Mexico May Attract as Much as $22 Billion of FDI, Zozaya
Says
By Thomas Black - Jun 2, 2011 7:00 AM GMT-0500
Mexico may garner as much as
$22 billion of foreign direct investment this year as the U.S. rebounds and companies seek to diversify
from Asia, said Jose Zozaya, president of the American Chamber of Commerce in Mexico.
The estimate tops a forecast of $20 billion by Mexican Finance Minister Ernesto
Cordero in April and would be an 18 percent increase from the $18.7 billion in
2010 reported by Mexico’s
central bank.
“We’re seeing a lot of interest from companies, including in the Far East, for
locating factories in Mexico,”
said Zozaya, who’s also president of Kansas City
Southern’s Mexico
operations, in a phone interview from Mexico
City. “This shows that Mexico is very attractive for
foreign investment.”
A manufacturing recovery in the U.S.
has helped Mexico
recuperate foreign investment from $15.3 billion in 2009, the lowest level in a
decade. Foreign direct investment, or spending by foreign companies on
factories, equipment, acquisitions and other areas, peaked in 2001 at $29.9
billion.
The drop in foreign investment correlated with a recession in the U.S., Zozaya
said. Mexico has gotten more
than 40 percent of its foreign direct investment on average from the U.S. in the
last five years.
Foreign investment will increase even as violence related to organized crime
continues to rise, he said. That’s because large companies can take security
measures to minimize the effects and because the violence is isolated to
certain areas in the country, he said.
Investment Plans
Kansas City Southern (KSU) de Mexico plans to invest $135 million in the
country this year, the same as last year. The company is preparing an $80
million project over several years to build a new railroad terminal in the port
city of Lazaro Cardenas
in Michaocan state, he said.
HSBC Mexico projects Mexican foreign direct investment will increase to $25
billion this year and $28 billion in 2012, according to a May 18 report.
In addition to investor confidence in Mexico’s
macroeconomic stability, “a key factor for the FDI recovery will be the
improving terms of trade in Mexico
from the ongoing gradual appreciation of the Chinese renminbi as well as higher
labor costs in China,”
the report said.
Deaths related to drug trafficking in Mexico reached 15,273 last year, a
59 percent increase compared with 2009, and total more than 34,000 since
Calderon took office, according to data compiled by the President’s office. The
government estimates the violence shaves 1.2 percentage points off economic
output annually.
Source: http://www.bloomberg.com/news/2011-06-02/