#Mexico Our World Tuesday, December 9, 2014 MEXICO Reforms impact the nation This supplement to USA TODAY was produced by United World Ltd., Suite 179, 34 Buckingham Palace Road, London SW1W 0RH – Tel: +44 20 7305 5678 – [email protected] – www.unitedworld-usa.com The newly unified government agenda has removed barriers to Mexico’s socioeconomic progress and created increased freedom of investment in a variety of key sectors that is expected to see GDP more than double this year and a seismic shift in some of its most vital industries

n less than two years, been recorded in the last 30 and our exports will grow are outstanding civil engineering ing impact of the govern- over the next two years, with Mexico has succeeded in years, an average rate of 2.6%. quite optimistic,” President feats, such as the $2.2 billion ment’s far-reaching reforms 80% connected to wind pow- unifying its government And yes, it is positive, these Peña Nieto acknowledges. Durango-Mazatlán Highway, in 11 key sectors – including er generation, 15% to solar around a set of far-reach- are positive figures, but it’s “We’re going to reach that designed to enable safe, the historic Energy Reform – and 5% dealing with biomass ing reforms that are boosting quite evident that we need goal; the forecast for next year speedy transit of commerce have created unprecedented or hydroelectric projects. Iits economy and spurring ac- to increase this rate more, is 3.7%, based on all of the across the Sierra Madre and optimism for Mexico’s fu- Ignacio Galán, Chairman tivity across North America, to have more social devel- groundwork prepared for that Mexico’s northern states. ture, with international insti- and Chief Executive of particularly in the United opment and a better stan- to happen, and the reforms The 140-mile mountain road tutions like the World Bank Spain’s Iberdrola, the largest States. While still in various dard of living for Mexicans. will boost our economy. It is crossing entailed construct- and the IMF applauding the private generator in Mexico, stages of implementation, the Therefore, we needed the re- clear that the implementation ing 61 tunnels and 115 bridg- country’s direction and ma- recently told the Financial benefits of these deep struc- forms. Right now, we are see- of the reforms will not happen es, including the magnificent jor investors lining up to take Times: “Mexico is going to tural reforms have already be- ing signs of a better economy, overnight, and the effect of Baluarte Bridge. It was the part in its resurgence. be one of our main invest- gun to show up. more growth.” each of one the reforms will final piece in completing the IMF Managing Director ment destinations in the next Mexico’s GDP growth is To what does Mexico owe not happen overnight. Most 715-mile Mexican Federal Christine Lagarde recently few years, with up to $5 bil- forecast to more than dou- this bright outlook? The an- of the benefits of these re- Highway 40, which con- declared Mexico “the only lion through to 2018 in new ble this year, compared to swers, experts argue, come in forms, yes, are evident. People nects Mazatlán on the Pacific emerging market country combined-cycle gas turbine last year, when it fell to 1.1%. the form of the newly unified are starting to see the results. Ocean with Matamoros on that has passed such num- plants and wind farms. As a The country is on track to hit government agenda that has But it will take some time to the Gulf of Mexico and carves ber of sweeping reforms, in result, we will be producing the government’s target of removed barriers to progress see the full impact of the re- out a superhighway offering a such a short time, and with more energy in Mexico than 2.7% for 2014, and its GDP and created increased free- forms. And eventually, we’ll 12-hour coast-to-coast drive. such broad political support.” in any other country where goal of 3.7% for 2015 chimes dom of investment in a vari- Since Mr. Peña Nieto took we have operations.” Good with observations from the ety of key sectors. office in late 2012, he has news, as cheaper electricity International Monetary Fund Under Mr. Peña Nieto’s People are starting to see the sought to forge closer links will be vital to powering the (IMF) that Mexico is on its way leadership, competing parties results. But it will take some within Latin America and country’s plans to boost its to a steady clip of nearly 4% an- in Mexico’s government came time to see the full impact of bolster ties with nations fur- industrial competitiveness nual growth from 2016-2019. together to break decades of ther afield. In November, the and attracting further for- During this time, Mexican political gridlock and revamp the reforms. And eventually, President announced that eign interest. GDP expansion will be rough- the country’s economic and we’ll see it reflected in how China and Mexico are to set U.S. Secretary of State John ly double the rate in Canada political system, fundamen- our economy will grow” up a $2.4 billion investment Kerry has underscored the and will surpass growth in tally altering the country’s tra- fund to support infrastruc- special ties that the United the U.S. by more than one jectory. Enrique Peña Nieto, President of Mexico ture, mining, and energy proj- States and Mexico share. percentage point, with this It is difficult to overstate ects, and that the two coun- “There are really few coun- gap widening in the medium the historic nature of the tries are eyeing an oil deal tries with whom the United term. However, these fore- changes in a country where see it reflected in how our In April, the govern- worth up to $5 billion. States enjoys as dynamic casts fail to take into account many powerful institutions economy will grow. We’re ment presented its $596 bil- Mexico’s renewable energy and as close a relationship as the full impact of last year’s have resisted modernization seeing it. Next year we will lion National Infrastructure sector attracted $11 billion in the one that we enjoy with array of reforms. If the strat- for the better part of a centu- see the signs, and in the up- Program 2014-2018 that FDI between 2003-13, with Mexico,” he said. “Our in- egy is carried out as planned, ry. The changes include the coming years, we’re expect- targets six specific sec- wind power leading the pack. terests are obviously inter- Mexico could achieve a 6% opening up of Mexico’s state- ing to have more expedited tors: Communications and The investment came mainly twined in many ways. We are growth rate in the years to owned oil and gas sector to economic growth. And this transport, energy, water, from Spain, Germany and the neighbors, but we also have a come, with an increasingly private investment, a major is the same forecast that we health, urban development U.S. and interest is far from common set of objectives, a competitive set of industries overhaul of the country’s edu- see by financial analysts that and housing, and tourism. on the wane. Trade and in- common set of goals and as- that could propel Mexico past cational system, and new laws know the Mexican economy.” Compared to past infrastruc- vestment agency ProMéxico pirations. And because of our China as the world’s largest restricting the reach of pow- One of the key mechanisms ture plans, it pays special at- announced in September 80 histories, our people are con- exporter to the United States erful monopolies that have available to governments to tention to boosting the com- renewable energy projects nected as closely as any two by 2018, according to The traditionally dominated the encourage economic growth paratively underdeveloped worth $8.5 billion will take off peoples on Earth.” telecommunications sector, ‘and inspire confidence and South-Southeast region, as Economist. “We need higher econom- among other important mea- optimism among investors well as enhancing the North ic development,” President sures that include a stream- and society is public spending and Central regions, and the A UNITED WORLD SUPPLEMENT PRODUCED BY: Enrique Peña Nieto declares. lining of the tax system and on infrastructure investment. government is particularly José Ramón Inguanzo, Editorial Director; “The greatest challenge in the electoral governance. Mexico’s infrastructure ambi- keen for the private sector Livia Mirón, Country Director; area of economics and social “The statistical figures tions rank among the biggest to become actively involved. Marina Carracedo, Country Coordinator; development is that we have about how our industry will on the continent and it has Taken together, these de- and Fátima Ruiz-Moreno, Regional Director reached a higher rate that has grow, how jobs will grow, already completed numerous velopments and the emerg-

Our World Insert is produced by United World. USA Today did not participate in its preparation and is not responsible for its content 2 Distributed by USA TODAY MEXICO Historic deals emerge from world-leading integration

New business ventures unite one of the most extensive economic unions in the world further as Mexico removes barriers to foreign investment

fter years of wait- ing and months of speculation, the results of Mexico’s historic reforms areA starting to become known, with strong impli- cations for investors in the U.S. and across the world. Recent cross-border trade and investment deals illus- trate how the new frame- work opens vital sectors to trade and investment, in a strong step toward the real- ization of a common North American market. In November 2014, U.S. telecom giant AT&T made history with its $2.5 billion purchase of Mexico’s Grupo Iusacell SA, the country’s third-largest wireless oper- ator. The deal gave AT&T 8.6 million new subscribers, but more importantly cre- ated the first-ever wireless provider serving custom- ers in the U.S. and Mexico. The Iusacell deal, a mile- U.S. President Barack Obama with Mexico’s President Enrique Peña Nieto, center, and Canadian President Stephen Harper, right, at the 2014 North American Leaders Summit, held in Toluca, Mexico stone in itself, coincides with another watershed Canada came together at Japan’s Nissan, Germany’s and open its economy to four heads of state met development: the creation the 2014 North American Daimler, and South Korea’s the world, resulting in the in New York at the open- of Mexico’s first private- Leaders Summit in Toluca Kia all planning billion-dollar creation of globally com- ing of the 69th UN General ly owned, independent oil to reinforce cooperation in manufacturing plants in the petitive industries. Assembly in September, company, Sierra Oil & Gas, commerce, education, sus- country. Its pro-regional integra- during which Bloomberg tainable development and In addition, Mexico is tion stance further heightens referred to the four lead- mexico is now the innovation. home to a burgeoning the country’s appeal to for- ers as “the people who are largest exporter This symbiotic relation- aerospace industry that eign investors looking for a moving markets and shak- of flat-screen ship has already helped includes global giants like foothold in Latin America’s ing the world”. TVs and fourth Mexico to become a major Bombardier, as well as am- expanding markets. Mr. Peña Nieto com- biggest exporter global manufacturer, while bitious new startups. Over In June, Mexico assumed mented: “We are involved supporting millions of jobs the past decade, the sector the pro tempare leadership in growth policies that of automobiles in within the U.S. Thanks to has grown from 100 U.S. and of the Pacific Alliance (PA) make compatible the ac- the world, as well its strong industrial base European manufacturers to for a year, with Mexican tive participation of the pri- as the largest car and thriving relationship more than 300 in 2014. President Enrique Peña vate sector with the country manufacturer in with its North American Cooperation at the inter- Nieto hailing the PA “the not losing control over its Latin America partners, Mexico has sur- national level has helped most daring regional inte- natural resources, particu- passed China to become the Mexico to successfully gration mechanism of the larly when it comes to hy- which is backed by $525 world’s largest exporter of modernize its democracy decade”. He later defined drocarbons” million in U.S. investments. flat-screen TVs. Mexico the Alliance – comprising As its key industries These deals signal a new has also risen to become The number of Chile, Colombia, Mexico surge, Mexico will draw level of engagement that Latin America’s largest manufacturers and Peru – as a union of upon its revamped ener- is reshaping an already dy- car manufacturer, and the from the U.S. and open countries “involved in gy sector through the Pact namic relationship. fourth largest exporter of Europe in Mexico’s structural transformations for Mexico, as the country’s autos in the world. About so as to expand social rights Building on one of the aerospace industry recent array of reforms is most extensive econom- one out of every four vehi- and strengthen our demo- known, to increase output, ic relationships in the cles imported into the U.S. has more than cratic institutions”. reduce end-user costs, and world, in February leaders comes from Mexico, with tripled in 10 years The President made the accelerate socioeconomic from the U.S., Mexico and that share poised to rise as comments when the PA’s development for its people.

