Weekly Review I January 11, 2023

GENERAL SITUATION IN MEXICO

RELEVANT

MEASUREMENT AND UPDATING UNIT (UMA) JANUARY 2023

The variation of the UMA in 2023, as compared to 2022, is 7.82 percent.

The UMA is the unit of account, index, base, measure or economic reference in pesos to determine the amount of payment of the obligations and assumptions provided for in federal and state laws, as well as in the legal provisions emanating from all of the above.

In accordance with the Second Transitory Article of the Decree by which several provisions of the Political Constitution of the United Mexican States are amen-

ded and added regarding the de-indexation of the minimum wage, the minimum wage must be updated annually. For this purpose, the value of the UMA of the immediately preceding year is multiplied by the result of the sum of one plus the year-on-year percentage growth of December of the immediately preceding year of the National Consumer Price Index (INPC). In December 2022, the annual variation was 7.82 percent.

The calculation of the value of the UMA is a task that corresponds to INEGI and is based on Article 26, paragraph B, penultimate paragraph, of the Political Constitution of the United Mexican States; in the Second Transitory Article of the Decree that reforms and adds various provisions of the Political Constitution of the United Mexican States regarding the de-indexation of the minimum wage and in Article 23, section XX Bis, of the Internal Regulations of INEGI.

KEY POINTS OF PRESIDENT ANDRES MANUEL LOPEZ OBRADOR’S Morning

Press Conference

January 4-10, 2023

NORTH AMERICAN LEADERS SUMMIT

• President Lopez Obrador informed that during the initial meeting with President Biden yesterday they were able to discuss what will be addressed at the Summit, emphasizing migration and the economic integration of North America as well as with the rest of the continent’s economies. With respect to migration, both agree that the causes must be addressed, and therefore opportunities must be guaranteed to citizens of all countries in their places of origin. The President reiterated that the entire region must be economically consolidated, with the well-being of the people in mind. He emphasized that there is a new environment in the business sector, governments, and all those involved since there is more consensus on economic integration with respect for sovereignty.

MIGRATION

• He mentioned that Mexico does not act as a “retaining wall” in terms of migration to the United States, but rather seeks to work with a social sense to guarantee conditions for people in their places of origin. In this sense, he commemorated

KEY POINTS OF PRESIDENT ANDRES MANUEL LOPEZ OBRADOR’S

President Biden’s initiative to grant 24,000 visas to workers from different countries, with which a reduction in the flow of migrants is perceived. The Chancellor acknowledged President Biden’s willingness to invest in the countries of origin, as well as to promote a regular path for labor mobility. For the first time, President Biden has dared to open the doors to Cuba, Venezuela, and Haiti to do their paperwork online through a democratic and courageous policy.

ECONOMY

• Remittances: In the month of November 2022, remittances reached $4.801 billion dollars. The best option to exchange dollars is ULINK, which offered an average exchange rate of $19.50 pesos per dollar with no commission; Western Union was the worst option with an exchange rate of $19.20 and a commission of 8 USD.

POLITICAL AGENDA

• Customs: The President informed that he will soon visit Tamaulipas, taking the opportunity to mention that he is working on the construction of the new customs in all the border of such entity. Nuevo Laredo will have a very large, wide customs office with several crossings, which will also have a military base and the national customs offices will be located there. Resources are already being exercised with the purpose of improving all border customs, a work in charge of the Ministry of National Defense.

• Welfare Bank: The President said that today he has a meeting to see with the state coordinators how to obtain the missing land to build all the branches

of the Banco del Bienestar. It is expected that the complete network of banks will be ready by June of this year. He added that this bank will be the one with the most branches in the country. He also informed that, of the 2,744 branches contemplated, 2,069 branches are currently completed, 210 are under construction, 255 are in the process of reviewing land documentation and 210 are in the process of obtaining land.

• Elections in the State of Mexico and Coahuila: The President indicated that the support that the government will deliver in the State of Mexico and Coahuila will be brought forward so as not to intervene in the electoral processes and to respect what is established by law.

CORRUPTION

• Pemex workers: In response to a question regarding fixed contracts for PEMEX workers, the President stated that there has been a dialogue with the union so that transitory workers can be basified and receive labor rights, under a seniority criterion. Romero Oropeza added that they will seek to add to the base those workers who have

KEY POINTS OF PRESIDENT ANDRES MANUEL LOPEZ OBRADOR’S

between 10 and 15 years of seniority, and in 2024 they will seek to add all personnel. In the past, PEMEX jobs were sold or offered to relatives of the leaders, now that there is no corruption, the criteria applied is based on seniority. The same process is being offered to the health sector.

• Emilio Lozoya’s trial: When asked about the letter sent by Emilio Lozoya’s defense in which they stated that they are willing to repair the damage for the purchase of the fertilizer plants, and when asked if PEMEX would accept such reparation, the president stated that what is being asked of the judges is to seek to repair the damages in these cases. He added that if its lawyers are willing to repair the damage, the prosecutor’s office and the courts will be able to take it into consideration so that it can go through its process in freedom. Already US$100 million has been recovered in the case of the purchase of fertilizer plants.

