Global peso boost wanted but not at expense of low-wage Mexicans

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January 22, 2020

Economy Secretary Márquez in Davos this week.

Mexico is willing to enhance its role on the world stage but not to the detriment of the country’s labor force, says Economy Secretary Graciela Márquez Colín.

Though Mexico is inclined to boost its participation in global commerce, lower salaries and low-wage jobs won’t be the price of doing so, Márquez told investors attending the World Economic Forum (WEF) in Davos, Switzerland.

“Last year we had a 16% increase in the minimum wage at the nominal rate, and a 13% increase in real salaries, and this year will bring a new increase of 20% in nominal terms and 17% in real terms,” she said.

In her opening statement at the WEF she said that macroeconomic stability alone will not suffice if it doesn’t result in reduced poverty and economic disparity.

While admitting to zero growth during the first year of the Andrés Manuel López Obrador administration, she predicted a much better outlook for this year and the rest of the president’s term, thanks to the new US-Mexico-Canada Agreement, which is now awaiting ratification by Canada.

One of the key advantages that Mexico provides global and domestic investors is that “there is no social discontent,” she pointed out at the session devoted to perspectives on Latin America. “The Mexican president’s popularity sends a clear sign that we won’t be facing any demonstrations for the rest of his administration.”

Moderated by Alicia Bárcena, executive secretary of the UN Economic Commission for Latin America and the Caribbean, the panel of industrialists at the Davos summit requested an update on investment and new regulations in Mexico. Márquez responded that the Mexican market’s strengthened overseas presence is due to a robust domestic economy that can create well-paid jobs.

“Investors ask us how Mexico will confront the challenges of this century’s third decade,” said the economy secretary. “And in response we want to make it clear that we’re committed to macroeconomic stability, which we understand is key to driving growth.”

Source: El Economista (sp)

Agreement with China opens market to Mexican bananas

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MND Staff

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January 22, 2020

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China-bound: 39 tonnes of bananas were shipped this week.

A shipment of Mexican bananas is on its way to China for the first time ever.

Thirty-nine tonnes of the fruit grown by producers in Teapa, Tabasco, and Mazatán, Chiapas, left the port in Manzanillo, Colima, on Tuesday bound for the world’s second largest economy, where consumers have already developed a taste for Mexican avocados and tequila.

At a ceremony to celebrate the departure, federal Agriculture Secretary Víctor Villalobos Arámbula said the opening of the Chinese market to Mexican bananas was the result of the work done by producers to ensure that they meet the necessary phytosanitary, or plant health, requirements.

Villalobos and a Chinese official signed a bilateral phytosanitary agreement in Beijing in May last year, paving the way for the export of Mexican bananas to the east Asian nation.

The agriculture secretary said on Tuesday that the government will continue to support producers, especially small-lot farmers, so that more can meet the strict import standards for countries such as China.

The Secretariat of Agriculture (Sader), through the National Agrofood Health, Safety and Quality Service (Senasica), will also oversee compliance with standards to ensure that export volumes increase, Villalobos said.

For his part, Senasica chief Francisco Javier Trujillo said that all Mexican banana plantations that will export to China in an initial phase have been certified as being free of pests and having sound agricultural practices.

A Sader certificate will accompany each shipment of bananas to serve as evidence of compliance with the agricultural conditions to which Mexico and China agreed, he explained.

Adrián Prats, president of the National Banana Product System Committee, said that producers will aim to increase their exports without neglecting the domestic market.

Mexico is the world’s 12th largest banana producer, according to the growers’ association, with annual yields of 2.7 million tonnes. About 30% of production is exported to 43 different countries, generating US $270 million in revenue.

The United States was the biggest buyer of Mexican bananas in 2018 followed by Japan and the Netherlands.

Source: El Financiero (sp)

Plane’s raffle may be absurd proposal but buying it was the real absurdity

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Sarah DeVries

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January 22, 2020

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The plane has been a popular target for memes.

My local gym put out a funny promo this past week on Facebook: it showed the presidential plane sitting on the roof and said, “For your convenience, we have special presidential plane parking for when you win it in the raffle — no excuses!”

