How do you grade the competitiveness of Mexico for attracting foreign direct investment?
Mexico is a very reliable country to invest in. This is not only being said by me, but the proper numbers of the Mexican Economy speak for themselves. According to the latest reports from the Mexican Government, this year the accumulated FDI reached the historic figure of US$24 billion and the expectation this year is to add more by December.
This growth trend must also be seen in a very special political context, for instance, look at the ambitious transformation agenda promoted by President Enrique Pena Nieto’s government. I have no doubt that these changes will encourage more and more investors to continue choosing Mexico as #1 for installing companies and generating more business.
This is what Mexico wants. Argentina wants the same thing for the two countries as well as for the entire region. As our President says, more investment means more jobs, more domestic consumption and development and it bolsters the strategic circle that we need to get our people out of poverty and reduce inequality.
What is your plan of action for strengthening the bilateral relationship between Argentina and Mexico?
In fact, I don´t have a plan designed by myself. All of my actions are framed in the guidelines given by our President to the Ambassador of Mexico in Argentina, Jorge Castro Trenti, and then to me.
In their two meetings during the Summit of CELAC, Chile (January 2013) and Havana (2014), Cristina Fernandez de Kirchner and Enrique Pena Nieto have asked us to work to strengthen the bilateral relationship and create a more dynamic link between our nations. And that is what we have been doing from the two embassies: working to re-launch the existing dialogue mechanisms, which were moving along below their potential.
So in March we celebrated a new meeting of the Joint Commission for Technical Cooperation and over 20 projects for South-South Cooperation were approved. This means we will be able to finance the Argentina and Mexico foreign ministries so they will be able to share experiences on key public policies for both entities. We want to think together how to further expand health services to the entire population and improve its quality. Our goal is to professionalize the tax administration to target more resources devoted to building better public policies.
Another objective is to increase agricultural yields. Remember, Argentina has considerable experience with direct seeding. This is a technology that our country very much wants to share with Mexico, and we also want to take a look at sharing information about food safety regulations.
Of course, these projects are only the beginning. This year we will also hold a further meeting of the Joint Commission on drug issues to strengthen joint efforts against this scourge. We also want to raise the Consultation Mechanism on Multilateral Issues, especially in sensitive contexts such as the crisis in Gaza, the Ukrainian situation and the on-going problems in Iraq.
All this requires greater coordination among all Latin American countries. In fact, we are also talking about meeting at a roundtable focusing on regional issues in Latin America and the Caribbean. This is, as you know, because for Argentina regional integration and multilateralism are the sine qua non for addressing challenges at the international level. And in this context I think we all strongly agree with Mexico that taking a much more active role in the world is really paramount.
What about the current diplomatic relationship between Argentina and Mexico?
The relationship is excellent and is based on a historical appreciation and gratitude from our country to the people of Mexico, who have received the exiles of the last dictatorship in Argentina. It was probably the bloodiest one that we have lived through. As you know, I myself am one of these exiles, and for that I work every day to make the relationship between our two countries as close as possible.
This deep historical link is expressed today in the cooperation and interest of both our sitting presidents, who have decided to re-launch bilateral relations. So I say that the relationship with Mexico is experiencing a really great moment.
The proof of this is that Argentina was one of the first countries visited by President Pena Nieto right after he took office. In addition, Mexico, and especially the Director General of PEMEX, have been a key players so Argentina could reach the final agreement between the Repsol and YPF oil companies. .
What is the current status of the commercial relationship between Argentina and Mexico?
Mexico is a very important commercial partner for Argentina. In 2013, bilateral trade exceeded US$3 billion and our country had the opportunity to export some products with high added value, such as vehicles and transmissions. This is important because the Argentinean government is convinced that it is necessary to deepen trade integration within Latin America to develop value-added products that can compete with other regions.
A very important trade mission was held just a couple of months ago and involved over 40 Argentinean companies. This mission was the result of an earlier one that took place last year and was led by Chancellor Timerman. He used the opportunity to agree with his Mexican counterpart that increasing, diversifying and balancing trade flows through joint trade promotion actions was the best path to follow.