SECURITY

• Situation in Sinaloa: General Luis Cresencio Sandoval informed that six months ago SEDENA, in coordination with the security cabinet, detected the areas of influence of “Ovidio N”. He gave a report on the results of fentanyl and methamphetamine seizures. He mentioned that during the early morning of January 5, an operation was deployed in Jesus Maria, Sinaloa. He reported that when the alert was given, previously established actions were activated in case of a situation like this one. Eighteen armed individuals were secured, among them was “Ovidio N”. Armed forces gathered around the detainee in an attempt to free him, where 7 soldiers lost their lives. Cells of the criminal group carried out blockades in different points of the city to prevent the evacuation of “Ovidio N.” They carried out aggression to airplanes and the Culiacan airport. The detainee was transferred in an air force helicopter and later taken to the Special Prosecutor’s Office for Organized Crime in Mexico City. After the event, in order to restore order, 3,586 army and National Guard troops were deployed in the state of Sinaloa, including members of special forces and paratroopers. Blockades in the city were neutralized and security was provided in the vicinity of the Altiplano CEFERESO through two security circles. There were 19 deaths among the detainee’s group and 21 alleged criminals were arrested. 10 members of the military lost their lives in the line of duty. 35 military personnel were injured by firearms and are receiving medical attention. There are no reports of civilian casualties.

KEY POINTS OF PRESIDENT ANDRES MANUEL

LOPEZ OBRADOR’S

ENVIRONMENT

• Mayan Train: The President shared that the tour of supervision of the Mayan Train that used to take place every month will now be every two weeks. This is in order to promote the work in the southeast, which he assures will help in the development of five states in the country. He shared that with 1554 km of extension of the work and assured that it will be finished by the end of 2023.

• Clean energy: President Lopez Obrador assured that work is being done and investments are being made in the modernization of turbines in the 17 hydroelectric plants and affirmed that contracts have already been signed. He also shared that there are currently two projects in Sinaloa for the construction of new hydroelectric plants. He stated that he considers it relevant to share the progress made by his government with respect to the expansion of the use and generation of clean energy, for which reason he will soon invite those responsible in his cabinet to share information on the progress of clean energy without the need for privatization and prioritization of public companies.

• Contamination of Madin Dam: A reporter mentioned that the Madin Dam, located in the State of Mexico, is suffering a serious situation due to sewage discharges. He pointed out that even international authorities have been approached and a Commission for Environmental Cooperation was created as part of the North American Free Trade Agreement. The President suggested that the case be reviewed by the Minister of the Environment, Maria Luisa Albores, and, if necessary, that she coordinates with the authorities of CONAGUA.

• Fertilizer program for welfare: The Minister of Ag-

riculture, Hector Manuel Villalobos, explained that the fertilizer program for welfare was created to reduce dependence with grain imports in corn, beans, and rice mainly. The goal is to serve 2 million producers; the logistics involve the movement of 1 million tons of fertilizer. Data on the results of the program will be ready by March 2024. The director of PEMEX, Octavio Romero Oropeza, explained that PEMEX will be in charge of the production and distribution of fertilizers. In 2022, a budget of 7,800 million pesos was used for the program in the nine states. This year a budget of more than 16,000 million pesos will be exercised.

NEWS BY STATE

BAJA CALIFORNIA

The Governor of Baja California, Marina del Pilar Avila Olmeda, mentioned that the State continues to be one of the largest generators of employment for the industry in the country, as confirmed by the National Institute of Geography and Statistics (INEGI). In the first ten months of 2022, the entity generated 27,438 new jobs in the Manufacturing, Maquiladora, and Export Services Industry (IMMEX), which constitutes 15 percent of those created in the country in that sector.

SONORA

This year the construction of a total of seven industrial parks will be carried out in the main cities of Sonora, in order to encourage the entry of foreign investment into the state, said the State Secretary of Economy. “Industries come to potentiate in Sonora what is the relocation of semiconductors, of everything that is being installed in Arizona, we have to have everything that is supply ready for them,” he mentioned.

NUEVO LEON

In 2022, the Monterrey Metropolitan Area achieved record occupancy figures for all real estate segments, so that in the entire area there is barely a 1 percent vacancy rate, especially in the industrial sector.

JALISCO

The work carried out by the Government of Jalisco to stimulate the economy allowed the state to rank first nationally in 2022 in the creation of more job opportunities, by adding 82,963 new formal jobs during the past year. The 82,963 sources of employment created during 2022 in Jalisco exceeded the generation of 20221 when 69,632 were created, which represents a positive annual variation of 4.48%. Nationally, 752,748 formal jobs were generated, of which Jalisco contributes 11%, that is, 11 out of every 100 jobs in the country were created by companies in the entity. . In 2022, according to data from the Mexican Social Security Institute (IMSS), in second place behind Jalisco will be Mexico City with 82,390 jobs; in third place, the State of Mexico with 82,319 new job openings; and in fourth place, Nuevo Leon with 76,407 formal jobs. The generation of employment in Jalisco during 2022 is even greater than the generation of employment in all of 2019, the year prior to the COVID-19 pandemic, and is proof of the economic recovery of the state and the synergy that has been generated between the business sector and the government so that Jalisco’s citizens have better economic and development opportunities.