NAFTA still sets the standard for economic cooperation after 20 years Since NAFTA launched on January 1, 1994, trade between the three nations has tripled to top $1.2 trillion per year and investments have quadrupled

Thanks in large part to Brazil, Russia, India, China, lion today, representing a economy, and Mexico is agreement in the world and the framework established and South Africa, together. 1400% increase. considered the fifth most contained several ground- in the 1994 North American That is how important it is A look at the trade num- open economy in the G20 breaking provisions. Since Free Trade Agreement for the United States and the bers shows a similar story. countries…I believe that then, economists argue, it (NAFTA), the economies same, the U.S. is very impor- Between 1993 and 2013, to- today, the world is defined has helped North American of the U.S., Canada and tant for Mexico, because the tal U.S. trade with Mexico by what happens in specific industries, especially the Mexico have become inte- U.S. is a top destination of increased by more than regions, and when we talk U.S. auto industry, become grated on an unprecedented our exports.” 522%, nearly double the about North America, we more globally competitive level. Since the agreement, While it has at times rate of non-NAFTA coun- need to link ourselves bet- through the development trade between the three has been the subject of in- tries. Mexico and Canada of global supply chains. In more than tripled and now tense debate, many econo- now make up the two larg- U.S. investment in serving as a foundation and tops $1.2 trillion annually, mists credit NAFTA with est markets for U.S. exports Mexico has risen a template for future eco- while investments have qua- helping U.S. manufactur- in the world, together ac- from $15.2bn nomic cooperation, its im- drupled, laying the ground- ing become more competi- counting for one out of ev- in 1993 to over pact continues to be felt work for many companies to tive globally, and its effect ery three dollars the U.S. $100bn today, while strongly today. operate on a continent-wide on trade and investment earns from exports. U.S. ex- By strengthening the Mexican FDI in the basis, tapping into a market on both sides of the bor- ports to Mexico increased framework created two de- that consists of some 450 der has been undeniable. rapidly since NAFTA, leap- U.S. has leapt from cades ago by NAFTA, argues million people and nearly The United States, for ex- ing from $41.6 billion in just over $1bn to Mr. Peña Nieto, “We will be $20 trillion in total econom- ample, represents the larg- 1993 to $226.2 billion in more than $15bn able to generate a stronger ic activity. est source of foreign direct 2013, an increase of 444% synergy to carry out joint “Before NAFTA and af- according to research done ter so we can create syn- efforts to make this region ter NAFTA, we have built according to the by the U.S. Congressional ergy. We need a joint effort a more competitive one. a relationship between UN, Mexico ranks Research Service. U.S. ser- to make this region a more Development that Mexico the U.S. and Mexico, be- in the top 10 of vice exports to Mexico have competitive one.” will show in its energy sector tween Mexico and the U.S,” countries globally also made impressive gains: Mexico’s strong record in without a doubt will make it President Enrique Peña in terms of the U.S. private services exports favor of trade and invest- – this region more competi- Nieto says. “We have been to Mexico multiplied from ment agreements gives cre- tive, and it adds up to what attractiveness of its able to build an intense re- $10.4 billion in 1993 to $27.4 dence to these statements. the U.S. has contributed to, lationship with a growing investment climate billion in 2012. According to figures from specifically in the area of ex- trade growth…We have a Pointing to these numbers the United Nations, Mexico ploiting shale gas, and also trade exchange that ranges investment (FDI) in Mexico. as evidence, policymakers ranks in the top 10 of coun- to have inputs that are more around $1 million a min- Its stock of FDI in Mexico argue that having an active tries globally in terms of the affordable compared to oth- ute. And being Mexico, the increased from $15.2 bil- cross-border marketplace attractiveness of its invest- er places in the world, this is third top trade partner of lion in 1993 to over $100 has proved to be an impor- ment climate, and has signed where we should target our the United States, and the billion currently – a nearly tant asset for the United more free trade agreements efforts. We need to work in second destination of its 560% expansion. While less- States. than any other country in the space of mutual respect, exports, and being Mexico, er known, Mexican FDI in “Mexico is one of the most the world. but we have to link efforts a country that buys more the United States has seen open economies you can At the time it went into and create synergies. We from the United States an even greater leap, moving find in the world,” Mr. Peña effect, NAFTA represent- want a win-win situation than all of the BRICS coun- from just over $1 billion in Nieto emphasizes. “Mexico ed the most comprehensive for North America and each tries together – more than 1993 to more than $15 bil- has decided to be an open and far-reaching free trade one of its components.”

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UNCTAD predicts videncing the rise of the country’s econom- ic prospects, the 2014 World Investment a ‘powerful boost’ Report from the United Nations ConferenceE on Trade and Development (UNCTAD) re- ports that Mexico raked in a re- cord $38 billion in foreign direct investment (FDI) last year, plac- of FDI in Mexico ing it ahead of countries like the UK, India and Germany. The Exceptional openness has transformed Mexico into one the world’s best places to do business report also predicted a “power- and it now ranks among the 10 most attractive foreign investment destinations worldwide ful boost” of investment in the country’s oil and gas sector in Latin American market by capi- chain drives a production surge houses 80% of the country’s pet- us,” says PAE’s Vice-President the coming years, and cited the talization, at over $1 billion, and in the automotive, aerospace rochemical industry, the state Ulises Muñoz. For businesses “We’re now removal of investment barriers by number of firms, with nearly and electronics industries. with the country’s largest re- wishing to enter Mexico, Mr. entering a new In March of this year, former serves of natural gas, and its sec- Muñoz says PAE can “assist in in its telecommunications sec- 1,000, after Brazil’s BOVESPA. era in Mexico tor as among the most impor- MILA aims to facilitate greater U.S. Federal Reserve Chairman ond-largest oil reserves.” their arrival and we provide the tant investment-related devel- capital flows between the mem- Ben Bernanke signaled out the As Mexico continues to open necessary services so that they that will foster opments in the world in 2013. ber countries and among inves- positive steps being taken by its borders, cut red tape and re- can develop their business in an innovation and Likewise, AT Kearney ranks tors worldwide, while providing Mexico, mentioning it as one move investment barriers, it effective manner. We endeavor creativity, and Mexico among the 10 most at- businesses access to global capi- of the countries in the world has increasingly attracted mul- to provide a constant focus on that will bring tractive countries in the world tal markets and encouraging ini- tinational corporations from personnel, training and skills.” competition in which to invest, a huge boost tial public offerings. annual private all over the world. Companies Services provided by the hu- from abroad” over just one year ago when it This steady buildup of vital investment made like Grupo Empresarial PAE man capital outsourcing com- did not make it into the top 25. partnerships and accords has possible under are easing the way to success- pany include payroll adminis- Ulises Muñoz, Vice-President of Further evidence of Mexico’s placed Mexico in an elite group Mexico’s Energy fully enter Mexico. Founded tration, socioeconomic studies Grupo Empresarial PAE ascendance comes from re- of countries worldwide. It now Reform will reach as a Mexican company with and recruitment and selection search done by the investment counts free trade deals and trea- $50 billion by 2020 a global perspective, PAE has to a growing number of compa- ties with 45 countries altogeth- more than 21 years experience nies and industries. Its focus on tential of venturing further firm Goldman Sachs, which and add 2.5m jobs forecasts Mexico’s economy to er, which account for more than providing human resource ser- Mexico has enabled it to steadily afield, into Canada, Colombia become the seventh largest in 60% of the world’s GDP, making and an additional vices to companies, particu- expand across the entire coun- and maybe even Spain, and ex- the world by 2020, while the it the world record holder for 2% to the country’s larly small to medium-sized try since its establishment in pressed an openness to silent Japanese research firm Nomura signing free trade accords. The GDP by 2025 firms, that prefer to outsource 1993, later expanding overseas partners who could become predicts that Mexico will reforms enacted by the current their HR management so they and developing a presence in shareholders in the group as soon overtake Brazil as Latin government, led by President where “things are happening.” can focus more on their core Central America, Peru, and on it develops its business by ex- America’s largest economy, if Enrique Peña Nieto, have given Mr. Peña Nieto emphasizes the businesses. the East and West Coasts of the panding and enabling more new its economic reforms have their Mexico’s economy a further jolt “climate of cooperation, harmo- “Personnel are paramount to U.S. PAE is also eyeing the po- companies set up in Mexico. expected impact. of momentum. Earlier this year, ny, change and transformation “Today, the world is begin- Moody’s upgraded Mexico’s that Mexico is living,” as well as ning to value the optimal and government bond rating to A3, the atmosphere of confidence favorable conditions in Mexico making it the second country in in the country. He also notes for investment,” President Latin America to receive an A “the expectations that today are Enrique Peña Nieto acknowl- rating, after Chile. being created by the structural edges. “Mexico now presents According to Nomura changes, the reforms that we’re itself to the world as a secure Securities economist Benito achieving in total cooperation country, a country that is cre- Berber, FDI in Mexico’s ener- and agreement with the politi- ating favorable conditions to at- gy sector alone will increase by cal institutions of the country, tract productive investments.” $10 billion annually, starting the government of the republic, in 2016, while Gabriel Casillas, with broad support and social Japanese research Chief Economist at Grupo consensus.” firm Nomura Financiero Banorte SAB, esti- The President, who begins predicts that Mexico mates that annual private in- his third year in office this will soon overtake vestment made possible un- December, also underlined Brazil as Latin der Mexico’s Energy Reform the benefits he expects this America’s largest will reach $50 billion by 2020. will bring to all Mexicans. “We Government forecasts, mean- are working toward making economy, if its while, show that accelerated ac- Mexico a destination for pro- economic reforms tivity in the energy sector will ductive investments that create have their expected boost the country’s overall eco- jobs and, most of all, well-paid impact nomic output by an additional jobs, jobs that extend security, 1% and create close to half-a- ongoing training and the op- Since the 1990s, Mexican million jobs by 2018, on the way portunity for individual growth leaders have worked to cultivate to generating 2.5 million jobs to workers, within the develop- a positive environment for en- and adding an additional 2% ment opportunities offered by trepreneurism, investment and to the country’s GDP by 2025. the companies that come to do trade. Building on the founda- In an additional boost to business in Mexico.” tion laid by the NAFTA agree- companies wishing to do busi- Many of these opportuni- ment, Mexico has gone on to se- ness in Mexico, it benefits from ties are being discussed be- cure groundbreaking pacts with virtually unfettered access to tween heads of state at this globally important trade part- the world’s largest economy year’s Ibero-American Summit. ners. In 2011, Mexico became a through a 2,000-mile border, In the host state of Veracruz, founding member of the Pacific the signing of numerous agree- Mexico, presidents from across Alliance, a regional integration ments and accords protecting the region focus on measures initiative that counts Chile, the rights of investors, the pres- to improve economic coopera- Colombia, Mexico and Peru as ence of an open and transpar- tion and human development. its members. Years of prepara- ent legal and regulatory system, Participants have the chance tion and increasing coopera- and a very young and increas- to see firsthand the progress tion culminated in early 2014, ingly well-educated population. that Mexico has achieved, par- when Mexico joined the Latin More than 60% of Mexico’s 112 ticularly within its energy sec- American Integrated Market million citizens are 35 years or tor. “I emphasize the Energy (MILA), which links equity younger. And there are signs Reform because Veracruz will markets in Mexico, Chile, Peru that Mexico’s industrial base is be the principal beneficiary,” and Colombia into a single trad- developing important synergies, says Veracruz State Governor ing platform. With the entry of as an increasingly dense and Javier Duarte de Ochoa, “be- Mexico, MILA became the first capable foreign-owned supply ing that we are the state that

