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States primed for FDI

Article - December 29, 2014

Prospects of big returns by partnering Pemex to tap vast oil and gas reserves, as well as the need for infrastructure and tourism development, is pulling in rising foreign investment in states developing old and new sectors.

THE PORT OF VERACRUZ WILL QUADRUPLE IN SIZE FOLLOWING A $1.8BN EXPANSION PLAN.

Citizens in three of Mexico’s 32 states in particular – Veracruz, Campeche and Chihuahua – are in a prime position to get a generous share of the benefits being sparked by the nation’s reforms under way. And for each of the trio, the new realities have already spawned initiatives that will take full advantage of the major changes soon coming Mexico’s way.

In the oil-producing state of Veracruz, the country’s most important port aims to quadruple in size after a planned $1.8 billion expansion, while in Campeche the government has worked hard to transform itself into what the World Bank calls “the perfect investment destination.”

To the north, sharing a 560-mile-long border with the United States, Chihuahua is already Mexico’s leading manufacturing center and is spending millions of dollars on new transport infrastructure to boost the flow of goods in both directions.

“Veracruz is one of the pillars of development in Mexico because of our great economic and commercial activity,” boasts the state’s Governor Javier Duarte de Ochoa. “We have three ports on the Gulf of Mexico, one of which is the most important in Latin America, making us the most important logistics center from Tijuana to Tierra del Fuego.”

Besides being the premier gateway to the Mexican market and beyond, there are the hydrocarbon deposits. Veracruz has the largest gas reserves in the country, the second-largest oil reserves and is the nucleus for 80% of Mexico’s petrochemical industry.

Braskem, the largest petrochemical company in Latin America, has teamed up with Grupo Idesa of Mexico to build a $4.5 billion plant in Veracruz’s port city of Coatzacoalcos, slated to open next year and will produce 1 million tons a year of ethylene and polyethylenes.

Clearly, foreign investors are taking notice of Veracruz, which has risen 13 places in the World Bank’s Doing Business rankings.

“Opening a company here now takes 48 hours,” says the governor. “The climate for private capital and investment is auspicious.”

Veracruz is also joining in with the country’s revived emphasis on education through a cooperation agreement signed this year with the Massachusetts Institute of Technology allowing the state’s best and brightest students access to the U.S. institution’s programs and courses.

“The first thing we want to do is take advantage of the capabilities, experience and intelligence of one of the most prestigious institutions in the world of education,” Mr. Duarte de Ochoa says.

Another exciting event on Veracruz’s horizon is the hosting in December of the Ibero-American summit bringing together the leaders of Spain, Portugal and all of Latin America.

Sharing the Gulf of Mexico coastline with Veracruz is the state of Campeche, which bills itself as the country’s energy capital and whose Governor Fernando Ortega Bernés has praised the President’s reforms and what they will do for the country and his state.

“Without a doubt, these reforms have extraordinary potential and they bring together all the determination to propel the changes that Mexico has needed for many years. From this year on, Mexico will grow tremendously,” he predicts.

In the petroleum sector, Mr. Ortega Bernés argues that the changes can only serve to benefit Campeche.

“The state’s logistical platform supplying the oil extraction and production operations is the most skilled, experienced and valuable in Mexico and when the reforms kick in, all of that will strengthen the economy and further increase employment, investment and wealth,” says Mr. Ortega Bernés.

The governor explains he is keen to also see new development in other sectors of the state’s varied economy including industry, farming and food production, and even tourism. With its many miles of beautiful Caribbean beaches, colonial towns and monuments, captivating jungle environments and vestiges of the ancient Mayan civilization, Campeche is already a natural draw for foreign visitors and the government is working to lure more.

“Our main attractions include eco-tourism and our tourism offer also includes adventure and nature activities like fishing, birdwatching, hiking and other activities,” the governor says.

“In Mexican Spanish, a campechano not only means someone from Campeche but also someone with a certain type of personality and that character includes the great warmth and joy with which campechanos receive visitors.”

Mexico’s largest state, Chihuahua, is also accustomed to visitors and while tourists certainly enjoy a warm welcome there, foreign investors, specifically Americans, are truly valued for their contribution to making Chihuahua not only a manufacturing powerhouse but also the country’s leading exporter.

“Chihuahua’s leadership in foreign direct investment has undoubtedly set a clear precedent in Mexico and the fact that we received more than $1.5 billion in FDI in 2013 proves that we have won the trust of investors,” says Governor César Duarte Jáquez.

The politician credits a range of factors which have made Chihuahua such an attractive investment destination, including the newfound sense of security there, the quality and skill of the workforce, and its constantly improving connections to the U.S.

“We have the industrial, commercial and logistical infrastructure reaching across the border, which allows us to exchange all manner of goods with the United States quickly and conveniently,” he notes.

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