So far I’ve thoroughly enjoyed the jokes about the presidential plane being auctioned off; if there’s one thing Mexicans are good at, it’s coming up with funny stories to make fun of absurd proposals.

I’d argue that the real absurdity, however, was buying literally the most expensive plane in the world to begin with.

While the idea of raffling it off has met with predictable ridicule, it’s important to remember that it’s not the only option being floated out there. Before we get to the others, let’s take a look at the plane’s origins:

Though purchased in 2012, former president Peña Nieto was actually not the one to get the ball rolling: it was ordered during the administration of Felipe Calderón. The previous presidential plane had been built in the 1980s and it was argued that an update for reasons of safety and security was badly needed.

That’s not to say, of course, that Peña Nieto was against any part of it at any point; indeed, he had no qualms about charging close to 1.3 million pesos on what amounted to toiletries for just two flights — with public money, of course.

Really, how long did government officials believe they’d be able to get away with this kind of thing?

Indefinitely, apparently. Or perhaps they thought (correctly) that the governing Institutional Revolutionary Party was on the way out anyway, so they might as well milk the public coffers for all they were worth.

President López Obrador has repeated these words often: there cannot be a rich government with a poor population. For better or for worse, the presidential plane has been held up as a prime example of the ostentatious and unapologetic wealth of the country’s rulers at a time when half of all Mexicans live in poverty.

These types of comments are timely as, quite honestly, there has been a lot of push-back culturally against obscene displays of wealth. While the uncommonly wealthy government functionaries might have been able to convince themselves that most people were happy for them and thought they had earned and therefore deserved their wealth, that is increasingly hard to do with this planet’s obviously widening inequality.

Which brings us back to Mexico, and being stuck with this ridiculously extravagant plane.

Unabashed liberals like myself have often made the same kinds of quips as the president: “Really, how many families could the money for that new race car track have fed and sheltered?”; “What would the poorest school districts in the city have been able to do with that kind of cash?”; “If only that could have been put toward college or medical debt . . .”

Now that someone who thinks like us — at least in that regard — is actually in a position of power to do something about it, we’re all a bit stunned, staring at the spectacle of a new leader trying to backtrack the old ones’ irresponsible choices with our mouths hanging open.

AMLO has said that various needed services, like adequate water systems in poor communities, for example, could be paid for with the proceeds. As there have been several promises regarding what to do with the money, it’s hard to say where it would ultimately go.

Another, which has been proposed to the United States, is to trade the plane for medical equipment. If this is truly something that’s on the table, perhaps it could offset some of the unexpected costs of our new health system meant to replace the Seguro Popular. Maybe we could even make it free as promised! (You can bet you’ll read more on that in a later column.)

Finally, public works — especially those carried out by workers in the communities themselves — could be funded so that needed improvements could be made by those who understand fully what’s needed and stimulate the local economies, like this one in Oaxaca.

Or, maybe we could just give every Mexican a dollar and some change.

According to the newspaper El Universal, a decision on how to unload the plane will be made by February 15.

Until then, I suppose all we can do is sit back and enjoy the memes.

Sarah DeVries writes from her home in Xalapa, Veracruz.

Veracruz attorney general confirms cousin is Los Zetas chief

By

Cody Copeland

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January 22, 2020

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Hernández's cousin is a senior operator in the cartel.

The attorney general of Veracruz has confirmed that she is a cousin of a senior operator in the Los Zetas cartel.

Verónica Hernández Giadáns admitted her relationship to Guadalupe “La Jefa” Hernández Hervis during a five-hour hearing before the state Congress on Tuesday.

“I’m not going to deny a familial relation. Family isn’t chosen . . . I am only responsible for what I do and say,” she said.

Hernández Hervis has been identified by Veracruz authorities as the chief operations officer of the Zetas gang and a close associate of Hernán “El Comandante H” Martínez Zavaleta, the leader of the criminal organization who was arrested in Tabasco in 2017.

The Veracruz lawmaker said she has not had any contact with her cousin for over 30 years and that she made the relation known during her examination before the National Certification and Accreditation Center.

“Fortunately I mentioned [the relation] at the time I was evaluated and this speaks to my transparency and clear conscience,” she told the Congress.

