More headaches for Mexico

Mexico has one more thing to worry about. 

According to a poll done by the American Chamber of Commerce in Mexico, one third of American companies established in the country are “reconsidering” their investment plans due to the lack of security.

The poll also showed that 58 percent of the executives interviewed said the country was less secure in 2009 than in 2008.   Thirty seven percent said that their supply chains have been affected by violence and 39 percent said that any improvement in the security situation could take more than five years.

The American Chamber of Commerce has been in Mexico for 93 years, representing the interests of more than 2,000 companies that have investments for more than $100,000 million (90 percent of the U.S. private investment in Mexico). According to their website, they contribute with more than 40 percent of the jobs in the country.

With those numbers in mind, the results of the poll are more than concerning; especially if we consider that the amount of foreign investment in Mexico has been already decreasing since 2008 due to the global economic recession.

Figures from the Ministry of Economy (Secretaría de Economía) show that in 2008, Mexico received close to $18.6 million in foreign investments and the next year the amount was just $11.4 million, a decrease of 38.6 percent. Half of this investment came from the U.S. 

For many years, Mexico was considered one of the most attractive countries for foreign investments given its labor costs and its geographical location. However, countries such as China, India and more recently Brazil, which has instituted structural changes to guarantee better investment conditions, have displaced Mexico as investors’ preferences.

Now the killings, kidnappings, extortions and violence that has plagued the country and has been featured on the front pages of Mexican newspapers every day has scared investors. President Felipe Calderón’s promises of promoting structural reforms does not seem to be convincing them to invest their money in Mexico.

If the decrease of foreign investments were not enough, Mexico also experienced  a decrease of 12 percent in remittances from Mexicans who are abroad in 2009.

The Mexican economy is still highly dependant on the U.S. investment and trade and for that reason, research figures like the ones presented by the American Chamber of Commerce just add more concern about a country already in very bad shape.

Comments

[Masiosare]

This futile effort by FeCal is and will be the worst setback for Mexico in its socio-economic history. What is there to like? What is there to show? Progress? Development? Improvements?
From all angles, conditions are clearly not positive. Problem is, he still has 3 years left and his successor will certainly not follow his muddy footsteps but instead will be handed over a fragmented and unstable country.
This is not looking good at all. Hope I'm wrong, but all aspects are pointing toward a downhill rolling snowball.

[Raymond Babcock]

president calderon can not see the forest because of the trees mexico must fight this drug kidnappings like your life depends on it because it does you must take the fight to the enemy never let them rest show no mercy project power iam sure average american people will support a honest effort

[Melvin]

If you are looking for the right time to invest your capital in a developed or developing economy then the right time is now. People today are investing overseas to have a stress-free business and expand it overseas.