of Mexican and foreign industrial giants that call Nuevo Leon home, gives credence to its title of the industrial heart of Mexico.

    U.S. Commercial Service on 25 Sep 2011 related to FDI in Mexico

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  • U.S. Commercial Service

    US GovTrade Promotion, the United States