9 reasons to invest in Mexico
The country’s great economic potential partly explains the rising interest around investing in Mexico. The country is now the ninth-largest world exporter and, in line with its Gross Domestic Product (GDP), is ranking 15th1 among the world’s economies.
Between 2019 and 2022, the automotive and heavy-duty vehicle industry, mainly those used for passenger transportation, peak export levels at US$53.1 billion.
Moreover, the auto parts industry exported US$31.2 billion, and the passenger transportation industry accounted for US$ 26.9 billion.
Manufacturing computer components is another crucial industry; in the above period, its export value amounted to US$32.4 billion.
Looking at the figures, investments in Mexico create an excellent opportunity for companies and the private sector to make the most of their resources.
Benefits of financial investments in Mexico
Companies from different industries financially invest in Mexico because it is a heavily sought out and favorite destination. Although there are several reasons, these are the ones to pay closest attention to:
1. Guaranteed profitability
The World Bank’s Doing Business 20202 ranking named Mexico as the best option for companies to invest in Latin America. The data is linked to several factors: investor protection, tax burden, contract compliance, and easy access to credit.
2. Strategic location and logistics infrastructure
When industries settle in the country, they have nearby access to major trade destinations with a seamless value chain.
This is possible because the area’s logistics infrastructure encompasses 49 custom offices3, 58 terminals and ports on the Pacific Ocean, 59 terminals in the Gulf of Mexico and the Caribbean, and 15 highway corridors.
3. Latin America’s leading export economy
Mexico has 14 free trade agreements, enjoying preferential access to 50 nations. This grants access to 60% of the world’s GDP, making Mexico the number one exporter in Latin America.
4. Foreign Direct Investment (FDI) through different sectors
Mexico has signed 30 investment agreements in 31 countries. As a result, between January and September 2021, the country’s Foreign Direct Investment totaled US$24,831.7 million, 5.7% higher than the previous figure for the same period in 2020.
Thus, the Mexican economy is ninth in exports worldwide.
5. Part of the world’s largest trade agreement
The agreement between Mexico, the United States, and Canada (USMCA)is known for its innovative trade rules and ability to address 21st-century issues such as labor market regulation, trade in digital goods, SME integration into foreign trade through datafication, environmental protection, and gender equality.
This agreement came into effect on July 1, 2020. It kept the investment protection elements included in the North American Free Trade Agreement (NAFTA) as it was, adding just a few changes3.
USMCA strengthened sectors such as Investment and Trade in the country during 20214. And today, Mexico is Canada’s third largest trading partner and the largets one of the United States, (collectively accounting for 54% of FDI). This data is valuable for investors looking to start operations in the country.
6. Income tax incentives for investment
There are free zones available in the country’s northern4 and southern regions. They provide companies with great options to invest through VAT reduction, from 16% to 8%, and 30% to 20% of income tax.
7. Innovation ecosystem
Unlisted startups in 2021 tripled their profit in five years, reaching US$3 billion. The fintech industry is expected to continue growing, closing 2022 with US$74.6 million users.
8. Young and specialized human capital
Half of the population, 126 million, is 29 years old or younger, and 49.8% are actively involved in the labor market.
Moreover, Mexico is among the 10 OECD countries with the highest number of engineer professionals; each year, 1,700 engineers graduate from the country’s universities.
9. Bonus: cultural diversity
Additionally, it’s essential to take into account cultural diversity since, nowadays, more than a million foreigners have chosen Mexico to settle. At the end of 2021, the country registered nearly 28.4 million international tourists, benefiting the domestic economy with US$14.262 million.
This shows how attractive Mexico is to the world. We must consider the importance of foreigners settling here because it enhances the domestic economy. It also means more human capital to meet the needs of companies as well as a positive outcome for people looking for jobs.
Advance Real Estate promotes the growth of foreign companies’ that want to invest in Mexico by renting industrial buildings and Build to Suit (BTS) projects in strategic locations. Learn more about us and find the ideal space for your operations.
INFORMATION SOURCE
- embamex.sre.gob.mx/espana/…/Brochure14razones.pdf
- www.oecd.org/acerca
- www.bancomundial.org/es/…/doing-business-2020-sustaining-the-pace-of-reforms
- archive.doingbusiness.org/es/…/doing-business-score
- www.crmsv.org/es/…/presidencia-pro-t%C3%A9mpore
- advance-realestate.com/adblog/empresas-de-manufactura-4-razones-para-invertir-en-monterrey
- www.realestatemarket.com.mx/articulos/…/16051-cinco-razones-para-invertir-en-mexico
- www.dineroenimagen.com/economia/…/142494
- www.mexicosocial.org/los-principales-cambios-al-mecanismo-de-proteccion-de-la-inversio
