Weekly Review I February 7, 2024 by PRODENSA

GENERAL SITUATION IN MEXICO

Weekly Review I February 7, 2024

RELEVANT NEWS MEXICO WILL RECEIVE MORE THAN $9,000 MILLION IN NEARSHORING INVESTMENTS FROM THE MAQUILADORA INDUSTRY BY 2024 Foreign companies will invest $9.05 billion by 2024 in fixed assets acquired through imports to install production lines, plants and factories in Mexico, according to the National Council of the Maquiladora and Manufacturing Export Industry (Index). “The export manufacturing industry foresees foreign investments of 9.05 billion dollars for 2024, considering the fixed assets that companies acquire through imports,” informed the organization, presided by Humberto Martinez Cantu. The organization said that in 2024, a quarter of the announced foreign direct investments will come from companies that do not have a presence in Mexico, although it is assumed that the companies already installed will continue with the policy of reinvesting profits and expanding their plants and production processes. Mexico is currently experiencing a preponderant moment in terms of investment, added the business organization. “The relocation (nearshoring), coming mainly from Asia, has put our country in the spotlight of the world, taking advantage of its geographical location, its trade agreements and treaties, as well as healthy public finances, among other strengths,” he said. Given the current dynamics in technological and labor advances, the maquiladora sector said it wants to consolidate itself in 2024 as the industry of the mind

RELEVANT NEWS

bill, promoting the development of human capital, training and education to increase productivity, playing a relevant role in national and global value chains. “Aware of the political context that Mexico and the United States will experience this year, the maquiladora and manufacturing export industry has had important approaches with the federal government to accelerate the necessary procedures and avoid delays to materialize the largest number of investments,” said Index. As of the third quarter of last year, foreign direct investments made and notified by the government reached 32,926 million dollars, he said. Of this total, 75.64 percent (or $24.905 billion) was reinvestment of profits, 15.84 percent ($5.215 billion)

was intercompany accounts, and 8.52 percent was new investment ($2.806 billion). “Certainly, what IMMEX can capture is encouraging, as there are signs that Mexico as a whole can capture up to $100 billion in the coming years,” he added. By the end of 2023, merchandise exports under IMMEX programs will exceed 220 billion dollars, confirming the strength of the sector in our country. The maquiladora industry generates 3.3 million formal and direct industry-related jobs, representing 18 percent of those affiliated with the Mexican Social Security Institute (IMSS), out of the 6,440 IMMEX establishments reported by Inegi. SOURCE: FORBES MEXICO

KEYPOINTS OF PRESIDENT ANDRES MANUEL LOPEZ OBRADOR’S MORNING PRESS CONFERENCE January 31 – February 6, 2024

POLITICS AND GOVERNANCE • ProPublica’s Investigation on the Financing of AMLO’s 2006 Presidential Campaign: In response to a journalist’s question regarding an article by Tim Golden, which claims that the president’s 2006 presidential campaign was financed by organized crime, AMLO denied these allegations, labeling them as slander and stating there is no evidence to support them. He argued that the media are subordinate to power, and in the case of the United States, certain governmental agencies also exert control over them. When another reporter asked if he believed this was all a setup against him, the president described it as a set-up and dirty propaganda, attributing it to the lack of success of his political opponents. • Mexico’s Outlook Towards Elections: President Andres Manuel Lopez Obrador highlighted that most people are content, poverty has been reduced, and the middle class has seen benefits. He stated that the economy is strong, and the country is progressing with a distinct atmosphere. He reaffirmed that entrepreneurs and bankers have done well, noting that banks reported profits of 220 billion pesos in 2022, with one bank, Bancomer, accounting for 100 billion of that total. Lopez Obrador described the current opposition as different, consisting not of traditional businessmen but of influence peddlers