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States react to unprecedented reforms to reshape the nation Over the first 20 months of President Enrique Peña Nieto’s administration, 11 structural reforms were passed by Congress, six of which specifically target increasing the country’s productivity and growth: labor, education, economic competition, finance, telecoms and energy “I’ve been here many times, n Mexico, change and “The Financial Times ranks Labor laws that might have “Our priority now is to that 48-year-old President but I am very reform may entail po- us one of the five best states made sense in a 19th-century boost development in the Peña Nieto “symbolizes this impressed with litical risk, though no to invest in Latin America industrial society proved of north of the state with a generational change, and he the course of one doubts that the re- and among the top 10 in the little use in a country where highway from San Cristóbal demonstrates it by having the reforms, wards can be considerable. world.” 95% of the people work in a to Palenque,” says Chiapas’ made very brave decisions. the Mexican ButI even the worthiest initia- Mr. Lozano de la Torre family-owned or other type Governor Manuel Velasco Through commitment and economy tive may come up short when is very upbeat about the re- of micro-enterprise with Coello, who has a lengthy leadership he has achieved and the its implementation becomes forms package, saying they fewer than 10 employees. wish list of modern highway the necessary consensus to determination a top-down process orches- are going to benefit all the But the presidential reforms and rail links. go forward with the reforms of the team” trated from the Mexican cap- states and all Mexicans. will allow them to enjoy ba- Much as the people of package in just one year.” ital. To minimize that risk, “Mexico is transforming itself sic benefits such as unem- Chiapas value the high-alti- For his part, Rubén Christine Lagarde, President Enrique Peña in ways that other countries ployment coverage for up to tude pine groves, coastal la- Moreira Valdez, Governor of Managing Director of the IMF Nieto took care to line up are incapable of doing. This six months and a pension for goons and tropical rain for- Coahuila, the logistical clear- the support of local officials is going to bring about higher retirees. ests that make their state “the ing center and manufactur- “the Structural and state governors for his economic growth and pro- Other measures address green lung of Mexico” they ing base for exports to the bid to turn around Mexico’s mote greater national wellbe- the issue of off-the-books still need a reliable telecom- U.S. and Canada, welcomes reforms reputation as the land of un- ing, as well as attract foreign employment, a huge prob- munications network to hold the reforms as “the neces- approved in realized possibilities. investment,” he states. lem affecting anywhere from everything together. That was sary step to compete with Mexico will Under the Pact for Mexico, the world.” allow sustained an unprecedented cooper- While every single one of growth to ation accord between the the reforms is intended to en- continue for the country’s three mainstream hance the economy and well- next 50 years” political parties, congress being of the people in the me- passed legislation that shook dium to long-term, it is per- José Ángel Gurría Treviño, up the education, telecom, haps the Energy Reform that Secretary General of the OECD financial and labor sectors, has sent the biggest shock- among others. Five of those waves through the world, “We had prepared measures required amend- and many state governors to comply with ments to the constitution. are watching closely, and act- the reforms by Economists at the ProMéxico ing accordingly. import-export promotion “The greatest challenge investing in new board say that once they are for Coahuila is to make the generations fully up and running, they best of the Energy Reform in of trained could attract foreign direct two ways,” says Mr. Moreira professionals” investment on the order of Valdez. “To become an oil $40 billion per year. producer, which for the time César Duarte Jáquez, “The most important eco- being we are not, and to take Governor of Chihuahua State nomic change in the past 50 advantage of the less expen- years,” is how the President sive and more competitive “the free trade described the decision to production of energy.” pacts that the open up the country’s rigid Coahuila is also in a good government energy sector to private capi- position to harvest solar and has signed tal, and it may be an under- wind energy, and with its in- allow us to statement at that. stallations “out in the desert”, export to over However, the reform dy- there is little in the way of 100 countries namic did not stop there. conflict and infrastructure Even a relatively resource- is easier to build. around the rich, export-savvy, geograph- The Energy Reform is al- world” ically advantaged state like so being tracked closely northern Chihuahua has a in Veracruz, the Gulf rim Carlos Lozano de La Torre, to-do list, with education state that is home to 80% of Governor of Aguascalientes State at the very top of it. “We’re Mexico’s booming petro- trying to achieve tangible chemical industry, its largest “Our priority results through education, gas reserves and its second- now is to boost infrastructure, and the re- largest petroleum reserves. development in forms promoted by the pres- “Ultimately, the Energy the north of ident, improving the level Reform means employment, the state with a and quality of people’s lives,” development, welfare, im- highway from says Chihuahua’s Governor, provement in the people’s San Cristóbal to César Duarte Jáquez. “The quality of life,” highlights Palenque” education reform is an es- Veracruz Governor Javier sential tool for us. In fact, we Duarte de Ochoa. “In fact, Manuel Velasco Coello, had prepared to comply with even before the changes were Governor of Chiapas State the reforms by investing in implemented, private invest- new generations of trained ment had already begun to professionals.” arrive. In Coatzacoalcos, a “We are in a Mexico spends more mon- Mexican group – alongside good position ey on educating its children an American one – already to harvest solar than any country in the world invested $4.5 billion and cre- energy and we with the exception of New ated 14,000 jobs.” also we have a Zealand, but results were less Just inland from the Gulf, very high wind than satisfactory. National Although Aguascalientes 30% to 60% of the workforce what the President promised the resource-rich state of quality ” standards for evaluating stu- can proudly say there hasn’t that deprives the government them when he made one of his Nuevo León is Mexico’s dents and teachers have now been a strike in the state for of revenues and workers of frequent visits to the state last top FDI earner, and there Rubén Moreira Valdez, taken effect, and merit rath- the last 46 years, elsewhere in the protection they are enti- September. seems to be no slowing down. Governor of Coahuila State er than seniority becomes Mexico, the power wielded tled to. Incentives for employ- “We can’t just sit back and Governor Rodrigo Medina the determinant in hiring, by trade unions has long been ers to hire more women and do nothing, so that’s why we de la Cruz proudly states “The economic promotion and tenure deci- a divisive issue. President first-time entrants to the la- are pushing for telecom- that his was the first state growth we have sions. At the same time, stu- Peña Nieto moved to curb bor market were also adopted munications reform,” the to publish a plan for the en- experienced as a dents going the university their veto power and modi- at the President’s insistence. President pledged. “It will ergy sector. result of public route will have their right fied regulatory rigidities that, In Chiapas, in Mexico’s permit the most remote and “We know that our oppor- to enrollment guaranteed by making it prohibitively ex- deep south, the reforms have distant parts of the country tunities lie in exploitation investment and a scholarship available pensive to dismiss or lay off received a warm welcome, to have Internet access, not itself due to our presence in is leading when required, in keeping workers, had acted as a brake particularly the one laying just in the big cities, but ev- the Burgos basin and we are to private with their constitutionally on hiring them. down strict rules for the ten- erywhere, to stay connected aware of all the services that investment and enshrined right to a quality der and execution of public with the rest of the country.” will be needed as a result of job creation ” education. with the exception works contracts, ensuring Access apart, the reform the exploitation of energy re- Running in a dead heat of New Zealand, that both the work and the also opens up the former sources. We want it to turn Javier Duarte de Ochoa, with Chihuahua for the title Mexico spends government’s payment for monopoly telecom sector into the Houston of Mexico,” Governor of Veracruz State of 2013’s economic growth more money on same will be delivered at the to competition and modi- says Mr. Medina de la Cruz. champion is Aguascalientes, educating its stipulated time. fies the pricing framework Nuevo León, he adds, also “In 2011, we had an inland state small in size, children than The other area being close- for the services these com- boasts highly skilled human $1.7bn in FDI, thin in population, and low ly monitored in Chiapas is panies provide, eliminating capital. “We have the most any country in by 2012 it was on natural resources, yet it transport and telecommu- domestic and foreign roam- prestigious research univer- $2.7bn. this year still gets the best credit rat- the world and nications infrastructure, ing charges and establishing sities in the country and a we are expecting ing of any Mexican state, to the reforms will which is off to a flying start a flat per-second tariff for cell high level of technical educa- say nothing of praise for its provide schools locally with the construc- phone calls. tion; our lowest level activity to exceed $4bn” living standards. with greater tion of the new airport at An exceptionally young here is advanced manufac- “Forbes magazine calls management Palenque that accommo- governor himself, Mr. turing. We are also growing Rodrigo Medina de la Cruz, Governor of Nuevo León State Aguascalientes the Jewel autonomy dates visitors to the breath- Velasco Coello stresses the in research and science, and of Mexico,” says Governor taking ruins of the Mayan importance of “generation- at the same time, our strate- Carlos Lozano de la Torre. city of that name. al renovation”, and notes gic location is also a help.”

