Wednesday, June 19, 2024

Investment promotional agency ProMéxico looks set to get the axe

International trade and investment agency ProMéxico could be axed by the incoming federal government as part of its austerity push.

All 46 offices of the organization, located in international financial centers including New York, London and Tokyo, are on the chopping block with president-elect Andrés Manuel López Obrador’s transition team taking the view that they generate significant expenses yet do nothing that can’t be achieved through traditional diplomacy.

Under the new government, which will be sworn in on December 1, Mexico’s ambassadors and consuls will be in charge of trade and investment promotion in key business capitals around the world, where trade representatives already work in the country’s diplomatic missions.

At least 10 ProMéxico offices are located within Mexican embassies and a further 10 are in consulates, while the remainder operate out of their own separate premises.

According to the newspaper Milenio, the incoming administration is close to defining the strategy it will adopt to attract new foreign investment including guidelines that will be given to Mexico’s diplomatic representatives.

ProMéxico functions as a trust fund of the federal government and is a subdivision of the Secretariat of Economy (SE).

It was created by decree in 2007 by then-president Felipe Calderón with the aim of coordinating and implementing actions to promote foreign trade and attract foreign direct investment (FDI). It was also intended to provide advice about the benefits in international trade treaties and help Mexican companies export to and establish themselves in foreign markets.

ProMéxico has supported the automotive, aerospace, chemical, food, electronics and metallurgy sectors among other industries.

One example of its work is the promotion of Mexican avocados in China, where sales of the product have skyrocketed this year.

During current President Enrique Peña Nieto’s administration, 40% of US $193 billion of FDI that has come into Mexico is thanks to the work of ProMéxico, according to Economy Secretary Ildefonso Guajardo.

Between 2007 and 2017, the agency attracted 1,126 projects backed by foreign investment, creating 411,000 jobs, including 300,000 over the past six years, SE data shows.

Guajardo said there is not a single developed or OECD member country in the world that doesn’t have a trade and foreign investment agency.

But for the incoming administration, which has already announced a range of austerity measures and appears intent on living within its means, the costs of running ProMéxico are seen as an unnecessary burden.

The agency was allocated a budget of almost 1.1 billion pesos (US $58.3 million) this year of which over 48.2 million pesos (US $2.55 million) went to paying just 20 high-level officials, all of whom received salaries higher than the 108,000 pesos (US $5,725) per month López Obrador has said he will take home as president.

The agency’s chief, Paulo Carreño King, is paid over 277,000 pesos (US $14,700) per month, or two and a half times the president-elect’s proposed salary, which will also serve as a limit for high-ranking officials and lawmakers.

The other ProMéxico offices set to close under the new government’s plan are located in Beijing, Dubai, Shanghai, Madrid and Moscow as well as the most important capitals of South America and the Caribbean and 15 cities in the United States, including Chicago, Los Angeles, Miami and San Francisco.

Source: Milenio (sp) 

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