Today Mexico is in the ninth place with the greatest restrictions for foreign direct investment according to the Organization for Economic Cooperation and Development (OECD), in the first places are China, South Arabia, Indonesia and Japan, on the other hand The countries that have more facilities for investment are Portugal, Slovenia, Romania, Holland, Finland and Spain, having governments that are more open to investment and the growth of their economy.
There are activities in Mexico that are more complicated for FDI, such as the services sector, which have numerous regulations and have a high impact on the competitiveness of companies, described Alejando Faya, general director of foreign investment in the economy.
“They are activities that have significant entry barriers, that is, it is not easy to participate in those markets for regulatory reasons. They are sectors with little exposure to competition with significant degrees of concentration at different levels and with different restrictions on FDI ”
At the infrastructure level, the telecommunications sector in the country requires large capital investments especially to stay out of the technological vanguard, however, in developing countries like ours, financial resources are scarce, which generates the problem technological lag and therefore limited service coverage.
There are two main factors that go into making a market an attractive destination for attracting foreign direct investment.
In the first place, the liberation of the market that allows both national and foreign companies to enter the industry since this allows increasing levels of competition.
Second, there are restrictions on ownership in the hands of foreigners, who in Mexican telecommunications, with the exception of the mobile segment, limit their participation to 49% of the capital within a company. Both factors have a negative effect on FDI to a country, a situation that leaves Mexico at a disadvantage compared to other countries in terms of potential foreign investors. It is obvious that the market situation also contributes to attracting FDI which, as we can see for Mexico, having a not very stable economy lately and the high levels of market concentration, especially the fixed one where the dominant operator maintains more than three quarters of the market, represents a disincentive for the flow of foreign capital in telecommunications.
Thus, while the vast majority of economies have been liberalizing their FDI policies in both the telecommunications sector and most of the commercial sector to encourage investments for the healthy development of the industry, Mexico still maintains considerable restrictions that discourage investment. It is then up to the government to align the public policy objectives to encourage the flow of capital necessary to advance through the severe crisis that is coming, survive the pandemic, and deploy the infrastructure that the country urgently needs.
How can you attract and maximize investments in the Mexican states?
Investment policy does not consist of privileging foreign investment over national investment or vice versa, but rather of connecting them through global value chains.
Foreign investment is not a transaction but a relationship. It implies a permanent relationship made up of many and very different actors with different interests. The investment policy strategy should not only seek to attract investment, but also allow the establishment, retention and link with the local productive sector to maximize its benefits.
3.-Not all investments are the same or have the same effects. Different types of investment bring different benefits, opportunities and challenges and have different effects on the socio-economic development of the host state, so different approaches are needed to capture potential benefits.For example, investing in the search for natural resources is not the the same as investment that seeks to produce goods and services to supply the local market, or investment that is established in a locality to produce goods and services and export them.
Proactive and strategic promotion is necessary to attract the investment we need. Need to have a strategic vision, identifying those segments that provide the greatest benefits and are also of great interest to investors.
On this basis, relevant value propositions are built for each type of investment to be attracted, generally using direct and relational sales and marketing techniques. At the same time, interested investors have a good level of information services.
Restricciones en México para la inversión extranjera. (n.d.). Retrieved October 24, 2020, from https://www.soyconta.com/restricciones-en-mexico-para-la-inversion-extranjera/
Destaca México en trabas a Inversión Extranjera Directa. (n.d.). Retrieved October 24, 2020, from https://inecex.com.mx/destaca-mexico-en-trabas-a-inversion-extranjera-directa/
Thanks, Jorge.
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