With unity of purposes, in months we overcame decades of immobility: President Enrique Peña Nieto

While enacting the secondary legislation of the Energy Reform, President Enrique Peña Nieto stated that “thanks to the unity of purposes, in months we overcame decades of immobility; the barriers that prevented Mexico from growing in an accelerated and sustained manner have been knocked down.”

During the event, held in the Main Courtyard of the National Palace, the President declared that, once the legislative process was completed, “we reaffirm that the Energy Reform preserves and assures the nation’s property over Petróleos Mexicanos (PEMEX), the Comisión Federal de Electricidad —Federal Electricity Commission (CFE)—, hydrocarbons in subsoil and the oil revenue.

He noted that “with this Reform we can extract deepwater oil and more effectively use our great shale deposit to obtain gas that allows us to generate electricity at a lower cost. The country will reduce its dependency on foreign supplies and will guarantee its energy security”.

After acknowledging federal lawmakers for “their splendid job in achieving and making this important Reform a reality,” President Peña Nieto said that this changes will translate in concrete benefits for families, both at the city and at the countryside, as well as businesses, especially small and medium enterprises.

President Enrique Peña Nieto reaffirmed that “the Energy Reform is also a green reform because it promotes the use of cleaner fuels such as gas, which pollutes 70 percent less than oil. It will also allow the production of energy based on renewable sources like solar, wind power, and geothermal energy.”

The head of the Executive Branch emphasized that “this is the moment to put the Energy Reform in action so the majority of Mexico can receive the benefits this landmark reform brings”. Consequently, he announced ten concrete actions, in the short and medium run, to achieve this goal.


Secretary of Energy Pedro Joaquín Coldwell expressed that “with the Energy Reform, the President and Congress have widened the path for the future.” He also claimed that with the enactment of the Secondary Legislation of the Energy Reform, “this day is a watershed, a before and an after in the energy paradigm experienced for the past decades.

"A change in the way in which we relate our national identity to energy, which will now correspond to the realities of the twenty-first century, and the environment in which the Mexicans of this generation develop," he said.

Secretary of Energy Joaquín said both the CFE and PEMEX strengthen, as they no longer function as decentralized public bodies and now become 100 per cent State-owned productive enterprises, with the objective of becoming strong, sound, and competitive public companies.

He noted that the Energy Reform will generate major transformations in two aspects; first, that the hydrocarbon industry has the capital and technology to access deepwater and unconventional resources, and second, that the electric industry operates through an energy market involving public and private companies participating on equal terms.


Secretary of Finance and Public Credit, Luis Videgaray Caso noted that the Energy Reform "is a profound change in the relationship between our energy and national Treasury. It is a radical reform of the tax treatment of oil, gas, and electricity. "

He highlighted three key aspects in fiscal and budgetary fields, arising from the Energy Reform:

First. The financial strengthening of PEMEX and the CFE. The aim is to strengthen PEMEX in the face of the competition it will encounter, just as the CFE in the creation of a new electricity market.

Second. Oil revenues and income for the Mexican State. The Energy Reform, "in addition to generating, among other benefits, more investment, more jobs and paying reliable and cheaper power supply, will allow us to resume growth in the production platform."

Third. The creation of the Mexican Petroleum Fund, "which will aim to ensure that present and future generations of Mexicans, who are the owners of the oil revenue, receive the income for the good of the country. This Fund was constituted as a trust in the Bank of Mexico with a majority of independent counsellors”, he said.


The president of the National Executive Committee of the Partido Acción Nacional, Gustavo Madero Muñoz, said: "The Energy Reform enacted today opens great possibilities for Mexico; opportunities that had been denied for decades”. The reform transforms the entire energy sector to compete globally, improving the quality and price of products and services, increasing the investment and job creation.

"It is a paradigmatic reform, in its form and content, and in a particular way it opens a new era for the energy sector, and for our entire country,” he said.

The reform ensures the national sovereignty over the ownership of hydrocarbons; opens the sector to private investment under models that maximize oil revenue; modernizes and strengthens PEMEX and the CFE as productive state enterprises with full autonomy; creates a competitive and efficient energy market, and defined strong and clear regulatory bodies.

"These are the tools that our country needed for years for the energy market, they will benefit all Mexicans," he said.


The president of the National Executive Committee of the Partido Revolucionario Institucional, César Camacho Quiroz, emphasized that the Energy Reform is historic by origin and significance and is the most transformative for the country.

“This is a social vocation Reform because the State will not only keep ownership of the hydrocarbons, but reaffirms its rectory in strategic areas, ensuring that oil wealth will lead to prosperity for all”, he said.

The reform will derive transcendental changes to ensure that Mexican companies have sufficient fuel at prices that make them competitive, and allow them to have greater resources that benefit the most vulnerable population with the support of social, education and development programs.

"The economy will be strengthened. Our productive plant will be modernized and more environmentally friendly. Our energy sovereignty is consolidated in a climate of transparency”, he said.


Why Mexico Is Speeding Past Brazil in Cars

By Brendan Case and Christiana Sciaudone July 10, 2014

Remember in the 1990s when some Cassandras feared the North American Free Trade Agreement would someday help Mexico eclipse car production of its higher-cost rivals north of the border? Two decades later, Mexico is making its move, but against another competitor: Brazil.