What other areas of opportunity do you see in terms of strengthening relations between Argentina and Mexico?
They are many and varied, as well befits two large, diverse and dynamic countries. In the economic scope, there are complementarities in the automotive sector that we have been taking advantage of for several years. This kind of cooperation has allowed our respective industries to be strengthened and has dramatically increased exports to other countries.
Now, oil is an issue where I think Argentina and Mexico face similar challenges as they need to incorporate technology to maximize their mature wells and simultaneously start exploiting unconventional reservoirs. All this certainly requires a lot of knowledge and investment.
And there is still much space for further deepening the relationship in more traditional sectors such as food and beverage. This is where Mexico is a major investor for Argentina. And there are other areas of opportunity as well such as the pharmaceutical, biotechnology, software, nanotechnology, clothing, services and appliances sectors.
What about the current situation for bilateral investment between Argentina and Mexico?
Mexico is a main investor in Argentina. According to figures from our Central Bank, Mexican FDI doubled its total in the last five years and at the present time it exceeds US$2 billion.
Telmex, Bimbo, Grupo Posadas, Coca Cola FEMSA, Dark Americas (Grupo Alfa) and Farmacias Dr. Ahorro are among the main Mexican companies operating in Argentina. Also installed there are Mabe, Jugos del Valle, Cemento Cerro Blanco, Lubritech and Aeromexico. This certainly demonstrates that Argentina is really an attractive destination for FDI.
Looking at the other side, for example, the stock of Argentinean investments in Mexico–the flow is less as it reaches the US$800 Million mark, but there is still great potential. In 2007 companies like Techint Hylsamex bought Arcor Aerolineas Argentinas for US$200 Million. And there were the clothing Isadora and La Martina and even some pharmaceuticals such as Biogenesis-Bago, as another example, as well as some other Argentinean companies that have been investing in Mexico. We hope there will soon be many more.
What areas of opportunity are being looked at by Argentinean Companies for investment in Mexico?
I think one of the assets of Argentina that is of interest in Mexico is everything related to culture. So I think that fashion and design are two areas with very great potential. There are already several Argentinean companies in Mexico, but I think there will be many more soon.
As noted earlier, oil is another interesting field. We have a long history of oil extraction. As a result highly specialized SMEs have been developed that are looking at the possibility of offering their services to assist in the harvesting of mature wells, especially in regard to the Energy Reform being promoted by President Enrique Peña Nieto.
A third sector is agriculture. This is where Argentina has significant capabilities in areas such as direct seeding and post-harvest handling. These are two issues that may be of very high interest to Mexican entrepreneurs.
What is the role that Mexico plays for Argentine investment in North America?
The Argentinean multinationals are concentrated in specific areas, such as Techint, which provides services for the oil industry. And there is Arcor, which manufactures candies. IMPSA focuses on machinery and the firm Bago produces pharmaceutical products.
So the strategy of these companies is to be installed in a country where they can mainly supply the domestic market. This is often done in partnership with a local company, as is the case of Arcor with Bimbo in Mexico.
I also think Mexico offers exciting opportunities as a platform for entering the North American market, and in fact some Argentinian brands have moved to Mexico to take advantage of this possibility. On the other hand, there are Mexican firms moving to Argentina to take advantage of the expanded MERCOSUR market. .
Is there any additional Argentine investment in Mexico to be expected in the near future?
We have received inquiries in both directions, but Argentines are interested in having a presence in Mexico (mainly through a local partner). And there are, as we have mentioned, Mexican businesses looking to start or expand their business in Argentina. From the Embassy we are fully available to these entrepreneurs, whom we see as key agents of a historic binational relationship.
Any last comment for the MexicoNOW subscribers?
I think the worst that can happen as a country and as a region is falling into irrelevance. In an international context such as this, Latin America must be united and take a look at the world being aware of diverse histories and cultural traditions. This is why from the Embassy we look for much greater production and knowledge integration with Mexico.
This is our responsibility to achieve, not only by more trade and production in the region, but also through more shared knowledge, more value to our products and by making the move to break the inertia that centuries of commodity exports have left us. And down deep I believe that both Mexico and Argentina have a common goal.