Thursday, June 20, 2024

Business group urges government to renew investor confidence

The head of the Mexican Employers Federation (Coparmex) has urged the federal government to put an end to the climate of anxiety and uncertainty that is scaring away investors.

Gustavo de Hoyos charged that the López Obrador administration is “highly destructive” to investment and said that it must make the “restoration of confidence” an “absolute priority.”

The warning from United States company Constellation Brands that it could terminate construction of its new brewery in Mexicali, Baja California, and transfer production to another country should serve as a wake-up call for the government, he said.

Speaking at a press conference after signing the United Nations Global Compact, a pact that seeks to encourage businesses to adopt sustainable and socially responsible policies, de Hoyos said that if the government succeeds in restoring confidence, the investment of Constellation and other companies can help Mexico to rekindle growth after the economy contracted last year.

His remarks came after President López Obrador said that a public consultation will be held to decide whether Constellation will be allowed to open its new brewery, which local farmers say poses a threat to the state’s water supply. López Obrador already canceled the previous government’s US $13 billion Mexico City airport project after a legally questionable public consultation, a move that was particularly damaging to investor confidence.

The departure of Constellation, de Hoyos said, would send a negative message to investors around the world. There is “nothing more damaging for the country’s future growth than a sign of uncertainty,” he said.

“Uncertainty could be destructive to the capacity to attract millions of dollars. … The continual reductions to growth outlooks for the Mexican economy in 2020 and 2021 are categorical evidence that there is not a climate of confidence … [nor] the willingness to take action in the short term to reestablish it,” said the chief of Coparmex, which represents some 36,000 businesses across Mexico.

The absence of growth is the fault of the government, he added, asserting that it has undermined investor confidence since it took office in December 2018. The decisions to disband the National Institute for Entrepreneurs, the investment promotion agency ProMéxico and the Tourism Promotion Council have especially hurt small and medium-sized businesses, de Hoyos said.

One positive is that Mexico, the United States and Canada signed a modified version of a new North American trade agreement late last year. The USMCA (only Canada’s legislature has not yet ratified the pact) will help attract greater foreign investment to Mexico, some experts say, because it guarantees tariff-free access to the North American market for the companies that operate here.

Source: El Financiero (sp) 

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