Our World Insert is produced by United World. USA Today did not participate in its preparation and is not responsible for its content Distributed by USA TODAY 5 MEXICO Energy industry faces its greatest challenges ever

The liberalization of Mexico’s energy industry is reducing the dominance of the state-owned giant Pemex, heralding a seismic shift in the sector and a spurring a new lease on life for the oil company’s operations

weeping reforms now funds to improve the country’s under way represent dilapidated education, health- a historic overhaul of care and social benefit pro- Mexico’s energy sec- grams, as well as spur clean en- tor and will play out over the ergy and infrastructure projects. nextS 10 to 15 years. “The Energy “Under this framework Reform opens a great opportu- and with everything that has nity for Mexico, and we need been happening in Mexico – to seize it with full and rapid macroeconomic stability and implementation,” President healthy finances combined Enrique Peña Nieto said when with a competitive industrial the reforms were signed into organization in leading sectors law in August. “I’ve told the gov- – the country will be able to ernment to accelerate all of the make the most of all it has,” says measures necessary to put this Francisco Salazar, the President reform into action for the good “the reforms “Pemex faces of Mexico’s Energy Regulatory of Mexico.” represent the the biggest Commission. The country’s energy in- most profound challenge in “It also means Pemex and the dustry has long needed such a entire sector will have to learn makeover. Mexico is the world’s transformation its history, to to become more competitive sixth largest producer of hydro- of the economy compete all because the business model and carbons with reserves of crude [and] attracted along the value the market organization we had oil estimated at 10 billion barrels international chain [and] for before the reform was a closed and 17 trillion cubic feet of natu- attention for the first time in one which didn’t allow compe- ral gas. Yet its state-owned and their impact” an open market” tition,” he adds. operated petroleum company, Shaking up the ailing Pemex, Petróleos Mexicanos (Pemex), Pedro Joaquín Coldwell, EMILIO LOZOYA Austin, from how it does business to which has controlled the sector Secretary of Energy CEO of Pemex how it operates its fields, could for more than seven decades, not come at a better time. This has been stalled in exploiting the summer, the company an- country’s underground riches nounced that it had to lower with falling production, anti- President Peña Nieto represent says the company’s CEO, Emilio its crude oil production forecast quated equipment and hide- the most profound transforma- Lozoya Austin, who notes that for this year to 2.35 million bar- bound labor practices keeping tion of the Mexican economy in the changes “will allow Pemex rels per day, the lowest annual Mexico from realizing its true many years and are the result to compete with other compa- output in decades. energy potential. of a broad national consensus nies for the first time in an open Plus, according to its most “We were the country with that has attracted international market.” recent financial data report, the greatest energy riches attention for their impact and As well as dragging Pemex in- Pemex posted a $4.4 billion on the whole continent, ex- for the growth they will generate to the modern world to make it loss for the third quarter, al- cept for the United States and for years and decades to come,” more competitive, the reforms most double the figure for the nonetheless we didn’t make states Mexican Secretary of have a number of aims, which same June-September period the best of it,” explains Marco Energy Pedro Joaquín Coldwell. include attracting foreign tech- in 2013, blamed largely on fall- Antonio Bernal, the President “With these changes, it is esti- nology to the country’s vital pe- ing production and a drop in of the Energy Commission of mated that Mexico could boost troleum sector, and boosting exports. the Lower House of Deputies. its crude output from the cur- production – and therefore Pemex’s crude oil output hit “Our reserves were dropping, rent 2.5 million barrels a day to earnings – from Mexico’s prime a record 3.4 million barrels per pate in bids. We think it has the the reform will open up invest- we didn’t produce enough, we 3 million in 2018 and 3.5 million national resource. day in 2004 and government capacity and the structure to be ment for refining,” notes Mr. hadn’t worked on our infra- in 2025,” he says. “Regarding Indeed, Pemex accounts for officials and industry experts a very competitive company.” Coldwell. structure in ages and we squan- natural gas, production will rise a third of Mexico’s government argue that the new day dawn- In addition to increasing its Pemex has earmarked $2.8 dered almost all our resources in from today’s 5.7 billion cubic revenue; in other words, the ing for the company will help role, alone or with partners in billion to upgrade five refiner- running costs,” he adds feet per day to 8 billion in 2018 company is currently respon- reverse its decline in both pro- upstream exploration and pro- ies to produce cleaner gasoline Under the laws establishing and 10.4 billion in 2025.” sible for paying for one out of duction and general operations. duction, Pemex also has ambi- and diesel, and will spend $2.5 this new regimen, private and The government has allotted every three schools, one out of But it won’t happen overnight. tious downstream plans, spe- billion to expand the country’s foreign investors are being in- 83% of the country’s potential every three hospitals, and one “We’re going to give Pemex cifically in refining so Mexico largest natural gas pipeline, vited in to help relaunch the reserves to Pemex, which it can out of every three miles of roads. a certain amount of time to can become closer to full self- which will one day feed gas from Mexican oil industry into the develop on its own or in part- The expected increased cash prepare itself,” comments Mr. sufficiency in gasoline supplies. the United States across the bor- modern age and expectations nership with multinationals. flow triggered by the reforms Bernal. “Pemex has to be more “Our low refining capaci- der and south to central Mexico. are high that Pemex, and soci- “Pemex faces the biggest will bring economic growth, flexible in its decision making ty means that we have to im- All ambitious plans, and the ety, will benefit. challenge in its history, to com- create tens of thousands of new and now it will compete with port almost 50% of our nation- historic company certainly “These reforms started by pete all along the value chain,” jobs, and provide badly needed others as an equal and partici- al gasoline consumption and looks to have its work cut out. Oil services ready for expansion Service providers in the energy sector are prepared for productive alliances with new foreign entrants to the market, placing quality over quantity

oised to get in on the American companies con- ground floor in the templating an alliance must expected boom in oil be convinced that the Mexican and gas-related busi- partner is a serious player and ness flowing from Mexico’s will be able to manage any op- energyP sector reforms is Oil portunities that arise. International Services (OIS). U.S. petroleum firms and It already has experience Mexican companies can be an working with international excellent fit, Mr. Bustamante de companies, especially U.S.- la Parra argues, drawing on his based firms, and is counting long experience in the indus- on further contracts as the try on both sides of the border. sector expands. “Mexico lags in terms of “We’ve had this vision of technology, while the United anticipating the market for a “Since our States is the leader in terms of long time and this is actually early days technology development,” he one of the key factors in the we have had says. “But many companies in success of this company,” ex- international the United States don’t have plains OIS Director General exposure and the know-how in terms of do- Eric Bustamante de la Parra. we understand ing business in Mexico. OIS is “We’ve been able to under- the ideology of a good partner in this regard.” stand trends and consolidate multinationals” Mr. Bustamante de la Parra those niches where we saw an suggests that foreign com- opportunity,” he adds. Eric Bustamante de la Parra, panies that want to come to Proof of this forward look- Director General of OIS Mexico take the time to study ing attitude is OIS’s move sev- the market, choose the right eral years ago into providing partner and then move in. offshore services and invest- OIS has a proven track record in engineering, construction, installation, commission, operation and maintenance services “There are many large com- ing in drilling projects – just panies that work in other mar- the kind of activities that are solutions through our own “Companies that do have “Since our early days we it is not interested in hooking kets perfectly but don’t suc- expected to take off once new resources and in cooperation all of this in place can play in have had international expo- up with just anyone nor taking ceed in Mexico where you players, both foreign and do- with our major partners to pro- this market and are ready to sure and we understand the on too many alliances. “We are need a lean and efficient or- mestic, seize the opportunities vide the best technology at the form partnerships with inter- ideology of multinationals, es- not,” he declares, “looking to ganization to be successful,” presented by the overhaul of most competitive prices.” national players,” the director pecially American companies, form 200 joint ventures around he explains. Mexico’s energy sector. Not all Mexican compa- general says. and we have representative of- the world. We only want truly The DG of OIS says that the “Now we are experts in the nies operating in the petro- Over the past several de- fices in the United States,” Mr. productive alliances.” reforms come at just the right field and recently OIS has been leum sector are ready to meet cades, OIS has provided engi- time for his company, as it is awarded a number of con- the new demands that the gov- neering, construction, instal- Although U.S. companies lead in technology eager to grow and expand in- tracts, even though we had to ernment reforms will unleash. lation, commission, operation development, they could benefit from partnering to new fields and help Mexico compete with the biggest com- There are many such firms and maintenance services, as with local firms for their invaluable know-how become a prosperous and for- pany in the sector. And with that have grown from small, well as labor supply and turn- in terms of doing business in Mexico ward-looking nation. these reforms, we can propel family-owned and run enter- key/EPC projects. “We are committed to our exploration activities, es- prises that have not evolved It has worked extensively on Bustamante de la Parra says. Attracting a foreign part- our country and we want to pecially in mature petroleum along with the market. projects with Pemex, both in “We are open to new, long-term ner for Mexican companies prove that Mexican compa- and gas fields,” he says. Meeting the rigorous de- Mexico and other parts of the partnerships and to further de- can be an arduous process be- nies can lead the way in the “It’s not about what we want mands of global investors world, so while the company is velop our lines of business.” cause there can be, as in any oil and gas industry,” he says. to do, but rather it’s about what means these companies must in good stead for further coop- But the executive is adamant such potential tie-up, concern “All the stakeholders in this we have done that provides a have good governance, trans- eration with the state-owned that the company can be very as to whether the local outfit sector have lined up behind true picture of the company. parent procedures and effi- petroleum giant, OIS is also ea- selective in choosing partners will be able to fulfill its end of the President to fulfill our na- We have learned to integrate cient practices. ger to work with multinationals. which compliment OIS and the bargain. tion’s potential.”

Our World Insert is produced by United World. USA Today did not participate in its preparation and is not responsible for its content 6 Distributed by USA TODAY MEXICO $50bn in new investment by 2018 A new ‘El Dorado’ for private-sector participation and partnerships in the energy sector has opened and investors are betting millions on its gas potential

Fermaca’s Supervisory, Control and Data Acquisition (SCADA) system is one of the most modern in the country Mexico will need more than $10 billion in capital investments in natural gas infrastructure over the next five years

