By Samuel Peña Guzman
Foreign Investment Coordinator
State of Nuevo Leon

Each state in Mexico creates its own mechanisms in order to attract foreign investment, and therefore create the jobs that Mexico so hardly needs. There are not too many mechanisms.

States have to work together with the private sector and, as much as possible, with the federal government and state-sponsored companies. More than 9,000 direct jobs were created this year by direct foreign investment in the State of Nuevo Leon. The task has not been an easy one, there is no doubt about it, every state in Mexico is under a hard competition to attract foreign companies and the incentives offered by state governments are rather scarce.

All states offer very similar incentives, with slight variations under very similar scenarios. Training programs aimed for potential investors are provided in most of the states. On the other hand, fiscal incentives are practically annulled, because most taxes are federal - the best a company can get is a reduction in the state´s payroll tax that amounts to 2% - leaving state governments unable to offer better fiscal incentives. In the investment projects scenarios, this 2% payroll tax is not a decisive factor to foster
foreign investment. In some Asian countries, even in the European Union, fiscal exemptions go even beyond five years. The truth is states in Mexico are fighting against global markets practically ´without any weapons´ to attract new investments, making the task harder for the states.

Mexico is not an inexpensive labor country any more. In North Mexico, labor, even if it is qualified, is one of the most expensive in Mexico, and so is the cost of living, mainly in the metropolitan areas. This is true for some states, such as Nuevo Leon, which education level is the highest in Mexico and has one of the highest GDPs - Gross Domestic Products - in Mexico; it contributes with 7.3% to domestic GDP. Even if it is considered an expensive state, Nuevo Leon´s infrastructure is still leader in attracting foreign investment.

Nowadays, in addition to savings, multinational companies also look for a share in the domestic markets and consuming societies; leave alone certain instruction hardly found in some states, such as those located in the South of Mexico. College graduates in North States have a worldwide competitiveness level and they speak English as a second language; the quality of life and safety provided by the North States are some of the factors that foster a competitiveness that may be compared even to developed economies.

The greatest incentive will always be infrastructure and the quality of suppliers located in states such as, for example, Nuevo Leon. Pioneer states must be created where, in addition to industrial strengths, companies - mainly foreign companies - can find work practices similar to theirs. The culture of effort to face the lack of natural wealth in most states in the North has made of this region a more prosperous place.

Achieving social welfare inside the communities without having proper mechanisms or incentives is going to be harder every day. As long as there is economic development without the corresponding social development, communities will only be filling a glass of water with a hole on bottom, making no sense´ such a paradox of life!