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GENERAL SITUATION IN MEXICO

Weekly Review I December 6, 2023

RELEVANT NEWS

New Minimum Wage 2024 EFFECTIVE ON JANUARY 1, 2024 The National Commission for minimum wages in Mexico has reached an agreement. Starting January 1st the daily minimum general wage will be $248.93 pesos except for the northern border cities where the new minimum will be $374.89. As part of the national strategy to recover the purchasing power of the minimum wages $27.40 pesos for Central Mexico and $41.26 pesos are first added to the 2023 minimum wages (amount known as the independent recovery measure, or MIR for its Spanish acronym) and then a 6% general increase.

RECOVERY AMOUNT (MIR)

MINIMUM WAGE 2023

Rest of the Country

$207.44

NBFZ*

$312.41

$27.40

$41.26

MINIMUM WAGE 2023 + MIR

$234.84

$353.67

TRIPARTITE AGREEMENT

MINIMUM WAGE 2024

$248.93

6% $374.89 *Northern Border Free Zone

SOURCE: PRODENSA A LO DE MINIMUM WAGE

KEYPOINTS OF PRESIDENT ANDRES MANUEL LOPEZ OBRADOR’S MORNING PRESS CONFERENCE November 29–December 5, 2023

POLITICS AND GOVERNMENT: • Governorship in Nuevo Leon: President Lopez Obrador emphasized the collaboration between the PRI and PAN against Samuel Garcia to appoint the state prosecutor as Interim Governor. The president highlighted the involvement of the Supreme Court of Justice, suggesting a potential coup if Garcia is prevented from returning to the governorship. A video revealed demands made to Garcia by adversaries, including a significant monetary amount and various conditions. • Corruption in Instituto Nacional de Transparencia (INAI): President Lopez Obrador criticized the INAI, accusing it of being created to avoid accountability. The Secretary of Governance, Luisa Maria Alcalde, will investigate and file complaints against autonomous organizations, citing one billion pesos in the INAI budget for current expenses, protected by the opposition. The president hinted at proposing an initiative before his term ends to change administrative aspects in certain autonomous organizations, even if it may not be approved.

KEYPOINTS OF PRESIDENT ANDRES MANUEL LOPEZ OBRADOR’S MORNING PRESS CONFERENCE HEALTH: • Super pharmacy built by the government: Ana Elizabeth Garcia Vilchis, Director of Networks at the General Coordination of Social Communication and Spokesperson for the Presidency, refuted claims in various media outlets that the super pharmacy won’t be ready by year-end. She clarified that the President affirmed it will be ready, the land is acquired, and equipment is being procured. The pharmacy, managed by BIRMEX, faced three main criticisms: being deserted, unviable, and falsely centralizing medicines. Responding, it was clarified that the project doesn’t replace the national distribution network but serves as a drug bank for immediate availability, aiming to streamline the purchase process through the BIRMEX distribution chain. ECONOMY AND DEVELOPMENT: • State debt: The President stated that the current administration does not have outstanding debts but may experience delays in specific cases. He emphasized the country’s good finances, thanked major contributors, and highlighted the absence of fake invoices or “factoring” companies. Contrary to previous practices, there is no devaluation or economic crisis in Mexico, leading to increased investment and a 6.5% nominal revenue increase of 334 billion pesos. In this sense, according to data from the Finance Secretariat, it is expected that debt growth during Lopez Obrador’s administration will be 19%, while real increases under Calderon and Peña Nieto were 37%. • Poverty reduction and economic performance: Lopez Obrador highlighted the reduction of pov-

erty and inequality as the most significant achievements of his administration. He also mentioned record-breaking figures in foreign investment, employment, and foreign exchange inflow during his term, contributing to favorable macroeconomic indicators in the country. He stated that public spending has not exceeded limits, and the debt remains below 50% of the GDP, acknowledging a 2.2% increase to 45.8% of the GDP. He compared this increment with a 7.4% rise during Felipe Calderon’s government and an 8% rise during Enrique Peña Nieto’s government. It is projected that by 2024, the debt will reach 48.8% of the GDP. • Minimum wage increase: The President highlighted a significant achievement in the fifth year of the government, a 20% increase in the minimum wage from January 1, 2024, as agreed upon with the labor and business sectors. The new daily wage will be 248.93 pesos, rising to 375 pesos in the northern border-free zone. The president credited the success to the collaboration and consensus of both sectors and plans to have representatives explain the reasons behind this achievement in the upcoming press conference.