ne year after sector and the states’ assets, like Diavaz, adds: “This gives us the ing in the international invest- an opportunity to connect the of the Year’, a ‘Megaprojects’ Mexican legisla- Pemex, are not for sale. It is also chance to create alliances with ment community was evident abundant shale gas supply in the award for best infrastructure in tors gave the green clear that the resources, as in big companies that can pro- in February 2014 when Partners United States with the growing the country, and ‘Energy Firm light to the historic many parts of the world, are still vide us with new technology Group, a Swiss-based global natural gas demand in Mexico. of the Year’. bill that ended the state-owned owned by the nation.” and funding. I believe these re- private equity firm, acquired a We are extremely impressed “We have done well; we have oilO company’s 75-year strong- Mr. Salazar admits that forms will make us more ag- majority stake in Fermaca in a with the Fermaca management shown that we can match any hold on crude production, Mexico’s selling off its banks, gressive and open up the mar- transaction of a reported $750 team and look forward to build- company worldwide. Our com- the once hidebound Petróleos telecoms and railway opera- ket even more.” million. ing a leading energy player in munications systems, for exam- Mexicanos (Pemex), which has tions was badly bungled and “Our hopes concerning the Jean Perarnaud, Managing the region.” ple, are the newest and most in- long been shy of working with that the government learned reforms are very high,” says Director in the Private Fermaca’s founders, novative in the country; they are foreign concerns, is sealing ac- from its mistakes. Others say Carlos Arriola, the Director Infrastructure team at Partners Fernando and Manuel Calvillo products of intelligent and cal- cords with major private-sector that the measures allowing big General of the Igasamex gas Group, stated in the compa- Alvarez, also stated: “Mexico culated preparation, supported enterprises that are expected multinationals to operate will transport company. “We be- ny’s press release: “Our invest- will need capital investment by large investors. We just in- to channel tens of billions of inevitably crush the smaller, lo- lieve they can completely invig- ment in Fermaca is an exciting of over $10 billion for natural vested $3 million in our SCADA dollars to the country’s energy cal companies in the sector. But orate Mexico’s energy sector, addition to our portfolio as a gas infrastructure over the next sector. executives say they welcome which carries so much weight core investment in energy in- five years to meet its targeted Impressed with the speed at the changes and are looking for- in our economy.” frastructure. Mexico’s growing growth plan. With the abun- Investing in a new which the Mexican President ward to the new scenario. A clear indication of the con- economy will be supported by dance of projects planned, and country can be Enrique Peña Nieto is push- Luis Vázquez, the President fidence the reforms and the sec- increasing amounts of natu- the very favorable political and daunting for even ing through groundbreak- of oil services provider Grupo tor’s liberalization are inspir- ral gas and Fermaca provides regulatory framework provid- the largest and ing reforms that were all but ed by the Reform, we find the most experienced unthinkable just a few years current environment extremely multinational ago, major multinationals like attractive to continue building, and to ensure ExxonMobil, BP, Petrobras, owning and operating new gas the process is as Chevron, Shell and many oth- infrastructure assets. We are painless as possible, ers are already lining up to get a excited to be partnering with piece of the action and industry Partners Group in this manage- foreign firms players say it can only help the ment buyout, a firm that shares should engage a state-owned oil company over our ambition and vision for our local partner the long term. continued, sustainable growth In one of the latest such deals, and success.” in October 2014, Pemex execu- Fermaca operates two ma- (Supervisory, Control and Data jor natural gas pipelines: the Acquisition) system, which can 237-mile long Tarahumara today operate the entire pipe- A first phase of Pipeline, which supplies cheap line network in the country via tenders in 2015will natural gas from the U.S. to satellite.” The system constantly open up some nearly 2 million people in the checks parameters such as pres- 169 onshore northern state of Chihuahua sure, temperature and humid- and offshore via an interconnection at the ity of the gas in real-time to en- exploration and U.S.-Mexican border. The oth- sure an uninterrupted supply extraction blocks er main pipeline is the Palmillas of natural gas and strengthens pipeline in the state of Toluca, the company’s assurance of its which is operated by the natu- systems being totally reliable. tives signed a cooperation agree- ral gas transportation company Fermaca is also developing ment with U.S. petroleum giant Tejas Gas de Toluca, and has compression, cogeneration Exxon Mobil to jointly study been supplying the gas needs and liquefied natural gas (LNG) upstream and downstream op- of various business parks and projects. “We are building the portunities in oil and gas ex- industrial areas in Mexico State country’s biggest gas compres- ploration, production, refin- without interruption for more sion station in Soto la Marina ing, storage and transportation. than a decade. via a joint venture with Enagas, According to the President of Mexico’s state-owned elec- which requires an investment of ExxonMobil Ventures Mexico, tricity utility, the Comisión $150 million,” says Mr. Calvillo Enrique Hidalgo: “Mexico has Federal de Electricidad (CFE), Alvarez. The project involves really captured the imagination awarded the contract to the ownership, design, con- of the world energy sector.” Fermaca in 2011 for the en- struction, operation and main- Similar agreements are ex- gineering, procurement, con- tenance of the new compres- pected to give Pemex, and the struction and operation of sion station in Tamaulipas State industry, a new lease on life and the Tarahumara project, al- that will be able to compress generate an estimated $50.5 bil- so known as the, Chihuahua natural gas from 570 million lion from new private and for- Corridor gas pipeline. Its bid cubic feet to a maximum dai- eign investment by 2018. beat a French-Spanish consor- ly amount of 1846 million cu- A first phase of tenders in tium and also a U.S.-Pemex joint bic feet, from a pressure of 698 2015, known as Round One venture. So what did it mean for psig to 998 psig. According to and expected to be followed by the private Mexican compa- the company, natural gas will two further rounds, will open up ny to surpass the all-powerful be received from the national some 169 onshore and offshore Pemex in a project as important pipeline system’s primary trunk oil and gas exploration and ex- as this pipeline? line, compressed at the Soto La traction blocks covering a total “It represents a 360-degree Marina Compression Station, of 11,000 square miles. change,” says its president, and then finally fed back into “I believe the reforms should Fernando Calvillo Alvarez. the same pipeline for CFE. lead us to being able to obtain Investors have also taken note cheaper fuels and help Mexico that the Ministry of Energy has become a serious business com- Fermaca operates estimated over the next 10 years petitor on a global scale,” says two major natural $100 billion in investment will Fernando Calvillo Alvarez, gas pipelines be needed to develop Mexican President of Fermaca, a lead- in mexico: the shale gas resources. ing Mexican operator of gas tarahumara pipeline, The gas sector is certainly one infrastructure. “Today we are and the palmillas that has piqued widespread in- the United States’ number one terest. In the U.S., the prolific pipeline in toluca partner, but we want to keep on Eagle Ford shale formation is growing and strengthening our possibly the largest single eco- position.” “Since the arrival of President nomic development in the his- Critics have been very vocal Peña Nieto, we have returned to tory of the state of Texas, and in denouncing the reforms, ar- the old rules of the game where its reserves extend south across guing that the government is there is no favoritism for anyone the border into Mexico’s Burgos privatizing a natural resource and everyone has the same op- Basin, which accounts for two- that is owned by all Mexicans portunities when facing a proj- thirds of Mexico’s shale gas re- and that the energy sector will ect. Under those rules, we have sources. Mexico’s approximate go the way of banking, telecom- won many bids and we have 19.3 trillion cubic meters of gas munications and railways that worked hard to fulfill our com- shale and 13 billion barrels of underwent disastrous reforms mitments. recoverable shale oil resources in the past. “This pipeline has become the rank it among the top 10 coun- “These criticisms are false backbone of the country. In the tries in the world. conceptions of the reforms’ end it was the only pipeline in Nevertheless, the shale gas range,” says Francisco Salazar, this country that was delivered sector in Mexico is still in its the President of the Energy on time, to specification and infancy, finding it hard to com- Regulatory Commission. “The budget, although few expected pete with cheap imports from energy reforms do not priva- us to achieve this in the begin- the U.S. that give further mo- tize, they liberalize which ning. In fact, this earned us vari- mentum to companies like means allowing competition. ous awards, including the ‘Best Fermaca who are rapidly ex- Privatization means to trans- Latin American Midstream panding Mexico’s gas transpor- fer state assets into the private Mexican firm Fermaca won a major pipeline deal from CFE over state-owned Pemex, heralding the new era of open competition Project Finance’, ‘The Deal tation sector.

Our World Insert is produced by United World. USA Today did not participate in its preparation and is not responsible for its content Distributed by USA TODAY 7 MEXICO “Doing the impossible is fun. We are up for the challenge” Faced with multinationals now moving into Mexico as the energy sector reforms become a reality, Fermaca is one local company unfazed by the influx of possible competition thanks to its long experience and alliances

ernando Calvillo competition, and this is our three lines of business, of perform that huge chal- Alvarez, President competitive advantage, both which energy is the most lenge efficiently and those of Fermaca, provides in possibility analysis and in important. who didn’t have faith in us an overview of an in- the establishment of the nec- Today we are a global qual- at that time ended up recog- dustry in the midst of un- essary developments to ex- ity company and we have the nizing our hard work. Fprecedented transition and ecute our businesses. possibility of searching for We have the advantage discusses how his compa- $3 billion in investments. of supplying Mexico’s most ny is already seeing its ef- What role does Fermaca On the other side, we have important industrial cluster, fects. He also highlights the have with regard to the the engineering and con- which is Monterrey. importance of local experi- new responsibilities the struction company that has ence and accomplishments CFE (Federal Electricity survived everything. And, What are the main objec- for major multinational oil Commission) will assume last year we started some- tives and greatest chal- and gas companies looking with the Energy Reform? thing that has nothing to do lenges you will pursue in to enter Mexico. I believe we will have a with our traditional activi- the near future? window of opportunity. ties, but which has brought The main challenge is Is Fermeca well positioned Compared with the gas pipe- us great results: medicine the competition. Mexico is as a strategic partner for lines in the United States, distribution. now an international focal international investors we can clearly see we have point and the large compa- coming to Mexico? a great need for infrastruc- $3 billion to invest in the I believe so. I have always ture. It is worth mentioning energy sector is a very sig- “I believe we will said our company has greatly that the state of Texas has nificant sum. Where are have a window benefited from the experi- 500,000 miles of pipelines; you thinking of investing of opportunity. ence of past years. We are our country has 13,000 miles that money? Compared with the In the midstream sector. an international company, and most of them are prac- gas pipelines in the born and bred in Mexico. tically unused. This gives us United States, we We have made alliances an idea of the great need for 2014 is the 20th anniver- can clearly see we with American, German infrastructure in our coun- sary of NAFTA. What do, and Japanese companies and try. or can, the northern coun- have a great need therefore we know how for- All industries are crying tries represent? for infrastructure” eign investors think. out for cheap supplies. The I believe they must be at We have also brought Energy Reform will be able a lesser advantage because I technology from other coun- to generate those prices for think we signed a free trade nies are coming for the oil. tries to Mexico, so Fermaca our products, but I think agreement that is a little ad- Therefore, it is difficult to can certainly be a great al- it will happen over many vantageous for our country. reinvent ourselves, because ly and partner for foreign years. Therefore, our vision We are trying to redefine it is not the same to compete on a bid for a gas pipeline with three or four compa- nies than to do it with many others, which are also much larger. The big oil producers bring their contractors and service providers with them. The only option we have left is to keep on making Fermaca more and more professional to be able to qualify as one of those com- panies. For me, the ideal situation would be for us to become the most impor- tant gas transport company in the country. That is my objective.

