Benefits of Investing in Mexico
Mexico's checkered economic and political past has given way to relative stability in the 21st century. Aside from a contentious presidential election in 2006, Mexico has been able to project a stable setting for foreign investments in the last decade. Foreign investors look at Mexico's oil reserves, tourist industry and nascent transportation infrastructure as sources of potential profit. Whether you are an individual investor or a representative from a large corporation, you should look at the plentiful benefits of investing in Mexico.
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North American Free Trade Agreement
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The North American Free Trade Agreement (NAFTA) was initiated in December 1993 between leaders of the United States, Mexico and Canada. NAFTA eliminated trade barriers between North American countries and encouraged the smooth movement of workers within the continent. NAFTA's impact on Mexico has been largely positive, with new factories opening up to meet product demands in the United States and Canada. The treaty's impact on Mexican investments comes from an effort by recent presidents to make the country as business-friendly as possible to stay competitive with its North American allies. In order to draw foreign businesses into Mexico, property taxes and restrictions on industries available for private investment have decreased.
Natural Customer Base for Invested Businesses
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The popularity of real estate and retail investments in Mexico has grown due to the country's role as a vacation destination. Mexican resorts and tourist companies took in $11.6 billion in 2005, according to "The Motley Fool," lead by places like Cancun, Cozumel and the Mexican Riviera. The market for Mexican historical and beach resorts continues to expand as the country reaches further to Europe, South America and Asia to attract visitors. An investor looking at a potential stake in a retail outlet, restaurant chain or tour company should keep Mexico's staying power with tourists in mind.
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Expedite Business Startup System
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Investors and business owners interested in working in Mexico can use the Expedite Business Startup System (SARE) to get started. The SARE is a federal government program that allows startup investors and owners to meet the minimal requirements for opening operations within one business day of application. SARE enables foreign business people to fill out applications and receive permits from state and federal governments within three months of application. This program is only applicable to industries not conducted exclusively by the government or Mexican nationals.
Flood of Expendable Income from United States
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The rising number of Mexicans heading to the United States for education and employment has helped bring in more money to the Mexican economy. The Inter-American Development Bank found that $17 billion was sent into Mexico from Mexican workers in the United States in 2004. This number has increased to $67 billion by the beginning of 2009, according to a report on Minnesota Public Radio. Mexico had built up a $30 billion reserve of foreign currency as of 2008, with the help of trade deals with the United States, Canada, Japan and the European Union. The increase in expendable income for Mexican families, along with the stability of federal government finances, have led to calmer waters for investors.
Improving Infrastructure and Public Safety
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The Mexican government under President Felipe Calderon has created the National Infrastructure Fund to improve the country's 14 national highways. This fund contains $25 billion for highway, rail and IT infrastructure throughout Mexico. While southern states remain spotty in terms of public safety and reliable public transit, President Calderon has focused attention on these areas to attract investors from neighboring countries. As trains, buses and cars gain easier access to remote regions of Mexico, profits will increase for investors who put their money in early.
Steady Improvement of the Peso
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Since Mexico's economic collapse in the mid-1990s, the country's currency has steadily improved due to sound economic policies. While the peso dropped off in the first week of January 2009, Mexico has been able to prevent a complete collapse by controlling the money supply and preventing reactionary economic policies. Investors who plan on buying businesses and putting significant amounts of money into Mexican land should be happy that the peso has weathered the latest economic storm. Each transaction made by an investment bank is done in local currency, meaning that a stronger peso takes foreign investments further.
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- Photo Credit Photo by Esparta Palma (Flickr)
