“We are the centre of the world”
After years of structural reform and consistently outward looking economic policy, Mexico emerges as one of the most attractive places to do business in the world. In recent years, the country has undertaken measures to open its market and become more competitive. Today, the manufacturing sector contributes 80% of Mexico’s exported goods. Financial services, however, do not yet play an important role in the economy.
On the occasion of the LFF financial mission to Latin America, Alejandro Hinojos from ProMexico opened the financial seminar with some impressive facts about Mexico. With 12 free trade agreements covering 44 countries, the country has access to two thirds of world GDP and thus offers enormous potential for foreign investors. With a median age of 26, the Mexican population is comparatively young. No other country is closer to the main ports of the world, a fact that lets Mr Hinojos proudly call Mexico “the centre of the world”.
In order to adapt domestic infrastructure to the economic boom, Mexico invests 5% of its GDP in infrastructure projects (this compares with an average of 3.5%). Despite these developments, Europe is not yet on the Mexican map – and Mexico is not on the Luxembourg map either. Only 6% of Mexican exports, worth 19 billion USD, go to the EU, a figure that is far below the country’s potential. The US is Mexico’s largest customer, accounting for 81% of exports.
It is the country’s expanding population of entrepreneurs that are of special interest to the Luxembourg financial industry. That is why Marc Saluzzi, Chairman of the Luxembourg Fund Association ALFI, has three key messages for Mexican asset management and pension fund industry. “Firstly, Luxembourg has a toolbox of investment vehicles that’s Best in Class when it comes to investor protection”, he stresses. Secondly, Luxembourg investment funds are distributed in more than 70 countries around the world, including the Americas, where Chili, Peru, Brazil and Columbia are the main markets.
Those countries are already investing through Luxembourg funds or have fund managers based in Luxembourg that benefit from the cross-border distribution expertise available in that market. Finally, Luxembourg’s flagship product, the Luxembourg UCITS, is the most widely accepted investment fund structure in the world.
As of today, exchange of financial services between Luxembourg and Mexico is still one-sided, because Mexican funds are not yet available for distribution in Luxembourg. In this context, Luc Frieden, Luxembourg Minister of Finance, stressed that this is due to European, not Luxembourg legislation. The Minister’s primary concern is to develop a sustainable relationship between Luxembourg and Mexico.
Asked by a Mexican journalist whether violence is a hindrance to fostering that relationship, Mr Frieden emphasised that temporary difficulties are not at all an issue. “We have great respect for this country are not scared off by temporary events”. On the other hand, Mexicans have their concerns about Europe as well, namely that the European crisis could affect Mexico. Here, the Minister reassured journalists that the Eurozone will soon find a solution together with the rest of the world, since the Eurozone crisis is part of a global problem of high debt and low growth. EA