The country is poised to overtake South America’s largest nation as the top Latin American automobile producer for the first time in more than a decade. Mexico’s ascent is fueled in part by auto sales running at the fastest pace in almost eight years in the U.S., its largest market. The boom coincides with a slump in Brazilian production through June as its domestic demand cools.

“People talk about the energy and telecom industries in Mexico, but the auto industry is going to continue as the icon of this country,” says Luis Lozano, lead automotive partner at PricewaterhouseCoopers in Mexico City. Passing Brazil, where output has fallen 17 percent this year, would vault Mexico to No. 7 among the world’s auto producers. China is No. 1, followed by the U.S.

Graphic: Five Years of Recalls: GM, Toyota, and Other Automakers

The diverging fortunes of Mexican and Brazilian auto production reflect the state of their biggest markets. Because of high labor costs and taxes, Brazil-made cars and trucks are too expensive to send abroad and go mostly to local buyers. Mexican factories export 8 out of every 10 cars they produce—with more than half bound for the U.S.

Auto output in Mexico rose 7.4 percent during the first six months of 2014, to 1.6 million vehicles, bolstered by new plants owned by Nissan Motor, Honda Motor, and Mazda Motor, according to the Mexican Automobile Industry Association, known as AMIA. Brazil’s production through June was 1.47 million, reports Anfavea, Brazil’s automaker association.

Mexico’s proximity to the U.S. also gives it an advantage, as do labor costs for carmakers that are about 20 percent of U.S. levels, according to PricewaterhouseCoopers. So the broader reason for the big surge “is the appeal of Mexico as the production source for North America,” says Bill Rinna, senior manager of North American forecasts at LMC Automotive. LMC forecasts Mexico will pass Brazil in 2016; other researchers put it sooner.

Video: Why Daimler and Nissan Are Going to Mexico

The recent plant openings in Mexico by Honda, Mazda, and Nissan represent a combined investment of $4 billion. And Volkswagen’s Audi unit is building a $1.3 billion plant to assemble the luxury Q5 sport utility vehicle.

Story: How the Auto-Parts Trade Retools for the Era of Reliable Cars

In June, Daimler and Nissan said they would produce luxury vehicles, including Infiniti compact cars, at a new $1.4 billion factory in Mexico, the biggest project to date in their four-year-old partnership. Earlier this month, BMW said it will invest $1 billion in a new factory in central Mexico that will make about 150,000 cars annually. “Whatever is made there can be exported” to any of the more than 40 countries that have free-trade agreements with Mexico, including the U.S., says Augusto Amorim, analyst for South America at IHS.

Brazil has logged some new plants of its own. In April, Nissan opened a $1.5 billion complex in Resende, and Chery Automobile has a $530 million factory in São Paulo state that will start production this year, marking the Chinese automaker’s first major investment outside its home country.

Yet as Mexico’s auto exports have advanced 9.7 percent this year, Brazil’s shipments have fallen 37 percent. And Brazilian consumers have slowed purchases because of tighter credit and a weakening economy. That’s one reason IHS is forecasting Mexican auto output this year of almost 3.2 million, ahead of Brazil’s 3.17 million.

Video: BMW to Plan $1B Factory in Mexico

The bottom line: With labor costs just 20 percent of those in the U.S., Mexico could pass Brazil to become the No. 7 auto producer.

Case is a reporter for Bloomberg News in Mexico City. Sciaudone is a reporter for Bloomberg News in Sao Paulo.


Seminar “Mexico: Your Gateway to North America” at the Singapore Manufacturing Federation Auditorium

Mexico has positioned itself as one of the most competitive countries in the world for productive investment this due to its macroeconomic and political stability, low inflation, size and strength of its domestic market. In fact, Moody’s has just granted an A3 rate to Mexico. The country also counts with a strong economic growth rate and a capacity to produce advanced manufacturing, particularly high-tech products; in 2012, close to 81% of its exports were manufactured goods.

Mexico offers very competitive costs in North America, as recognized by several business and consultant offices:

  • AlixPartners’ Manufacturing Cost Index 2013 places Mexico as a highly competitive country in terms of costs, surpassing China or the United States for products like manufactured and assembled parts, as well as consumer products.
  • Mexico was the most competitive country (among 33 nations) in terms of manufacturing compensation costs and taxes, according to the Global Benchmark Report 2013 published by the Confederation of Danish Industry.
  • Mexico is 21% more competitive than the US in the total cost of doing business across 19 industries, according to KPMG.

In this context, the Embassy of Mexico in Singapore, together with PROMEXICO (Trade Commission of Mexico), and the Singapore Manufacturing Federation, as well as with the support of IE Singapore had joined forces and organized the seminar Mexico: Your Gateway to North America. The seminar that will introduce you to the myriad opportunities that Mexico offers for your business, will take place on the 12th of February 2014, at the Singapore Manufacturing Federation Auditorium from 3:30pm to 5:00 pm.

For further information contact:

PROMEXICO, Trade Commission of Mexico
+65 6297-2052