And does the acquisition of other small companies enter into your plans? We want to acquire green- field, brownfield and some other assets as big part of our business plan

Fernando Calvillo Alvarez, President of Fermaca There are very strict policies regarding the companies that come to the tells us that we have to con- some policies between the environment. What is country to invest. nect as much as we can with countries, because today we Fermaca’s engagement Fermaca has been in the the United States’ southern are service providers to the with its people, and its market for 52 years and we gas supplies to bring it to north. I feel like a service social responsibility point have made the best of the Mexico. provider and not an eco- of view? lessons we have learned in This is possible because nomic partner. I believe the hardest thing that time, developing gov- with new fuels the price of Entering the north isn’t here, respect of life, is to ernment projects. Our ac- natural gas has dropped and easy, but I am sure we are find the land to develop the quired experience places us they don’t have the infra- going to make it. I think do- projects. We have been suc- in a preferential spot. structure to store it in the ing the impossible is fun. It cessful in that we stay every- U.S. Therefore, that gas will is an experience that starts where we go. Our projects “We have brought naturally flow to Mexico. at the very beginning. are long-term projects, of 30 This means I believe I can We are here to demon- or 50 years. What we have technology from affirm we will be a net im- strate that Mexicans do to guarantee is an economic other countries to porter of natural gas. things with quality, that we benefit for the local area and Mexico, so Fermaca know how to work, that we a fair price for the lands. We can certainly Does Fermaca have na- are honest and that we are share with the community as be a great ally tional competitors? up for the challenge. That is much as the company allows and partner for On a national level, I the message we have always us to. For this company, the foreign companies don’t think so, because wanted to convey with the most important things are that come to the there aren’t any compa- company. security and the protection country to invest” nies building pipelines as of the environment. large as ours. There are very What is the landmark you important local companies are most proud of having What do you feel when you Regarding large and in- but in other niches, other achieved? look back and see every- ternational oil companies, sectors. We like to work I think breaking with the thing you have achieved, I believe they have to work with larger volumes and taboos that exist in the coun- not only through the work together with local compa- larger investments. try. In 1997 we proposed of so many people but also nies because those are the building a new gas pipeline, through your own influ- ones that will guide them Fermaca has over 50 years which is a very risky enter- ence? What are you most through the right path, a of experience. Currently, prise. We received a nega- proud of? path they already know and what are the main activity tive answer from a public I am very proud of the have traveled. levels of the company and servant, saying that such company. It has been a mag- Money and technology do what main services does it large projects should be left nificent journey, a great ex- not always level the play- offer international part- to big, international compa- perience, and pride comes ing field – the experience ners interested in coming nies. And, after many years, mostly from seeing that and tradition of the locals is to a country like Mexico? we demonstrated we could what we do is part of the necessary: they know the de- They say that to know country’s chain of progress. tails, the permits, the securi- success you need to have “The main challenge I always tell my children that ty protocols, the way to pro- gone through failure. In fact, we have to do something to is the competition. tect the environment, etc. you always learn more from make the country better. your failures than from your Mexico is now an We have a very solid team How has Fermaca man- successes. international focal that includes many sec- aged to endure for so long We almost lost the entire point and the large ond-generation employees. and what is the company’s company in 1994 and we companies are Ultimately, we have an or- spirit? tried to recover from that coming for the oil. ganization to which people In the first place, our line scandalous devaluation the my objective is for arrive and hardly ever want of business has always been country went through. We us to become the to leave. focused on Mexico. Only had to redefine our objec- most important gas We try to make our people recently have we begun to tives. So I proposed we en- transport company comfortable and well paid. think about international ter into a long-term business in the country” We believe we have to pro- developments. I believe we with stable income. pel the three Ds: dignity, du- are a few steps ahead of the Ever since, we have had ty and diversion.

Our World Insert is produced by United World. USA Today did not participate in its preparation and is not responsible for its content 8 Distributed by USA TODAY MEXICO $596bn infrastructure plan to create a bicoastal logistics legacy The country’s landscape is being dramatically transformed with new roads, bridges, seaports, airports and public facilities taking shape

exico is getting an extreme makeover with one of Latin America’s largest invest- Mment programs ever. A few weeks after the last bit of en- abling legislation was passed in August 2014, President Enrique Peña Nieto com- mitted to one of the most ambitious undertakings in Mexico City’s which a leader puts his ad- crowded ministration’s credibility and underground system future legacy on the line: a is to be extended comprehensive and cost-ef- further into the fective upgrade of the coun- try’s ageing infrastructure. suburbs around the “This is the roadmap that capital, adding an shows us the way to the mod- extra 30 miles of ern, competitive country we coverage that will all want Mexico to be,” is how serve an estimated the President sees the spend- 9 million commuters ing program intended to cre- ate thousands of jobs and give a boost to virtually all sectors of the economy by enhancing the country’s competitive- ness and productivity. Roadways, rail transport, seaports and airports. Gas pipelines, power transmis- The highest cable-stayed bridge in the world, the Baluarte Bridge straddles the border between Sinaloa and Durango and forms part of the $2.2bn Durango-Mazatlán Highway sion grids, container termi- nals. Bus stations, even. You priority attention during the corridor – also known as other strategic area com- billion will cover the start-up name it and it will probably first phase of the implemen- the Interoceanic Highway ing in for major upgrades costs of six wind farms, in ad- appear as one of the 743 items tation process. – that cuts about six hours as the country advances its dition to two hydroelectric on the government’s to-do Actually, Mexico has a lot from the travel time be- plans to become a bicoastal plants and a modern system Infrastructure list – just so long as it is new, of roads for a country its tween Mexico’s Atlantic and logistics hub. Veracruz may of drainage tunnels for the functional and incorporates size and, for the most part, Pacific coasts. An engineer- be the country’s oldest and Greater Mexico City region. aims include 16 the appropriate technology. their layout allows for good ing challenge, but one with largest port, but its capac- Dams, aqueducts and water solar farms in the And, yes, the overall price inter-city and regional con- a payoff that could end up ity to handle modern-day treatment plants also in short arid deserts of the tag is formidable: to the order nections. The trouble is that giving the Panama Canal a container shipping needs to supply in different parts of north, as well as of $596 billion, including con- only 40% of those roads are run for its money. be expanded and equipped the country will be built. six wind farms and struction of the new state-of- More funding is earmarked with advanced monitoring To be fair, massive invest- two hydroelectric the-art Mexico City airport. The Transpeninsular for the railroad sector, where and operation systems that ment in healthcare facilities plants, plus a It will be money well spent. fast train, slicing it is hoped that the speed, ef- require an outlay of some got under way with the pre- modern system of An estimated 63% of that across the yucatán ficiency and convenience of $1.8 billion. vious administration, which drainage tunnels funding will come from the peninsula between modern trains will attract Slicing the pie chart makes built or reconditioned sev- for the Greater federal and state govern- Campeche and passengers to routes such as it clear that slightly over half eral thousand hospitals and Mexico City region ment, with the remainder Tulúm, will take Mexico City-Querétaro via the total investment will be clinics. The President has provided by private capital, fast train, or Mexico City- absorbed by 462 initiatives in made every effort to ensure visitors to such whether as foreign direct Toluca. The Transpeninsular the energy sector. that in addition to the facili- investment, public-private emblematic but fast train, slicing across the Most of that money will ties themselves, the prod- partnerships (PPPs), or other hard to get to Yucatán peninsula between end up at the state energy uct they deliver has all the modalities that will be flex- inland destinations Campeche and Tulúm, will company Pemex, to cover the funding it needs to attend to ibly structured. All ventures as Izamal or take visitors to such emblem- preliminary phases of iden- a growing population, with will be protected by a fa- Valladolid atic but hard to get to in- tifying and developing the universal healthcare in all of vorable regulatory environ- land destinations as Izamal potentially huge oil and gas Mexico’s states as his ulti- ment and the guarantees en- or Valladolid. The plan also reserves in the deep waters mate goal. shrined in Mexico’s new PPP paved, and those that are calls for electric trains for of the Gulf of Mexico, and a Will he be able to imple- laws, which are considered as paved are likely to be in ur- the larger cities and a signif- series of modern refineries ment these projects? Will equitable and comprehen- gent need of grading, resur- icant investment in rolling intended to reduce Mexico’s the political, social and leg- sive as in any comparable facing or replacement. stock for moving merchan- imports of processed petro- islative reforms that sustain Latin American country. Then there are new dise by rail. leum derivatives. them hold up under the bur- transcontinental In the World Economic links such as the Durango- In his 2014 State of the A pipeline grid conveying den of expectations that they trade has been Forum’s Global Competi- Mazatlán Highway. It may Union address, the President natural gas closer to its in- generate? Mr. Peña Nieto is given a boost tiveness Report for 2013- seem perverse to build a said that various existing dustrial and domestic end- convinced they will. “The th with the cities of 2014, Mexico came in 66 route that requires 61 tun- metro lines of Mexico City’s users will also contribute to foundations are in place,” place among the 148 coun- nels along its 140-mile crowded underground sys- presidential plans to set the he has said, “so let’s get busy Matamoros on tries evaluated for the overall length, to say nothing of 115 tem would be extended deep- conditions for a more bal- building the nation we want the Gulf of Mexico quality of their infrastructure, bridges – including Puente er into the suburban belt anced energy sector. for ourselves. and Mazatlán on trailing nations like Greece, Baluarte, the world’s highest around the capital, adding Green power also has its “One thing that must be the Pacific Ocean Rwanda and Kazakhstan. Its suspension bridge. But on its an extra 30 miles of coverage place on the agenda, which clear to us is that this is not now linked by deficiencies are especially con- inauguration on October 17 that will serve an estimated 9 contemplates 16 solar farms the country it used to be. superhighway spicuous in the country’s road 2013, the segment complet- million commuters. in the arid deserts of the This is the Mexico that dared network, which is to receive ed the Matamoros-Mazatlán Mexico’s seaports are an- north. An allocation of $2.5 to embrace change.” Allies streamline cross-border trade Mexico’s largest road cargo transport company partners with U.S. and Canadian firms to offer comprehensive shipment options tracked by the latest technology

s Mexico’s freight haul- Unidos Mexicanos, the coun- penses low, and not have to and most recently FedEx, fol- States, however it will take a U.S. companies to transport ing sector going through try’s largest road cargo trans- deal with bookkeeping and col- lowing a deal signed earlier this customer’s shipment right up our shipments on the other the best of times or the port operator. TUM has nearly lection issues.” year to serve as the U.S. trans- to the border, or across it, if side of the border. We prefer worst of times? The an- 1,800 employees and operates As a result of this enhanced port firm’s partner in Mexico. preferred, to the nearest cus- to concentrate on consolidat- swer is “yes” – to both ques- a fleet consisting of almost the capability, TUM is in a position “FedEx is an important toms facility. But no further. At ing our position in the domes- tions.I Recently having celebrat- same number of vehicles, many to supply its distinguished list customer,” agrees Miguel that point, one of the 25 U.S. or tic market and that is going to ed its 20th anniversary, NAFTA of which are privately owned of corporate clients with every- Quintanilla Rebollar, Canadian firms TUM has part- take a lot of work.” is generating a steadily increas- and leased to them by the driv- thing from armored cars, re- Chairman of TUM’s board nered with will take over and From the 18 freight termi- ing flow of goods moving at er, along with his services. frigerated haulers, extra-length of directors and father of the see that the cargo reaches its nals and cross docks located a rate of $1m-$2m worth per “It is a type of arrange- semis (over 200 of them), tank- Vice-President. “Nowadays, stateside destination. from one end of the country minute. Mexico’s GDP is ro- ment we would like to devel- er trucks, light vans for door- we are operating their entire Asked why that is the way to another, road-tested vehi- bust, as are its industrial output op further,” says TUM’s Vice- to-door parcel delivery, con- base network at the national it is done, Mr. Quintana cles from the TUM fleet make and demand from the grow- President for Operations, tainer platforms, and just about level. And apart from that, ow- Hernández merely says some 1,300 pickups or deliver- ing middle class. That is why Miguel Quintanilla Hernández, any other type of wheeled ve- ing to Mexican laws and the “ground transport between ies per month. State-of-the-art efficient, punctual transport “and the invitation is open to hicle used to move cargo from investment they made, we are Mexico and the United States technology allows every last for moving factory output to all professionals. Truckers and one place to another. in a very favorable position to is anything but free, and I don’t one of them to be tracked by wherever it is needed is of criti- their vehicles are given regular The range and versatility of compete in tenders for service think that’s going change any a satellite positioning system, cal importance. check-ups. They benefit from its offer has impressed TUM contracts.” time soon.” and maintains constant com- The bad news is that the being able to access our infra- customers such as Nissan, At the present time, TUM “Therefore,” he continues, munication between control- government has introduced structure, keep operating ex- Honda, Nestlé, Ford, Costco, does not operate in the United “we decided to contract with lers and drivers. changes in the tax regime that “We have a network and draw blood from just about systems capability that sets everyone in the freight haul- us apart from any other ing sector, but especially the Mexican company and gives small-time owner-operator. us access to the information The write-off allowed for ve- that an outfit like FedEx in- hicle depreciation is only 8%, sists that you have at your while truckers say its costs fingertips. We get a real- them at least 20% of revenues time street view from every to meet safety regulations and cab,” says Mr Quintanilla compensate for ordinary road Hernández. “But the impor- wear. Small wonder, then, that tant thing is that we also have one in three small-time opera- the people who are ready, will- tors has gone out of business. ing and able to make sure the One firm with the resources cargo gets to where it’s going, and the determination to stay at the right time and with the the course is TUM, Transportes right guarantees.”