KEYPOINTS OF PRESIDENT ANDRES MANUEL LOPEZ OBRADOR’S MORNING PRESS CONFERENCE

JUDICIARY AND LEGISLATIVE: • New list for the SCJN: Following the rejection of the initial list for the Supreme Court justice position, the President mentioned that the new slate is composed of Erendira Cruz Villegas Fuentes, Lenia Batres Guadarrama, and Bertha Maria Alcalde Lujan. The President expressed the hope that the Senate will approve the new list, relieving him of the need to personally select a new minister. • The selection process for the Justices in the Supreme Court of Justice: In response to inquiries about a backup plan for the selection process of Justices in the Supreme Court, the President mentioned a plan involving the popular vote for judges and ministers, asserting that he has multiple contingency plans, including plans B, C, and even Z. • Constitutional reform for the reduction of the workday: The President encouraged all sectors to analyze the proposal, fostering debate, regarding the constitutional reform regarding the reduction of the workweek. He emphasized that this is not an issue confined to December 12 or the current legislative period but requires in-depth analysis. He highlighted the significance of considering all factors in the production process with the goal of benefiting workers. The president specified that following this analysis and debate, the federal government will issue an official position. INFRASTRUCTURE AND PROJECTS: • Tren Maya: The Tren Maya is set to begin operations on December 15, according to the SEDENA. Construction in Section 4 is almost complete, with 100% of the tracks installed. ICA and Alstom Mexi-

co reported readiness for the inauguration, with six trains in Cancun. • Inauguration of Felipe Carrillo Puerto International Airport: The President announced the inauguration of Tulum Airport. General Luis Cresencio Sandoval Gonzalez, Defense Secretary, highlighted complementary works to enhance the benefits. The airport will start with domestic flights, transitioning to international flights in March, involving various airlines. Mexicana begins operations on December 26, and international airlines, approved by Agencia Federal de Aviacion Civil (AFAC), start on March 28, connecting Tulum to several cities. • Water situation in Nuevo Leon: The President shared that the El Cuchillo II project will be finished on December 16, providing a water capacity of 5,000 liters per minute. He highlighted effective cooperation with Samuel Garcia, resolving the water problem in a year and ensuring a minimum sixyear water supply with an investment of 12 to 15 billion pesos. The President appreciated the backing of business groups in Nuevo Leon, each of whom took responsibility for a section of the aqueduct, all meeting their obligations.

KEYPOINTS OF PRESIDENT ANDRES MANUEL LOPEZ OBRADOR’S MORNING PRESS CONFERENCE

NATURAL DISASTERS: • Situation in Guerrero after Hurricane Otis: The President addressed efforts to counter organized crime by deploying additional security personnel in Acapulco. He reported progress in hurricane relief, with a high percentage of affected families receiving support. The government has completed pension payments and registered new families for student scholarships. Also, AMLO announced the chancellor is in China to work for agreements with national companies aim to boost production capacity for various domestic items.

NEWS BY STATE

BAJA CALIFORNIA The implementation of Artificial Intelligence (AI) has optimized several processes in industries, making Baja California a pioneer in its use during the last decade due to its close relationship with Californian companies. Jose Luis Villasana Beltran, President of the National Chamber of the Electronics, Telecommunications, and Information Technology Industry (Canieti), highlighted that, despite the recent boom in AI applications in the last two years, the industrial sector in Baja California has led its application, managing to reduce times in production and commercial operations. SOURCE: EL MEXICANO

SONORA More than 30 thousand jobs were generated this year in the state due to investment in the industry, said the president of Index Sonora. Jesus Gamez Garcia indicated that the growth of plants already installed, the arrival of foreign investment, and the attraction of other future investments due to “nearshoring”, are some of the factors that have led to this increase. SOURCE: EL IMPARCIAL

NEWS BY STATE

CHIHUAHUA The state of Chihuahua ranked second nationally in the Industrial Development Index (IDI) 2023, reported the Private Sector Competitive Intelligence Platform (PICsp), with data from the Finsa Industrial Development Index. The Index’s main conclusion was that Nuevo Leon, Chihuahua and Coahuila are the entities with the top three IDI positions, due to a combination of factors among which stand out their high participation in the real estate market, and their leadership in industrial GDP, manufacturing exports and attraction of foreign direct investment. NUEVO LEON According to the Manufacturing Economic Expectations Report prepared by the Nuevo Leon Chamber of the Transformation Industry (CAINTRA), the manufacturing industry in Nuevo Leon remains in an expansion stage. Of the nine indexes included in the study, seven are above the expansion threshold, while two are in contraction. Likewise, five of the nine indexes increased in October compared to the previous month’s results. SOURCE: LIDER EMPRESARIAL

SOURCE: HERALDO DE CHIHUAHUA

COAHUILA The Law of Science, Technological Development and Innovation of Coahuila was amended to establish that the government must support scientific research, technological development, and innovation in the productive sector, especially for micro, small, and medium-sized companies, at the initiative of Congresswoman Mayra Valdes Gonzalez (PAN). SOURCE: VANGUARDIA

NEWS BY STATE

AGUASCALIENTES The Secretary of Planning, Participation, and Development of the State of Aguascalientes, Guillermo de la Torre Sifuentes, highlighted the advances in the digitalization, streamlining and efficiency of real estate procedures in the entity, emphasizing the relevance of the real estate sector for local economic development.