KEYPOINTS OF PRESIDENT ANDRES MANUEL LOPEZ OBRADOR’S MORNING PRESS CONFERENCE who were allowed to commit abuses in the past and are now upset because they can no longer do so. The president reported economic growth and job creation, with the unemployment rate at 1.6%, the lowest on record. He thanked the business community, which he does not view as the enemy, for their positive contributions. • Elections in Mexico: The president shared that with the upcoming change in government, many people have asked him not to leave, citing unfinished work. He reassured them that the movement he started is unstoppable and will continue, possibly even improving. He noted that his opponents have run out of time and cannot blame their failures on his administration, pointing out their lack of proposals. Regarding the pre-campaign stage, he observed media bias toward certain pre-candidates, contrasting it with the dirty tactics he faced, such as the “danger to Mexico” campaign, which he indicated no longer prevails. JUDICIARY BRANCH • Request for Political Trial Against Crescencio Contreras: Andres Manuel Lopez Obrador criticized the judiciary branch for protecting Crescencio Contreras, a Tamaulipas judge facing a political trial, describing the judiciary as corrupt and lacking principles. He mentioned that there is concrete evidence against Contreras, who is alleged to be a criminal receiving constant judicial protection. ECONOMIC AND LEGISLATIVE REFORMS • Electric Reform: President Lopez Obrador shared a note from Manuel Bartlett, the Director General of CFE, stating that Minister Laynez recused him-

self from voting on a legal injunction against the Electricity Industry Law favoring private companies. The note also declared the vote illegal due to a tie being broken by a deciding vote from Minister Perez Dayan, who chairs the session. An appeal against the decision will be filed. Lopez Obrador reiterated his commitment to preventing electricity price increases, emphasizing that private entities should not control energy to avoid price hikes. He highlighted the importance of CFE maintaining a significant market share, proposing a distribution of 54% for CFE and 46% for private companies to ensure competitive prices. • Constitutional Reforms Presented by AMLO on the 5th of February: President Andres Manuel Lopez Obrador and the Secretary of Government, Luisa Maria Alcalde Lujan, highlighted a package of 20 legal reforms aimed at improving society, including 18 constitutional and 2 legal adjustments. These reforms focus on welfare, fair pensions, minimum wage adjustments, judicial changes, electoral modifications, justice system reforms, environmental protection, animal rights, healthcare, housing for workers, indigenous and Afro-Mexican peoples’ rights, austerity, and transparency. Key proposals include: ensuring that “minimum wage” changes are not set below inflation; setting “Fair Pensions”

KEYPOINTS OF PRESIDENT ANDRES MANUEL LOPEZ OBRADOR’S MORNING PRESS CONFERENCE by seeking to reverse the deterioration of the 1997 and 2007 legal adjustments, so that people receive a fair retirement pension; a reform to the Judicial Branch seeking that the Ministers of the Supreme Court of Justice, Circuit Magistrates, District Judges, Electoral Magistrates and members of the Judicial Discipline Tribunal be elected by popular vote; eliminating plurinominal deputies and senators; extinguishing autonomous and regulatory entities, such as INAI, COFECE, IFT, CRE, CNH, CONEVAL, MEJOREDU; among other reforms. INTERNATIONAL RELATIONS AND BORDER ISSUES • Mexico-United States Relations: The Mexican president blamed the crisis in the United States on its failure to enact essential reforms and criticized U.S. agencies for engaging in subversion, espionage, and blackmail. He condemned the U.S. for its hypocrisy and called for respect for his country’s independence and sovereignty, noting that despite President Biden’s calls for an equal relationship, U.S. agencies operate unchecked, contributing to domestic issues. • U.S.-Mexico Border: President Lopez Obrador mentioned that immigration and drug issues are commonly used in the United States as election topics. He stated that building walls does not solve the migration problem; instead, addressing root causes like poverty does. He questioned President Joe Biden’s remarks on closing the border, noting that such actions would harm both countries, and attributed these discussions to the U.S. electoral period. Finally, Lopez Obrador criticized Texas Governor Greg Abott as anti-Mexican and insensitive due to his immigration policies. Also, President Lopez