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“Veracruz is one of the pillars of development in Mexico because of our great economic and commercial activity”

The Port of Veracruz will quadruple in size following a $1.8bn expansion plan Javier Duarte de Ochoa, Governor of Veracruz State

itizens in three States primed someone from Campeche but of Mexico’s 32 also someone with a certain states in particu- type of personality and that lar – Veracruz, character includes the great Campeche and Chihuahua – warmth and joy with which Care in a prime position to get a campechanos receive visitors.” generous share of the benefits for FDI Mexico’s largest state, being sparked by the nation’s Chihuahua, is also accus- Prospects of big returns by partnering Pemex to tap vast oil and gas reserves, as reforms under way. And for tomed to visitors and while well as the need for infrastructure and tourism development, is pulling in rising each of the trio, the new reali- foreign investment in states developing old and new sectors tourists certainly enjoy a ties have already spawned ini- warm welcome there, for- tiatives that will take full ad- eign investors, specifically vantage of the major changes Ochoa. “We have three ports lowing the state’s best and Mexico has needed for ma- Americans, are truly val- soon coming Mexico’s way. on the Gulf of Mexico, one of brightest students access to ny years. From this year on, ued for their contribution In the oil-producing state which is the most important the U.S. institution’s pro- Mexico will grow tremen- to making Chihuahua not “The distinctive of Veracruz, the country’s in Latin America, making us grams and courses. dously,” he predicts. only a manufacturing power- the most important logistics “The first thing we want to In the petroleum sector, house but also the country’s feature of Veracruz and center from Tijuana to Tierra do is take advantage of the ca- Mr. Ortega Bernés argues leading exporter. Campeche’s Campeche on the del Fuego.” pabilities, experience and in- that the changes can only “Chihuahua’s leadership inhabitants, the Gulf of Mexico are Besides being the pre- telligence of one of the most serve to benefit Campeche. in foreign direct investment campechanos, is major producers mier gateway to the Mexican prestigious institutions in “The state’s logistical plat- has undoubtedly set a clear their kindness” of hydrocarbons. market and beyond, there the world of education,” Mr. form supplying the oil ex- precedent in Mexico and the are the hydrocarbon depos- Duarte de Ochoa says. traction and production op- fact that we received more Fernando Ortega Bernés , The former is a its. Veracruz has the larg- Another exciting event erations is the most skilled, than $1.5 billion in FDI in Governor of Campeche State nucleus for the est gas reserves in the coun- on Veracruz’s horizon is experienced and valuable 2013 proves that we have petrochemical try, the second-largest oil the hosting in December of in Mexico and when the re- won the trust of investors,” industry, whereas reserves and is the nucleus the Ibero-American summit forms kick in, all of that will says Governor César Duarte the latter provides a for 80% of Mexico’s petro- bringing together the leaders strengthen the economy and Jáquez. top-flight logistical chemical industry. of Spain, Portugal and all of further increase employment, platform for the Braskem, the largest petro- Latin America. investment and wealth,” says Just across the upstream industry chemical company in Latin Sharing the Gulf of Mexico Mr. Ortega Bernés. border from Texas America, has teamed up coastline with Veracruz is the The governor explains he and New Mexico, with Grupo Idesa of Mexico state of Campeche, which bills is keen to also see new de- Chihuahua is a top most important port aims to build a $4.5 billion plant itself as the country’s energy velopment in other sectors manufacturing to quadruple in size after a in Veracruz’s port city of capital and whose Governor of the state’s varied econo- state as well as planned $1.8 billion expan- Coatzacoalcos, slated to open Fernando Ortega Bernés has my including industry, farm- sion, while in Campeche the next year and will produce 1 praised the President’s re- ing and food production, and the country’s government has worked hard million tons a year of ethylene forms and what they will do even tourism. With its many leading exporter to transform itself into what and polyethylenes. for the country and his state. miles of beautiful Caribbean the World Bank calls “the per- Clearly, foreign investors “Without a doubt, these beaches, colonial towns and fect investment destination.” are taking notice of Veracruz, reforms have extraordinary monuments, captivating jun- The politician credits a range To the north, sharing a which has risen 13 places potential and they bring to- gle environments and vestiges of factors which have made 560-mile-long border with in the World Bank’s Doing gether all the determination of the ancient Mayan civiliza- Chihuahua such an attractive the United States, Chihuahua Business rankings. to propel the changes that tion, Campeche is already a investment destination, in- “The fact that is already Mexico’s leading “Opening a company here natural draw for foreign visi- cluding the newfound sense we have received manufacturing center and is now takes 48 hours,” says the According to the tors and the government is of security there, the quality more than spending millions of dollars governor. “The climate for working to lure more. and skill of the workforce, and governor, it now $1.5bn in FDI in on new transport infrastruc- private capital and invest- “Our main attractions in- its constantly improving con- 2013 proves that ture to boost the flow of goods ment is auspicious.” takes just 48 hours clude eco-tourism and our nections to the U.S. to open a company we have won in both directions. Veracruz is also joining tourism offer also includes “We have the industrial, the trust of in veracruz state, adventure and nature activi- “Veracruz is one of the in with the country’s re- commercial and logistical in- investors” pillars of development in vived emphasis on educa- which has advanced ties like fishing, birdwatch- frastructure reaching across 13 places in the Mexico because of our great tion through a cooperation ing, hiking and other activi- the border, which allows us to César Duarte Jáquez, economic and commercial agreement signed this year world bank’s doing ties,” the governor says. exchange all manner of goods Governor of Chihuahua State activity,” boasts the state’s with the Massachusetts business rankings “In Mexican Spanish, a with the United States quickly Governor Javier Duarte de Institute of Technology al- campechano not only means and conveniently,” he notes.

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Durango City is home to the largest number of historic buildings in the north of the country

The Liverpool Interlomas Department Store in Mexico State is a futuristic hive of stores and cultural and relaxation areas The intricately carved wooden doors of the Catedral de Santiago in Saltillo, Coahuila

oldman Sachs fore- “Transparency as well casts Mexico will as accountability are ex- be the world’s sev- tremely important,” notes enth-largest eco- Mr. Ávila Villegas. “Both nomic power by 2020. The are part of the state’s public Gcountry’s resilience during policy and its development the global economic crisis was States advance plan.” National consultant the bedrock of its current fi- ARegional places Edomex nancial health, but challeng- top out of the 32 states in es remain at the national and that respect, while the World state level; challenges that in Bank’s Doing Business 2014 partnership with the U.S. and report ranked the state in Canada have not only spurred national progress the top five business friendly Mexico into greater efforts Mexican regions. internally but have led to in- Efforts made in Mexico’s individual states to highlight their own competitive advantages have the Industry accounts for a creased regional cooperation. combined effect of driving forward the country’s overall development and create a nation that will large amount of Edomex’s A Council on Foreign become even greater than the sum of its parts output, with agriculture, Relations independent task manufacturing, food and pa- force co-chaired by retired per products supplement- U.S. General David Petraeus Nieto has implemented a se- But as the governors of three cross-border links with their Edomex, as it is known from ed by services and tourism, and former president of the ries of reforms to best address of Mexico’s largest and most Mexican counterparts. its Spanish title, is also the the latter accounting for World Bank Robert Zoellick the needs of a swiftly grow- prosperous states all concur, “We’re investing in edu- most populous and a ma- some 20% of employment in stressed the importance of ing economy: “Public-private the key to tackling crime and cation because it encourag- jor contributor to nation- the state. “According to the Mexico, the U.S. and Canada partnerships – a mechanism poverty is education. es development,” says State of al GDP. Transport infra- National Bureau of Statistics presenting a united front in we will promote across all in- International cooperation in Mexico Governor Eruviel Ávila structure is a priority for and Geography (INEGI), the the fields of security, energy, dustries – may foster great- education has led to a rise in Villegas. “Nelson Mandela said both Edomex and the U.S., State of Mexico has grown by education and the develop- er investment in the oil and which posted exports of 3.28% and came in third in ment of natural resources. electricity sectors, allowing governors of three of Mexico’s largest $226.1 billion southwards terms of its contribution to “If the three North Pemex [the national oil com- and most prosperous states all concur in 2013. As a result, the GDP. Mexico State is essen- American countries deepen pany] to remain an engine of the key to tackling crime and poverty three premiers – Enrique tial to our country’s econom- their integration and cooper- development, without hav- is education, and collaborations with Peña Nieto, Barack Obama ic strength,” says Mr. Ávila ation, they have the potential ing to cede state ownership international universities are on the rise and Stephen Harper – have Villegas, who adds that job to again shape world affairs over our nation’s resources,” signed a commitment to creation in Edomex in the for generations to come,” the the Mexican President wrote create a North American first quarter posted a 200% CFR concluded. in The World in 2013 by the number of universities in that if we want to change the Transportation Plan. year-on-year rise. A trilateral energy agree- The Economist. Mexico, which now offer de- world, we have a very power- For Edomex, relations However, Mr. Ávila Villegas ment proposed at the North Mexico and the U.S. are in- grees in international business, ful weapon to do it: education. with the U.S. are vital to its does not shy away from the American Leaders’ Summit creasingly working together relations and commerce, and We are going to use this weap- mission to place the state at issue of security, one of the held in Toluca, State of on security issues, ranging in partnership with Germany on to change the world and to the forefront of economic main obstacles in attaining Mexico, in February is the from the border to the cartels and other EU nations, pro- change Mexico.” development. Infrastructure the state’s goals and an ar- first step toward a North while also seeking to increase motes a dual education pro- Mexico State, says Mr. accordingly goes hand-in- ea of increasing cooperation American common policy the flow of legitimate cross- gram across all of the major Ávila Villegas, is the “eco- hand with efforts to facili- with the U.S. in fossil and renewable en- border commerce, which states. U.S. business schools nomic and geographic heart tate investment and the en- “Security is one of the chal- ergies. Nationally, the gov- amounts to some $500 bil- and higher learning institutes of Mexico.” The largest of try of foreign companies in- lenges that we need to over- ernment of Enrique Peña lion per year. are also forging productive the country’s 32 states, to the regional market. come, and as quickly as pos- Yucatán targets R&D and regional tourism One of Mexico’s largest investors in R&D has closer links with the U.S. in its sights

