Luis Fernandez-Cid de las Alas Pumariño Spain Ambassador to Mexico

Luis Fernandez-Cid de las Alas Pumariño Spain Ambassador to Mexico

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Editor’s Interview

How do you grade Mexico’s competitiveness for Foreign Investment?

It is very competitive. The proof is that it occupies a remarkable position in the FDI (Foreign Direct Investment) receptors index of the UNCTAD. And in regard to Spain it is as high as any of our investment destinations abroad. In addition, there is legal certainty and recent reforms that will make the Mexican economy even more attractive for the FDI.

Both the Central Government and individual State Governments have developed an important activity in recent years to attract investment that has really paid off. In addition, Mexico has a privileged geographical location and numerous free trade agreements with corresponding incentives for the installation of firms from third countries.

There is ongoing legislation approving important reforms that will open sectors reserved until now. This is an indication of a working network of Agreements for Protection and Promotion of Investments. All of these aspects have certainly favored the consolidation of Mexico as a very attractive destination for foreign investment.

Mexico has been traditionally, along with Brazil, the most attractive investment destination in Latin America. However, since 2007 according to the United Nations Conference on Trade and Development (UNCTAD), Mexico has lost its leadership in favor of Brazil. According to data from the UNCTAD, Mexico ranked in the 12th position in 2013 among the economies with FDI attraction. This is a gain of seven seats from the 19th position it occupied in 2012. Among the 38 countries included on the list, Brazil is the best positioned in Latin America in 7th place. Spain is ranked at 13th and Chile in the 18th position.

What is your plan of action as an Ambassador for strengthening the bilateral relationship between Spain and Mexico?

Fundamentally, it is to continue deepening the extraordinary bilateral relationship that Mexico and Spain enjoy. We know that our relationship is strategic and increasingly stronger.

In the economic and commercial field in particular there is still space for further progress. We remain very aware of the contributions that Spain and its companies can carry out stemming from the reforms that are in progress in order to continue encouraging investment in Mexico along with Mexican investments in Spain.

Also, we fully support Mexico in its European integration that already is a fact and we remain the main Mexican supporter and ally from the European Union and also support the renewal of the Free Trade Agreement.

What is the current situation of the diplomatic relationship between Spain and Mexico?

The state of diplomatic relations between Mexico and Spain is excellent. This excellence is reflected in every area of diplomatic representation that I lead. And I must add, it is being driven by the XI Spain-Mexico Binational Commission in which I am personally involved and it is making steady progress.

Another essential element that shows the deepening of our relationship is the State visit that President Peña Nieto made ??to Spain this summer. This demonstrated the excellent health enjoyed by our mutual relationship which continues to develop thanks to the support of our respective governments.

The success and celebration of the XXIV 2014 Ibero-American Summit in Veracruz is also an important priority this year. This is when Mexico will play a decisive role in the future of the Summit. It is also where the good relations between Mexico and Spain have always generated a tone of appreciation for this important forum since its inception with the Ibero-American Summit in the beautiful city of Guadalajara, Jalisco, in 1991.

This Embassy really mirrors the excellent Mexico-Spain partnership in the political, cultural, commercial, economic, environmental and educational sectors.

What is the current situation of the commercial relationship between Spain and Mexico?

Our relationship goes beyond basic economic cycles. For our trade policy Mexico is a priority country. This is shown in the specific plans that we have designed to promote Spanish guidance for our companies and to stimulate our bilateral economic relations. Since 2005 an Integrated Market Development (PIDM) Plan has been running. It is a catalyst for a number of stock shares of institutional, commercial, investment, information and training support and has consistently produced significant achievements and results.

Our bilateral trade now exceeds US$11.5 billion in both directions. In 2013 Mexico was the second largest market for Spanish products in Latin America (Only behind Brazil). It was the 7th largest market outside Europe, and 16th in absolute terms. Spain is the third largest European supplier in Mexico, coming in right behind Germany and Italy.

Mexico is our number 14 overall provider and leading supplier from Latin America. Spain is the third largest export market for Mexico in the world, following the U.S. and Canada.

All this information documents the importance of the bilateral trade relationship in both directions, but nevertheless, it is true that there is still great potential for growth. Both countries must seize and exploit the complementary nature of things offered by the two economies.