SAN LUIS POTOSI

The National Institute of Statistics and Geography (INEGI) reported in preliminary export figures, that San Luis Potosi during the third quarter of 2022 reached an amount of 4 thousand 398.8 million dollars, which compared to the same quarter but in 2021 means a growth of 39.5%, also this figure represents 3.3% of the national economic amount, which was 134 thousand 876 million dollars. By economic activity, more than 90% of exports from San Luis Potosi correspond to the manufacturing industry, while the rest belong to the mining and agricultural sectors. Given this positive closing, San Luis Potosi was positioned as the entity with the best growth for merchandise exports in the Central-Bajio zone, surpassing Guanajuato, Aguascalientes, and Queretaro, which had growth of 26.3%, 19.5%, and 18.1%, respectively. It is worth noting that in the national scenario, the manufacturing industry represented 89.6% of exports, and although San Luis Potosi showed a favorable growth, it was far from the five entities with the highest increase in the value of its exports, which were Hidalgo, with 95.9%, Oaxaca, with 61.4%, Puebla, with 57.8%, Chiapas, with 52.1%, and Mexico City with 46.4% growth, respectively.

GUANAJUATO

Guanajuato’s manufacturing industry had a recovery in sales of 133,705 million pesos, a growth of 17%. From January to October 2022, the state’s manufacturing industry generated sales of 897,517 million pesos, with 21 productive sectors including food, textiles, and chemicals. These results represented an increase compared to the same period last year, when sales of 763 thousand 812 million pesos were recorded from January to October 2021. This acceleration generated a growth in the number of people employed in the manufacturing industry; this year there was an increase of 794 people between January and October 2022. At the beginning of last year, the number of people employed in this sector totaled 238,374, a figure that increased towards October when 239,168 workers were documented, a variation of 0.33%. The results for 2022 are 44% higher than those recorded prior to the pandemic in 2019.

From January to October 2019, manufacturing industry sales totaled 622 thousand 782 million pesos, this figure represented a growth of 274 thousand 735 million pesos with respect to 2022 results.

NEWS BY STATE

CDMX

Almost 72 hours after the train crash on Line 3 of the Metro, which left a young university student dead and more than 100 users injured, Mexico City authorities announced that the Green Line that runs from Indios Verdes to Universidad is operating normally in all its stations. Through a brief statement, the CDMX Metro said that the reopening of the Indios Verdes, 18 de Marzo, Potrero, La Raza, and Tlatelolco stations is given after “verifying the different operating systems and safety conditions. The reopening of the service takes place after carrying out strict and rigorous tests on track devices, electrical and electronic installations, and telecommunications and automatic piloting systems, from La Raza to Indios Verdes”.

STATE OF MEXICO

Before formally announcing that the Green Ecologist Party of Mexico (PVEM) will go in coalition with Morena and the PT, in the June 4th election to renew the state governorship, it will finish with the analysis of the results of the 12 regional conventions held in the entity for such purpose. Jose Couttolenc, state leader of this political party, assured that they still do not have a clear result or position on whether they will go in coalition because they will need to previously analyze the feelings of their 30 thousand participants or militants in the conventions.

ECONOMY AND INVESTMENT IN MEXICO

NORTHEAST

VINCI OF FRANCE

The French company, leader in design and construction of large projects will be investing $820 million dollars for the remodeling of the Monterrey International Airport, putting Monterrey in the spotlight of the air tourism industry.

NOAH ITECH

The company, supplier of automation equipment for Tesla and GM, will invest $100 million dollars to settle in Santa Catarina. It will generate 100 highly specialized jobs.

CENTRAL MEXICO

FARMACIAS LA GENEROSA

Farmacias la Generosa announced its growth and expansion plan for the period 2022-2025, in which it plans to open 150 new branches in Jalisco. The amount of investment was not disclosed.

CDMX

PERFETTI VAN MELLE

A confectionery and chewing gum manufacturer will start an expansion in the Toluca 2000 industrial area, in the state of Mexico, with an investment of 40 million euros. This investment will generate 300 new jobs.

LABOR

ADDITIONAL SOCIAL SECURITY COSTS FOR RETIREMENT

This year the social security employer´s cost to cover the retirement pension system increases.

The Mexican retirement law, for workers in the private sector, had major changes in 2020. Even though the current law became effective two years ago, back in January 2021, main changes were differed to begin until 2023.

Starting 2023, and until 2030, the employers contribution will have annual increases. Before the legal reform, and until 2022, employers had to pay 5.15%, now depending on the daily base salary, the employer contribution will be having annual increases to go from 5.15% to 13.875% in 2030. The workers contribution remains unchanged.

Company departments responsible for fiscal and social security compliance must now update employers contributions to follow the law.

ALVARO GARCIA HR, Vice President

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