KIA reaches new incentive agreement with Nuevo Leon authorities

KIA reaches new incentive agreement with Nuevo Leon authorities

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Even though the KIA facility in Pesqueria, Nuevo Leon is up and running, the Government of the State of Nuevo Leon and the Korean company had several negotiation meetings to reach a new incentive agreement.

Governor Jaime Rodriguez Calderon said a new deal was recently signed and it goes along with the Law on Promotion of Investment and Employment and other state laws.

“This new agreement is a reference point for future investment. We want to make sure the Pesqueria region gets an economic boom to improve the quality of life of all its residents,” said Governor Rodriguez. “Now KIA has a legal certainty of its investment.”

Seong Bae Kim, president of KIA, said the company will continue to work with the State of Nuevo Leon because this corporation has a commitment to grow in Mexico, especially in this border state.

Last May, both parties reached a preliminary agreement to reduce the incentives from 28% of the amount invested by Kia and its suppliers to 10.5%.

Furthermore, the deal also eliminated other incentives, such as paying for a party to inaugurate the plant, as well as committing the state government to provide water and electricity services. Also, the carmaker agreed to increase its purchases from local suppliers.

The new signed agreement includes some incentives such as the reduction of 95% of the Payroll Tax for 5 years, as well as the donation of the land in which the KIA facility was erected and additional land for future growth. Also, KIA will receive a property tax reduction of 50% for 10 years.

Both parties will build additional infrastructure such as a railroad spur and the relocation of a gas pipeline.

The signed document also states KIA will donate US$7.8 million to be invested in infrastructure in the Pesqueria municipality.