What are the areas of opportunity that you see in terms of strengthening relations between Spain and Mexico? 
Spain and Mexico started a process in the mid-90s of deepening their commercial and economic interaction. Two decades later this has driven Mexico to establish itself as a prime trading partner for Spain.

Despite the economic crisis of recent years, exchanges and cooperation between the two countries is at the highest level and it remains constant. The on-going structural reforms (mainly energy and telecommunications), and the several plans for infrastructure development and the expansion of the economy bring business opportunities that require significant experience and strength.

This is what Spanish companies can bring with their in-depth experience, technology and knowledge. The Spanish companies help create competition, dynamic transfer of technology, higher employment and they constantly work closely as partners with local entrepreneurs.

Can you describe the current situation for bilateral investment between Spain and Mexico?

Spain, with US$43 billion during the 1999-2013 period stands as the second largest investor from the European Union in Mexico after the Netherlands and ranks third worldwide. Spain has traditionally been the second largest investor globally in Mexico, only after the U.S. But, according to statistics, investment was affected in 2012 for the accounting as a percentage of Santander (worth around US$4 billion). Without these asset divestitures, Spain would still remain as the second largest investor in Mexico.

In any case, the fact is that our companies are still arriving and according to the Mexican Ministry of Economy, there are almost 5,000 Spanish companies operating in the country. Not only have large Spanish companies arrived, but also small and medium-sized businesses that provide many services and products.

As a matter of fact they are sometimes attracted by the “drag effect” of larger firms. Others provide good examples of the important internationalization of Spanish SMEs in the tertiary and secondary sectors. It may be noted that the Spanish companies in Mexico feature high social awareness and respect for the environment. Their activity in the field of Corporate Social Responsibility in Mexico is becoming more intense. They are always committed to the creation of greater value, increased employment and better opportunities for both Mexico and Spain.

In the period 1999-2013, according to the Mexican Secretary of the Economy, the most important Spanish investment flows have been directed to financial services. They have accounted for 39.5 % of the total; information in the massive media from telecommunications (19.8%); manufacturing (15.4%) and construction 9.2% of the total. As for manufacturing, although in volume it cannot be compared to investments in other sectors, it is still relevant. For example, with the establishment of companies in the automotive sector. Another area of great importance is the establishment of Spanish hotels. This is where the investors from our country believe strongly in the potential of Mexico as a tourist destination at the first class level.

Mexico is the third destination outside the EU for Spanish Foreign Investment after the U.S. and Brazil. We believe it will be increasing as Mexico executes on-going reforms in various sectors and related fields.

Which areas of opportunity are being looked at by Spanish Companies for investment in Mexico?

Despite the fact that the international economic crisis has delayed some operations, the perspectives point to significant progress and consolidation of Spanish investment in the coming years. This is due to the on-going interest from our companies in the processes of liberalization and opening already mentioned, along with the development of infrastructure in the country. Sector by sector there stand financial brokerage, along with communications and transportation, tourism, real estate, and of course, the all-important generation and distribution of energy. In this context renewable resources also merit special mention.

What role does Mexico play for Spanish investment in North America?

Mexico is the second largest economy in Latin America after Brazil and has one of the highest incomes per capita. Being established in Mexico you are in the position to negotiate with a significant percentage of the Latin American market. In addition, under NAFTA, Mexico may become a starting place to develop important business throughout the entire free trade area, taking advantage of its geographical proximity to the U.S. One advantage is by having lower labor costs and there is also the growing importance of Hispanic consumers in the U.S. who are always looking for more and more products imported from Mexico.

What is the level of satisfaction of the Spanish companies with their operations in Mexico?

The figures and growth rate of the presence of Spanish companies in Mexico speak by themselves in regard to satisfaction. Although it seems obvious to say it, the historical and cultural ties that bind us have really facilitated the integration of our business with the Mexican culture. In turn this has led to an excellent symbiosis with outstanding results for both the Mexican and Spanish companies.

Is there any additional Spanish investment in Mexico to be expected in the near future?

Yes, of course, the best is yet to come. In Mexico forecasts are being considered of large volumes of investment in specific sectors such as energy and communications. And in all of them I am sure that Spanish companies have much to contribute through their knowledge of the market along with our technology and know-how.