On Tuesday, President Claudia Sheinbaum signed a ‘“nearshoring decree” listing a package of fiscal incentives for new investments worth up to 30 billion pesos (US $1.46 billion).
The incentives will be available for companies investing in Mexico or spending on training and innovation. The decree has been published in the Official Gazette of the Federation (DOF) and will enter into force tomorrow, Jan. 22.
Out of the total funds available, 28.5 billion pesos ($1.38 billion) are earmarked for investment in new fixed assets and 1.5 billion pesos ($72.7 million) will go towards training and innovation expenses.
The decree is part of a range of actions being developed to support Sheinbaum’s Plan México “vision for equitable and sustainable development,” a term-long — if not decades-long — strategy that, in addition to other business targets, is aimed at encouraging foreign investment in Mexico.
To administer the stimulus package, the government will create an Evaluation Committee with representatives from the Finance and Economy Ministries, as well as the Advisory Council for Regional Economic Development and Relocation.
Eligible companies must apply for tax incentives and may be issued a certificate of compliance by the Evaluation Committee. The committee will then assess projects for their suitability and will determine the maximum tax incentive companies can apply for each fiscal year.
To encourage small and medium-sized enterprises (SMEs) to apply for incentives, the government has allocated at least 1 billion pesos ($48.4 million) for companies with total annual earnings of less than 100 million pesos ($4.8 million).
According to the decree, companies can deduct anywhere between 35% and 91% for investments in machinery, equipment and fixed assets.
During Sheinbaum’s presentation of Plan México on Jan. 13, the president asserted that there is already US $277 billion in the investment pipeline from companies that want to come to Mexico, spread across some 2,000 projects.
The Evaluation Committee must publish guidelines for the granting of fiscal incentives in the DOF within 60 days.
With reports from El Economista
Nearshoring makes no sense with a 25% tariff.
Given china can make a car in mx instead of China ship it cheaper to Europe nd other countries , nearshoring makes total sense. also gtrue for other countries.
There’s no indication that the Plan Mexico new incentives were designed to increase nearshoring. That’s probably what outsiders with a view to the US market call it. It sounds like a good plan, at least this part. Mexico is a sizeable market in itself. It’s going after established foreign businesses, but also small entrepreneurs that will come and fail or succeed while providing training and demonstrating innovation. Mexico is taking control of the situation.
Foreign companies offloaded worker expenses to China under similar circumstances decades ago, and China was able to learn from and eventually exceed foreign expertise in manufacturing. This appears to be the Mexican plan as well, but whether or not Mexican increases its export capacity and competitiveness, it’s bound to provide benefits to the Mexican economy and standard of living.
Manufacturing in Mexico historically has been good to save on manual labor but the last socialist president (current socialist president is pushing for more). implemented some measures raising take home pay for these workers to the point that one of my clients already pulled out and went to honduras. Everyone deserves to have a decent salary but you can go too far and lose the manufacturers and they will simply go somewhere else. Obviously the Trump tariff situations will also factor into all this.