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What Investors Need To Know About Infrastructure Projects In Mexico

Author:Mr Gerardo Zamudio
Profession:TMF Group
 
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Investors looking for countries with strong opportunities for investing in infrastructure project should look towards Mexico. With a new government, a population of 1.23 million people, strong currency, a border with the US and access to two oceans, Mexico has a lot to offer investors.

Economy

Mexico has an independent central bank whose primary objective is to ensure the stability of purchasing power and to keep inflation controlled at levels between 2% and 5% which they have been over the course of the last four years. The new trade agreement with the US and Canada will allow the country to maintain and improve the economic activity of Mexico. There is also a new government that has big plans and goals for starting investment projects in the southeast of the country, as well as eradicating corruption while growing the economy.

Infrastructure project focus

The Mexican government has turned their focus for investments to the following industries:

oil and gas; renewable energy; railroads; tourism; IT; and construction projects. President Andrés Manuel López Obrador has prioritized infrastructure projects with an investment of 500 billion pesos (US $26.5 billion). These projects include new airports, a trade corridor in the Isthmus of Tehuantepec, the Cancún-Palenque train, paving of 300 rural roads, bringing internet to the entire country, earthquake reconstruction and support for residents of marginalized neighbourhoods. There is also a project using 50,000 million pesos from the 2019 Budget to build a new refinery in Tabasco. These ambitious plans will require much more than government funds and will need the help of outside and foreign investors.

In the past six years, foreign direct investment came from developed markets like the US, Belgium, Canada, Spain and Germany. Many large global investment firms have seen the benefit of long term investing in infrastructure projects in Mexico.

Capital market financing in Mexico

Traditionally, the capital markets were focused on debt issuance for financing. Now, a new capital investment structure has become more common.

In 2009, the new investment vehicle called Development Equity Certificates (CKDes) was created as a response to the needs of...

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