Obrador discussed a requested meeting by the U.S. with a delegation led by Elizabeth Sherwood-Randall on immigration issues. Initially hesitant due to being offended by drug trafficking accusations, he highlighted the politicization of immigration by Republicans for electoral gains. Lopez Obrador emphasized addressing root causes in his 10-point immigration stance and criticized the proposed U.S.-Mexico border closure as an electoral strategy. A trilateral meeting with Mexico, the U.S., and Canada officials is set for the following days. INFRASTRUCTURE • Passenger Trains: The president discussed the future of passenger train concessions, mentioning a proposal from CPKC for a Mexico-Queretaro train,

KEYPOINTS OF PRESIDENT ANDRES MANUEL LOPEZ OBRADOR’S MORNING PRESS CONFERENCE potentially extending to Monterrey and Nuevo Laredo, with a study due in May. He indicated an openness to allowing current cargo concession holders to also operate passenger trains and is considering a constitutional amendment to ensure the state can authorize the use of cargo tracks for passenger services. The state will consider three options: running projects directly through a public company, managing some lines publicly and leasing others to private entities, or granting new concessions to existing cargo train concessionaires who present viable projects. LABOR • Audi Workers’ Strike: A reporter mentioned that workers in an Audi factory in Puebla have been on strike for a week and that negotiations resumed on Tuesday, with the company offering a 6.5% raise while workers kept demanding 15.5%. The president responded that he believes an agreement will be reached and mentioned that the Secretary of Labor has kept him informed. He noted this is the only case of a business shutdown or strike involving workers currently reported.

NEWS BY STATE

BAJA CALIFORNIA Tijuana’s industry tends to integrate into the real estate and commercial development that already exists in the city, to shorten the time of employees to the work centers, said Rodolfo Andrade Pelayo, Undersecretary of Investment Management of the Ministry of Economy and Innovation of the state, Rodolfo Andrade Pelayo. He mentioned that there is “interest” on the part of the industrial sector to bring industrial warehouses closer to housing, as is already happening in the 2000 corridor and the Pacifico Industrial Park, where there are shopping centers, housing, and industry. SOURCE: EL SOL DE TIJUANA

SONORA Margarita Velez de la Rocha, head of the state’s Ministry of Economy, announced that the eleventh edition of Cumbre Sonora will be held on February 15 at Club Los Lagos in Hermosillo. At the event, the state’s business owners will be able to talk and listen to worldclass entrepreneurs. SOURCE: PROYECTO PUENTE

NEWS BY STATE

NUEVO LEON Different factors are currently coming together to trigger an accelerated and unprecedented change in the automotive industry in Mexico and Nuevo Leon. The global transformation is driving the sector to enter into digital manufacturing, different propulsion systems, and vehicle electrification, as well as to adopt new environmental regulations and new materials technologies.

TAMAULIPAS The city of Reynosa, Tamaulipas will receive during this 2024 more than 325 million dollars (mdd) of industrial investment, 141% more than in 2023, according to projections of the Secretariat of Economic Development and Employment in the city. Last year, through the electronics, medical, logistics, metal mechanics, logistics, fulfillment, and other aspects of manufacturing, Reynosa accumulated $230 million dollars. SOURCE: MEXICO INDUSTRY

This was stated by Ramiro Montero Cantu, president of the Nuevo Leon Automotive Cluster (CLAUT), during the announcement of the International Mobility of the Future Summit (IMOF), to be held on June 26 and 27 at Cintermex. SOURCE: EL ECONOMISTA

NEWS BY STATE

COAHUILA With investments of more than 15 to 20 million pesos, industrial warehouses are being built in the Central Region of Coahuila that will attract large companies to settle in this area.

CHIHUAHUA Governor Maria Eugenia Campos celebrated the fact that the state of Chihuahua has positioned itself in first place nationally in the generation of formal jobs and as the fourth state with the largest investments.

Alejandro Loya Galaz, president of the National Chamber of the Industry of the Transformation in Monclova, declared that there are at least two large speculative warehouses that are being developed in this zone of Coahuila, which have measures of up to 5000 square meters, as demanded by the investors.

The above, after the work of making investments that allow improving the economic conditions of the state, so the governor said that these investments result in the generation of better-paid jobs for the people of Chihuahua and new business opportunities for entrepreneurs.

