On the occasion of the state visit to Kuwait by His Excellency Enrique Peña Nieto, the President of Mexico, we look at Mexico: the country, its economy, investment climate and the lucrative investment opportunities that the new government has opened up for entrepreneurs.
Kuwait, a dynamic and relatively young country, and Mexico, an emerging economic powerhouse, have plenty of opportunities to create synergetic relations in various fields. The two countries enjoy cordial bilateral relations and have the same aspirations for the peace and prosperity of their peoples. The two also share similar viewpoints and hold identical positions on many international and regional issues.
Since launching diplomatic relations more than four decades ago, Kuwait and Mexico have reinforced their ties in various domains, including in the diplomatic, political, economic and cultural fields. Giving further impetus to the strong relations has been the opening of embassies in each other’s capitals, the exchange of visits by high-powered delegations, holding of Joint-Committee meetings and the signing of various bilateral agreements.
On the diplomatic and political fronts, Kuwait and Mexico decisively support full respect for international law and legal equality of states, their sovereignty and independence. The two nations also believe in the promotion of collective security through active participation in international organizations, the peaceful resolution of conflicts and non-intervention in the domestic affairs of other countries.
Reinforcing this friendly and reciprocal diplomatic relations, in early December 2015, Kuwait’s ambassador to Mexico Samih Jawhar Hayat met with the Mexican Foreign Minister Claudia Massieu and reviewed bilateral relations in the political, economic, commercial, cultural and investment fields. Both sides agreed to enhance strategic cooperation in all domains and to continue talks on international and regional issues of mutual interest while promoting bilateral ties in all fields.
While size- and population-wise the two countries have no comparison — Mexico’s 1.9 million square kilometers of land and over 125 million population downright eclipsing Kuwait’s 18,000 square kilometers of land and four million population — the two countries are both oil exporters producing roughly the same amount, of around three million barrels, of oil per day. However, in addition to oil, Mexico has a highly productive manufacturing industry that has helped propel the country into one of the most dynamic export markets in the world.
Over the past thirty years, Mexico has successfully transitioned into an electoral democracy and opened up its economy to market reforms that have developed competitive industries. Mexico’s free market economy, with a GDP in 2015 worth more than two trillion dollars, in purchasing power parity, is the 11th largest in the world. In addition, the country also possesses unrivalled potential in terms of growth and investment. Analysts also believe that by 2050, Mexico could well have the fifth largest economy in the world.
For long, the economy of Mexico has been inextricably linked to that of the United States and Canada, its two larger neighbors to the north. Since the signing of the North American Free Trade Agreement (NAFTA) in 1994, which created one of the world’s largest free trade zones, the three countries have witnessed exceptional economic growth and rising prosperity. Today, it is estimated that NAFTA partners exchange between them more than US$2.6 billion in goods every day.
Since taking office in 2012, the country’s government, led by the dashing and energetic President Peña Nieto, has been reinvigorating the economy, prioritizing structural economic reforms and competitiveness, while giving a much-needed boost to the private sector. Constitutional amendments under the new government have also shaken up various economic sectors, including energy, telecommunications, labor, investment and taxes, leading to the stimulation of a new era of economic modernization.
Reiterating the principle that free trade increases wealth and competitiveness, the government has been promoting the manufacturing sector, with its export-oriented policies delivering real benefits to ordinary people. As of 2105, Mexico had a GDP per capita of US$18,370 which was the highest in the Latin American region. Producing more automobiles than any other North American nation and accounting for a large share of the continent’s electronics trade, Mexican exports have more than tripled since the signing of NAFTA.
Mexico also has free-trade agreements with a host of other countries, including China, the European Union and Japan, as well as with its neighbors in the Caribbean and Latin America. In fact, Mexico manufactures and exports the same amount of goods as the rest of Latin America combined and foreign trade forms a greater percentage of Mexico's economy than that of any other large country in the world.
The new government has also been aggressively promoting investments and manufacturing in Mexico. With free-trade agreements signed with more than 40 countries worldwide, Mexico is an ideal location for investments and for setting up new businesses, with any manufacturer in Mexico gaining immediate duty-free access to 60 percent of the world GDP. Foreign investment in automotive facilities has doubled in the last few years to 12 billion in 2014. As a result, Mexico has grown to become the seventh largest auto manufacturer and the fourth largest auto exporter in the world.
In 2014, Mexico also attracted 366 Greenfield investment projects totaling an estimated $33 billion and capital investment levels have risen over the past two years. In addition, the Mexican Congress passed a bill in December 2013 to partly privatize the country’s oil industry to attract foreign direct investment. The new bill permits foreign oil companies can now share in any profits from oil recovered from new wells, encouraging international investment in the exploration of Mexico's rich deep-water oil fields and its natural gas reserves.
Also, in the tourism sector, the government has keenly supporting the expansion of tourism venues and facilities in the country. Mexico is ranked among the top-ten most visited countries of the world with around 32 UNESCO World Heritage Sites located in the country. Last year almost 24 million tourists visited Mexico and the government has announced an investment of $10 billion dollars in 176 touristic projects around 27 locations in Mexico, adding 33,000 extra hotel rooms to meet the expected tourism rush in the immediate future.