The former Veracruz public security secretary, Jaime Téllez Marié, was accused in 2017 of being linked to “La Jefa” (The Chief) as well but he claimed that the gang leader was an informant for his department.

The accusation evoked criticism of then governor Miguel Ángel Yunes Linares’ administration, but federal authorities ultimately decided not to charge Téllez with any crime.

Source: Al Calor Político (sp)

53 police investigated in disappearance of monarch butterfly activist

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Cody Copeland

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January 22, 2020

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The Michoacán Attorney General’s Office is investigating 53 police officers in connection with the disappearance of monarch butterfly activist Homero Gómez González on January 13.

The investigations began on Monday with the interrogations of 29 officers from the municipality of Ocampo and 23 from neighboring Angangueo.

The officers were transported to the attorney general’s offices in Morelia by soldiers and state investigative police.

Security operations in the two municipalities were assumed by over 100 state police officers while the investigations are underway.

Attorney General Adrían López and Governor Silvano Aureoles both confirmed that the investigations have yet to produce information into Gómez’s whereabouts or the details of his disappearance.

Gómez, a 'titan of conservation.' — Gómez, a ‘titan of conservation.’

Gómez is the head administrator at the El Rosario monarch butterfly sanctuary in Angangueo. He was last seen around 7:00pm on January 13 in Ocampo.

An official with Michoacán’s human rights commission, Mayte Cardona, said that although the circumstances of his disappearance are still unknown, it is likely that it was related to his conservation work.

“He was probably hurting the [business] interests of people illegally logging in the area,” she told Reuters.

Those who have worked with Gómez said that his efforts have been invaluable to the monarch butterfly species, which migrate thousands of kilometers each year to Mexico through the United States and Canada.

Donna Kelleher, a butterfly conservationist from Granbury, Texas, who has worked with Gómez told Mexico News Daily that “Homero Gómez González is a titan of conservation for the monarch butterfly.”

“Without oyamel trees, the species will not survive. His efforts have included planting one million oyamel trees, all with volunteers, at [the El Rosario Sanctuary],” she said.

For Gómez, butterfly conservation is part of local and family traditions.

“Our grandparents told us, ‘Take care of them. They’re angels,’” he told The Washington Post for an article published earlier this month.

Gómez’s Twitter feed and the El Rosario Sanctuary’s Facebook page are full of photos and videos of the brightly colored insects swarming the forests of Michoacán in the winter.

Gómez posted several tweets on the day of his disappearance. One post is a photo of several El Rosario tour guides in front of the sanctuary entrance. Others are videos of hundreds of butterflies fluttering through the forest.

The organizations Amnesty International and Global Witness reported in October of last year that Mexico is growing increasingly more dangerous for environmental activists.

Global Witness had documented 12 murders of environmentalists in 2019 by that time, and reported that there were 14 in 2018 and 15 in 2017, up from three the year before.

Howler monkey conservationist José Luis Álvarez Flores was murdered in Palenque, Chiapas, last June. A biologist working on a scarlet macaw breeding project, Nora López, was found stabbed to death in Palenque in August.

Sources: Milenio (sp), The Washington Post (en)

Confident investors have ‘insatiable’ appetite for new bond issue by Pemex

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MND Staff

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January 22, 2020

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Demand for new bonds issued by Pemex is five times greater than supply, according to a report by the newspaper El Financiero.

The state oil company announced on Tuesday that it had issued US $5 billion in bonds that it will use to refinance existing debt.

Half of the bonds will mature after 11 years and pay annual interest of 5.95%, while the other half will mature after 40 years and pay 6.95%.

Pemex, which has debt of about US $100 billion even after receiving $9.5 billion in support from the federal government via cash injections, tax breaks and debt refinancing, said that part of the funds raised by the bond issue will be used to repurchase USD debt that matures this year and the remainder will go to refinancing.

The company stressed that it is not increasing its overall debt balance and that it remains committed to not doing so for a second consecutive year.

Unnamed sources with knowledge of investors’ intentions told El Financiero that Pemex has already received offers to purchase US $25 billion of its bonds, which will be sold via eight banks on January 28.

Similarly, an emerging market fund manager with Pictet Asset Management said that the appetite for the bonds is “insatiable.”