SOURCE: VANGUARDIA

SOURCE: EL HERALDO DE CHIHUAHUA

NEWS BY STATE

SAN LUIS POTOSI San Luis Potosi ranked among the ten states in the country with the best economic performance during the first quarter of 2023 compared to the previous quarter, according to the Quarterly Indicator of State Economic Activity (ITAEE). (ITAEE). The report, published by the National Institute of Statistics and Geography (INEGI), detailed that San Luis Potosi grew at a quarterly rate of 3% between January and March 2023, as well as 3.8% compared to the same months of 2022. SOURCE: LIDER EMPRESARIAL

QUERETARO With the intention of boosting competitiveness and the development of technology and information, the Ministry of Sustainable Development (SEDESU) presented its Economic Development Program for Queretaro 2024. Marco Antonio Del Prete Tercero, head of SEDESU, said that in 2023, 300 companies based in the state will be supported with resources from programs dedicated to technological innovation or for the growth of their businesses. SOURCE: LIDER EMPRESARIAL

NEWS BY STATE

AGUASCALIENTES The Secretary of Economic Development of Jesus Maria, conducted the first business module of this year 2024, a series of workshops that were aimed at small entrepreneurs who had a vision of economic improvement and easy access to economic support from the state. JALISCO The first Jalisco Industry Fair, organized by Expo Guadalajara, will take place from November 19 to 23 with the objective of demonstrating the strength, breadth and economic importance of the various industrial sectors and services in the state of Jalisco. This exhibition will undoubtedly revolutionize the industry in the State of Jalisco as announced on February 1st, we will be able to find sectors such as agribusiness, food and beverages, investment attraction, electromobility, government entities, sports industry, primary industries, diverse manufacturing, creative industries, health and science, technology and innovation, meeting tourism and much more. SOURCE: AZTECA JALISCO

Secretary J. Guadalupe Valtierra Perez indicated that around 40 people participated in the modules, which consisted of five training sessions on topics such as administration, accounting, finance, taxation and soft skills in the world of Information and Communication Technologies (ICT). SOURCE: LJA MX

NEWS BY STATE

CDMX Cuauhtemoc borough was the most expensive area for renting in Mexico City in 2023, with average rents increasing by 36% from the previous year. Miguel Hidalgo followed as the second most expensive. The average salary of technicians and professionals rose from 2022 to 2023 but remained below the average rent costs in some boroughs. Rising rents in popular neighborhoods have pushed tenants toward the outskirts and neighboring areas of the State of Mexico for more affordable options. Other boroughs like Benito Juarez and Cuajimalpa also saw significant rent increases, with these areas being highly sought after for their proximity to work and entertainment centers. The most affordable renting options were found in Iztapalapa, Gustavo A. Madero, and the municipalities of Cuautitlan and Tlalnepantla. SOURCE: EL FINANCIERO

STATE OF MEXICO Romina Contreras, the municipal president, inaugurated the first course for certification in real estate sector knowledge in Huixquilucan, State of Mexico, highlighting the municipality’s healthy finances, infrastructure development, and security which have attracted over $2.2 billion in investment. Huixquilucan has been recognized for its economic growth potential, receiving high investment ratings and maintaining a strategy of no new debt for eight years to ensure investor confidence. The area is noted for its high property values, making it attractive for further investment. Local notaries and real estate groups commend the municipality’s secure, growth-friendly environment and the streamlined processes for investment and development, seeing Huixquilucan as a model for other regions. SOURCE: EDOMEX AL DIA

INVESTMENT NEWS

CENTRAL MEXICO ELAM-FAW The logistics company has announced its intention to invest 407 million dollars and create 300 jobs in Colima. SUMINOE TEXTILE The automotive company has announced its inten-

tion to invest 4.1 million dollars and expand its production in Irapuato, Guanajuato. No mention of job creation. QSM SEMICONDUCTORES The semiconductor design company has inaugurated its facility in Corregidora, Querétaro. No mention of the investment amount or job creation. SOURCE: CLUSTER INDUSTRIAL