SAN LUIS POTOSI Ricardo Gallardo Cardona, Governor of San Luis Potosi, informed that four new automotive companies are expected to arrive in the state, which are in the process of being installed by the beginning of 2024. The governor informed that this announcement contributes to the dynamism and economic development of the state, which is being negotiated through the Secretariat of Economic Development (Sedeco), so it is expected that in the first quarter of next year, the details of investment and number of jobs will be defined. SOURCE: MEXICO INDUSTRY

According to De la Torre Sifuentes, digitalization and decentralization have considerably reduced waiting times to obtain authorizations, going from delays of up to a year and a half to approximately three months in some cases. SOURCE: HERALDO

NEWS BY STATE

QUERETARO In an effort to strengthen relations with Tier 1 and Tier 2 companies in the automotive industry in Queretaro, the Queretaro Automotive Cluster held the fifth edition of its Human Resources Symposium. This event, which has become a benchmark in the sector, focused on analyzing the labor challenges that are on the horizon for 2024 and highlighting the crucial role that human capital plays in the sustainable development of the industry.

JALISCO According to the American Chamber of Commerce of Mexico Guadalajara Chapter (AmCham), investment by American companies in Jalisco continues at the same pace as in recent years, and this year they expect at least one billion dollars (MDD) to be raised.

The symposium program addressed various aspects, from the identification of labor challenges to the importance of building excellent working environments. The event was not only limited to theoretical discussions but also offered practical activities aimed at strengthening the bond between participants and driving positive change in HR practices.

SOURCE: INFORMADOR

SOURCE: CLUSTER INDUSTRIAL

Fernando Garcia de Llano, president of AmCham, stated that American companies continue to make new investments and reinvestments.

NEWS BY STATE

CDMX CDMX seeks to acquire 2.5 billion pesos in debt by 2024. The Government of Mexico City proposes a net borrowing of 2.5 billion pesos for 2024, a 17% reduction compared to the approved amount in 2023. The capital’s debt balance is 93.4 billion pesos. The proposal aims to maintain zero real terms borrowing from 2018 to 2024, manage debt responsibly, and finance public works, particularly in the area of mobility. SOURCE: EL ECONOMISTA

STATE OF MEXICO Unidem demands reversal of environmental taxes in the State of Mexico. The Union of Industrialists of the State of Mexico (Unidem) has called for a reversal of proposed environmental taxes, asserting that these measures prioritize revenue generation over ecological conservation. Francisco Cuevas Dobarganes, Unidem’s director, has urged Governor Delfina Gomez and the State Legislature to review these taxes outlined in the 2024 state budget. The proposed fiscal package introduces three new taxes, including those on Water Pollutant Emissions, Disposal, Confinement, and Storage of Waste, and Environmental Remediation in the Extraction of Quarry Materials. These taxes, set to take effect in April 2024, could result in a substantial 289% increase in income from this concept. SOURCE: CAPITAL

INVESTMENT NEWS CENTRAL MEXICO EATON Eaton plans to invest $85 million in Queretaro, Mexico, to enhance its manufacturing capacity by 50%, creating about 300 new jobs. This expansion will support the growing demand for energy solutions in various industries. KURABE Kurabe is investing $14 million in Aguascalientes for a plant specializing in vehicle heaters and other automotive components. The investment aims to generate 400 direct jobs initially and 1,600 more in a later phase, contributing to Aguascalientes’ leading role in attracting foreign direct investment in Mexico. ZKW ZKW has invested $102 million in its third expansion in Guanajuato, creating 830 new jobs. The expansion focuses on manufacturing automotive lighting and electronics, with plans to produce around 4.5 million headlights annually by 2026. RENE MADRAS LTD : Rane Madras LTD is investing $31 million in Aguascalientes to establish its first Mexican plant, creating over 300 jobs. The plant will produce steering and suspension systems, strengthening the region’s automotive industry SJM FLEX SJMFlex, a South Korean company, is expanding its operations in Guanajuato, Mexico, with a $1.2 million investment. This expansion includes constructing a new 2,500-square-meter facility, focusing on adapting to changing market demands, and innovating in electric vehicle technologies.

CDMX CIP Copenhagen Infrastructure Partners will invest $10 billion in southern Mexico to produce green hydrogen, replacing fossil fuels in shipping. This aligns with a key project connecting the Pacific and Atlantic oceans, involving several development hubs in Oaxaca. KOPRIMO Koprimo, a Mexican raw materials distributor, has invested about $$860,00 to open a new 40,000 square meter distribution center in Toluca, State of Mexico. The facility, with a 7,600-tonne storage capacity, will serve industries like automotive, offering raw materials for parts manufacturing, lubricants, noise-reducing pastes, brake pads, and antifreeze. SOURCE: CLUSTER INDUSTRIAL