Guido Chamorro said that the demand was high because investors have faith that the government will always “rescue” the state-run company if it is unable to pay back its creditors.

However, he added that holding Pemex bonds is not completely risk-free because the state oil company “was already the largest corporate issuer in the world and it will now extend its lead.”

Fitch Ratings downgraded Pemex’s credit rating to junk status in June and if another ratings agency did the same, there would be a massive sell-off of bonds by investors who are required to maintain an investment-grade portfolio.

However, analysts at S & P Global Ratings said in November that they saw no reason to downgrade Pemex debt in the near future, indicating that its credit rating would only move if Mexico’s sovereign rating fell.

In addition to massive debt, the state company’s oil output has been in decline for more than a decade.

President López Obrador, who is determined to reduce Mexico’s reliance on gasoline imports by upgrading six existing refineries and building a new one, declared earlier this month that the federal government had “saved Pemex” and put an end to declining oil production.

However, some analysts disputed his claims and agreed that a second ratings agency would likely downgrade Pemex to junk status.

Source: El Financiero (sp), Reuters (en)

Oaxaca Aerospace’s military plane is first to be designed in Mexico

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MND Staff

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January 21, 2020

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The military plane designed by Oaxaca Aerospace. — The military plane designed by Oaxaca company.

Oaxaca is not just a renowned center of culture, art and gastronomy: it is also home to a company that has made a prototype of the first military plane to be designed in Mexico.

The P-400T is a lightweight attack aircraft made by Oaxaca Aerospace, a company founded by the father-and-son team of Raúl and Rodrigo Fernández.

Raúl Fernández, who is also general director of Oaxaca Airspace’s parent company Traylfer, told the newspaper La Jornada that the P-400T was developed using a homegrown design and technology that is 100% Mexican.

Military aircraft were manufactured in Mexico in the 1960s, he said, but they were copies of existing planes, not original designs.

The P-400T, a prototype of which was presented at the 2019 Mexican Aerospace Fair, will cost US $3 million, Fernández said, explaining that the price is much lower than that of similar aircraft which can cost up to US $11 million.

The P-400T: cheaper to build and cheaper to operate, its designers say.

He said the use of modern aircraft design software has allowed Oaxaca Aerospace to become a world-class aviation company before reiterating that the P-400T’s design is “original – it’s not similar to any other.”

The aircraft is part of “a new generation” of fighter planes, he added, explaining that it only uses 57 liters of fuel an hour whereas similar models use as much as 189 liters.

Fernández also said that the plane can be flown at night and features a propeller that helps the aircraft stay in the air longer in the case of a mechanical failure.

Measuring 4.09 meters high and 8.39 meters long, the P-400T will have a top speed of 550 km/h during a maximum flight time of five hours. The cabin of the aircraft can be ejected in the case of an emergency.

According to Oaxaca Aerospace, the P-400T will be an ideal aircraft for maritime patrols and reconnaissance missions. It is capable of making agile evasive maneuvers and engaging in light attack missions.

Fernández explained that Oaxaca Aerospace has a collaboration agreement with the Secretariat of National Defense because only the Mexican state is authorized to install aircraft weapons.

The company is currently seeking additional investment capital and hopes to begin manufacturing P-400Ts by 2022, he said, adding that it will focus on selling the aircraft to developing countries such as Thailand.

Oaxaca Aerospace has also designed and developed a single-engine, two-seater non-military plane. A prototype of the Pegasus, an agile, fast and inexpensive aircraft, was unveiled in 2015.

Source: La Jornada (sp), Xataka (sp)

Unexpected decline in noise complaints in Mérida

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MND Staff

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January 21, 2020

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This speaker promises to keep things noisy.

There was an unexpected decline in noise complaints in Mérida, Yucatán, in December, according to a city official.

Urban development director Federico Sauri Molina said authorities issued 35 sanctions for noise-related offenses in the last four months of the year but only two were issued in December.

The Mérida government receives an average of 20 to 30 complaints per month, making the December decline unusual especially considering that a high number of parties and other events are usually held in the last month of the year.

The historic center of the colonial city has been known to be particularly raucous, drawing the ire of some expatriate residents.

In addition to responding to noise complaints, Sauri explained that the city government has a team of inspectors that makes the rounds of different parts of Mérida in order to detect establishments that are not complying with noise regulations.

