At the same time as writing this article, I am also preparing information related to foreign investment behavior in the State of Nuevo Leon, which the State Governor will disclose in his coming State Report.

I am also reading Andres Oppenheimer’s book “Cuentos Chinos”, who was a present from by boss, Andres Franco, Foreign Investment and International Trade Sub-secretary.

In this book, I find interesting the comparative analysis made by the author regarding China and the growth there. The Chinese Republic is attracting more direct foreign investment that all of Latin American countries together, US$56 billion every year in direct investment coming from abroad versus a little under US$50 billion which is the sum of all Latin American countries, isn’t that amazing?

Even if Mexico receives foreign direct investment for around US$20 billion, being the second country with the largest foreign investment, only after Brazil, growth could still be larger if the Federal Government – which receives the largest share of Mexican taxes (most taxes charged are federal taxes, versus state and municipal taxes) – granted larger and better incentives to foreign investors.

Unfortunately, I have heard many times complaints and comments about the few incentives offered by the states to investors, let alone the complexity for implementation, some times making the time spent in hour-men more expensive than the return received by investors from such proceedings.

Training programs, for wages from 1.5 up to 3 minimum wages, as well as reduction in payroll tax, which is barely 2% or even 1% in some states, do not represent a real figure when compared to invested amounts.

Said incentives are not attractive for investors and if we add their complex implementation, the incentives proves to be practically null.

I think there is a lack of rulings to implement said incentives; therefore, both Federal and State governments must make easier the operation and implementation of the already few incentives granted by the states. And to add to it all, the structural reforms our country so hardly needs have not been made, a topic that would take more than this space to discuss at depth.

The State of Nuevo Leon – as do some other states like Jalisco and the State of Mexico – faces strong problems when recording of foreign investments arriving to the sate; which is due to several reason, some of them, I must say, even absurd, such as denying access to National Foreign Investment Registry kept by the Ministry of the Economy. Also, said Registry represents the same problem regarding foreign companies arriving into Mexico, because penalties for a foreign company that fails to register barely amount to 3 minimum wages.

Records kept in the State of Nuevo Leon are practically “empiric”, we could even say they are rather field studies. Companies themselves, industrial parks, consultant firms, law firms, accounting firms, the press, shelters, chambers, the State Treasury, among others, are the most reliable source for Nuevo Leon’s Foreign Investment Direction. Even if amounts registered as foreign investment are actually quite accurate based on said sources, I think actual investment is larger than the one reported in our data banks, because many investments are registered in Mexico City when their operations and administrative headquarters are located in Nuevo Leon. However, it is hard to make this kind of statements because identifying companies under said status is rather difficult. There are also some foreign companies which are not registered and we know about their existence some time later, only after they are already operating and request from the State Government suppliers’ development services or some other service.

I think foreign investment in Mexico is still low, even if it is the 2nd Economy in Latin America. If we consider that China is growing by leaps and bounds and that 3 years ago they displaced Mexico to a 3rd place with our main trade partner, in a few years more they will neutralize the main advantage we have over them: geographical location.

In a domestic context, even if Nuevo Leon is considered the most industrialized state in Mexico, it is facing hard competition in some strategic sectors with other states. Even if it is the state leader in sectors such as education, industry, metal-mechanics, glass, cement, beverages among others, its companies are now competing in a global world, with all that this represents. The task is laborious and difficult; but it is a pleasant task because it translates into more jobs and better quality in employment. It is useless to have technological development and being highly competitive if we do not achieve at the same time an increase in quality of live for our people and true social development. There is no sense in trying to obtain economic development at the state through foreign investment if this does not translate into a social and tangible benefit for our people.