“. . . It’s not just bars and restaurants that have been fined but also other businesses, religious centers and workshops,” he said

“. . . Party halls have been fined, factories, everyone can be punished. The fines range from 25,000 pesos up to 150,000 [US $1,300 to $8,000] if they’re repeat offenders. You can even pay up to 2 million pesos, which is the maximum amount . . .”

Sauri said that authorities also have the power to revoke business permits or shut establishments down temporarily until they can show that they can comply with the regulations that limit the noise levels they can emit.

Source Sipse (sp)

Mexico falls off list of 10 most attractive countries for investment

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MND Staff

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January 21, 2020

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Mexico is no longer among the 10 most attractive countries in the world for investment, according to the 23rd annual Global CEO Survey conducted by PricewaterhouseCoopers (PwC).

Presented Monday at the World Economic Forum’s annual meeting in Davos, Switzerland, the survey asked 1,581 CEOs in 83 different countries the question:

“Which three territories, excluding the territory in which you are based, do you consider most important for your organization’s overall growth prospects over the next 12 months?”

The United States was the most commonly cited country followed by China, Germany, India, the United Kingdom, Australia, Japan, France, Brazil and Canada.

Unlike 2019, when Mexico ranked as the ninth most attractive country for investment, there was no spot in this year’s top 10 for the nation.

The newspaper El Economista reported that it is only the second time that Mexico has been absent from the top 10 in the PwC survey after appearing on the list the previous year. The same happened in 2018 after global CEOs rated Mexico the eighth most attractive country in which to invest in 2017.

Clues to Mexico’s absence this year may lie in the main economic threats identified by CEOs in the regions of North America and Latin America.

Cyber threats, policy uncertainty and trade conflicts were identified as the top three threats in the former region, while populism, uncertain economic growth and policy uncertainty were the top three in the latter.

At least five financial institutions operating in Mexico lost hundreds of millions of pesos in a cyber-attack in 2018, while the state oil company Pemex was targeted by hackers late last year.

Since President López Obrador took office in late 2018, policy uncertainty has been cited by several financial institutions and international organizations as a factor in cuts they have made to Mexico’s economic outlook.

Just last week, the leaders of two influential business groups said that policy changes that are friendlier to the state than private enterprise are scaring away foreign investment.

The third most commonly cited threat for North America – trade conflicts – is now less of a concern for Mexico due to the signing of a revised version of the United States-Mexico-Canada Agreement (USMCA) in December.

However, PwC conducted its survey in September and October last year when there was still considerable uncertainty about the new pact. Just a few months prior, United States President Donald Trump had threatened to impose blanket tariffs on Mexico’s exports if the government didn’t do more to curb migration.

Of the three main threats identified for Latin America, the second – uncertain economic growth – is particularly relevant to Mexico.

The economy stagnated in 2019 and the outlook remains pessimistic as far as the International Monetary Fund is concerned: it cut its growth forecasts for both 2020 and 2021 on Monday to just 1% and 1.6% respectively.

Source: El Economista (sp)

Police detain presumed Nuevo León cartel boss

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Cody Copeland

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January 21, 2020

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Authorities in Nuevo León have arrested the presumed leader of the state’s cell of the Northeast Cartel (CDN) who is also a longtime member of the Zetas cartel.

Rodolfo Garza Briseño, 38, was detained after months of investigations and intelligence gathering by the State Investigations Agency (AEI).

The Nuevo León Attorney General’s Office said five other members of the gang were also arrested.

The presumed gang members were arrested on charges of drug trafficking and weapons possession after a series of operations were carried out in San Nicolás de los Garza and Ciudad Apodaca, which are part of the Monterrey metropolitan area.

Prosecutors said that drugs, firearms and cash were seized in the operations and that the suspects are being investigated for violent crimes carried out in recent months in Nuevo León.

Since March 2018, the AEI has executed almost 300 arrest warrants related to homicides specifically attributed to organized crime.

In 2018, 98 arrests were made, followed by 184 in 2019 and 12 have already been made this year. Of all those arrested, 183 were affiliated with the Northeast Cartel.

Source: El Universal (sp), Excélsior (sp)