in recent years Yucatán year here in Mexico, and we has experienced an influx of are now working to frame this foreign property owners seek- phenomenon in a temporary ing the good life on the penin- resident scheme so we can take sula, which juts out between maximum advantage of the sit- the Caribbean and the Gulf of uation,” says Mr. Zapata Bello. Mexico. As one of Mexico’s He adds that despite its rep- safest states, the appeal is un- utation as a safe destination, deniable, although it faces the state’s fight against crime is stiff competition in terms of being extended continuously. tourism from neighboring “We believe that public safety Quintana Roo and Campeche. cannot focus solely on policing. “Promotion is one our great- In addition to crime preven- est challenges at the moment,” Rolando Zapata Bello, tion plans our approach is fo- says Yucatán’s Governor Governor of Yucatán State cused on citizen participation. Rolando Zapata Bello. “Yucatán It is vital that our citizens get is a well-known state, recog- tion (a Yucatán-U.S. ferry link involved in public safety. And nized throughout Mexico and is in the pipeline) and its po- the most basic element to en- the world as heir to the great tential for renewable energy sure society’s involvement is Mayan culture, and also for patents, especially in the field public trust in its police forces.” our music, food and imposing of wind energy. As Mr. Zapata As Yucatán extends its tour- archeological sites. But there Bello notes, the re-establish- ism and second-home offer, is another, little-known, side ment of a sea route between Mr. Zapata Bello also recog- which we are very interested Yucatán and the U.S. would nizes that competition is not a in promoting. People should also benefit tourism and those hindrance to state goals, but a know that Yucatán has the big- Americans who have made the vital part of a healthy regional gest critical mass of researchers state their second home. sector. “Tourism is not compet- in the whole of the country’s According to the Mexico itive but complementary. The south-southeast region.” 2010 census, there are 738,103 federal government is promot- According to the OECD, Americans living in the coun- ing regional strengthening. The Yucatán is one of Mexico’s larg- try, the largest foreign diaspo- big idea here is connectivity. We est investors in terms of R&D. ra in the world, and Yucatán should make it possible for tour- The state is actively encourag- is rapidly becoming a destina- ists to enjoy the different attrac- ing foreign companies to take tion of choice. “Many U.S. cit- tions we have to offer across the advantage of its strategic loca- izens spend a large part of the region in one sole trip.”

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“We have a long-lasting relationship with the U.S., which has made us brother nations”

Eruviel Ávila Villegas, Governor of Mexico State

“The eight states of the north are now much more connected to international commerce”

Jorge Herrera Caldera, Governor of Durango State The Aztecs believed that the gods created the universe in the ancient city of Teotihuacán, 30 miles from Mexico City sible,” he says. “It has to be Texas. The feat of engineer- cause we enjoy 300 days of es serves to generate wealth “We are an industrial state stated that this is not a na- ing was one of Mexico’s fin- sun each year.” in others” and we have an important tional problem; it is very local- est: 115 bridges, including Durango’s growth has While Mr. Moreira Valdez influence on the country’s ized and the federal and state the spectacular Baluarte been swift, but the state has agrees that violence has exports,” notes Mr. Moreira governments are working to- Bridge – the tallest cable- provided the infrastructure been a historical problem in Valdez. “The growth forecast gether in this area. In Mexico stayed bridge in the world – required to keep it ticking Coahuila, today the state is for this year places Coahuila State we are striving to make and 61 tunnels bypassing the over, to the extent that last “one of the symbols of the in fourth place nationally. the most of our resources and former route, a treacherous year there was a significant evolution of the way we are We are the largest produc- if we do an international anal- stretch known as the Devil’s spike in its traditional output dealing with delinquency.” ers of coal, railway wagons, ysis, we are not above the av- Backbone. Mr. Peña Nieto and an increase in the levels Coordinated efforts to im- liquid steel and refined sil- erage crime rates. Obviously officially opened ‘Mexican of foreign direct investment prove safety in Coahuila have ver. We are leaders in min- this is not much comfort, pro- Federal Highway 40’ last year and U.S. companies setting also had an effect on for- ing and in the production “The growth vided that with a single case on October 17, Mexico’s an- up shop in the state. eign investment, which has of manufactured products. forecast for of violence we should commit nual “Road Workers’ Day” Industrial power is also surged as the levels of inse- I look at the energy reforms this year places ourselves to achieving better (Día del Caminero). Coahuila State’s major em- curity have fallen. The state’s as a necessary step to com- Coahuila in results. But the best promo- The highway is viewed as ployment and revenue gen- importance to the country pete with the world. I see fourth place tion is for people to come here a land-based competitor to erator; both Chrysler and as a whole lies not just in its it as an essential need. We nationally” and walk our streets. I have the Panama Canal, and at 12 General Motors have assem- geographical proximity to need the Energy Reform to received visitors from Illinois, hours coast to coast takes bly plants there and other ex- the U.S., but also in terms of become more competitive Rubén Moreira Valdez, Utah, Nevada and California.” a similar time to traverse. port-oriented sectors thrive its ability to compete, and with Texas, for example. We Governor of Coahuila State Mexico State is soon to “We have a great advantage,” in the state. Traditionally cooperate, economically need to obtain energy that’s open a representative office says Durango State Governor a mining region, Coahuila with its northern neighbors. lower on cost and cleaner.” in Los Angeles, complement- Jorge Herrera Caldera. “We still accounts for the major- ing the two that already ex- already have two pipelines ity of Mexico’s output of fos- ist in Houston and Chicago. and a third is to be intro- sil fuels and precious metals. Mr. Ávila Villegas is a tire- The state also has potentially less promoter of his state and vast untapped reserves of oil a firm advocate of the ben- Given its prominent and gas, which have attract- efits of greater ties between role in national ed foreign investment, espe- Edomex and the U.S. “We and international cially from shale companies. have a long-lasting relation- industry, Durango Coahuila Governor Rubén ship with the U.S., which has was the obvious Moreira Valdez has been ac- made us brother nations,” he tive in placing the northern choice for one of says. “We are much more than state at the forefront of the partners; we’re strategic al- Mexico’s largest country’s energy policy and lies. We want to encourage infrastructure recently toured Southeast U.S. investment in the State of projects of the Asia to drum up interest Mexico so that entrepreneurs century: the from prospective partners become aware of the strengths Durango-Mazatlán in Japan, South Korea and of our state and understand highway Taiwan, who in turn sent in- that there are many business vestigative representatives to and investment opportunities Mexico. waiting for them here.” Mexico has Mexico has estimated re- Durango State rose to in- estimated resources sources of 600 trillion cu- ternational prominence in of 600 tcf of bic feet of recoverable shale the 1950s and 1960s as a fa- recoverable shale gas, in addition to 13 billion vored location for Hollywood: gas, in addition to barrels of shale oil, much of the backdrop to several of the 13 billion barrels of which is located in Coahuila. most celebrated John Wayne shale oil, much of While the state-run oil and and John Ford collaborations gas company Pemex has which is located in is the dramatic landscape of been active in investments the northwestern state. But Coahuila state in the field, there is a huge Durango’s love affair with cel- gap between what is avail- luloid stretches all the way back able and what is needed – to the Mexican Revolution In a 2014 survey anything between $100 mil- and the state’s most famous by consultants lion at Secretariat of Energy son, Pancho Villa. aregional, Mexico estimates, and $250 billion The name Durango – state came first according to some industry “fertile land, with rivers sur- in terms of fiscal observers. rounded by mountains” – is transparency. The 2015 Mexican Shale believed to have been be- the world bank’s Summit in San Antonio, to stowed by Basque settlers. doing business be held on February 17 and But although agriculture was 18, will bring together the report named it the once the staple diet of the world’s leading industry ex- state’s economy, Durango fifth most business perts, government officials has for two decades been syn- friendly state and company executives to onymous with production of explore how best to channel a different sort. investment into the region. Taking its cue from the duced to lower the price of As a border state, Coahuila 1994 North American Free natural gas and make the has had its fair share of con- Trade Agreement, Durango state more competitive. The flicts over the years, not quietly set about carrying Durango-Mazatlán Highway least due to the proximity out its own revolution, one is the biggest of its kind in the of the U.S. However, as Mr. based on industry and man- history of Latin America. The Moreira Valdez notes, the ufacturing. Assembly plants eight states of the north are solution to illegal immigra- sprang up all over the state now much more connected tion “lies in understanding and goods for giant corpo- to international commerce in-depth the reasons for im- rations, including Wal-Mart and we are also fighting to migration. I think dialogue and Honda, began to roll off build a new port while the between the United States, the lines. Today, Durango is one in Mazatlán is being up- Mexico and Central America the engine of the Mexican dated to triple its capacity. is very important. Coahuila industrial sector. With these factors, Durango is not an expulsion point to Given its prominent role is ready to become an indus- the United States. We are a in national and internation- trial development hub. This transitory place that also ab- al industry, Durango was the is a great opportunity to de- sorbs Mexican population, obvious choice for one of velop more international especially in the north. We Mexico’s largest infrastruc- commerce and welcome in- are also a place where mi- ture projects of the century: vestors. We also have an im- grants pass through to re- the Durango-Mazatlán high- portant plus: Durango is po- turn to Mexico. We must un- way, a $2.2 billion, four-lane sitioning itself as the first so- derstand that migrants are road linking Durango with lar capital in the world. We looking for work and we have the Pacific coast, the Gulf are constructing the biggest to understand that genera- of Mexico and San Antonio, solar farm on the planet, be- tion of wealth in some plac-

Our World Insert is produced by United World. USA Today did not participate in its preparation and is not responsible for its content 12 Distributed by USA TODAY MEXICO Natural and cultural tourism at the root of Veracruz’s future The passion for music and culture in Veracruz is surrounded by unspoiled tropical, coastal and mountainous regions, World Heritage sites and magical villages that make “the most Latin American state in the country” a must-see destination and a sure bet for tourism early 19th century. Also, the urely you have danced three pueblos mágicos (magi- at least once in your life cal villages) – selected as such to La Bamba and there by the Mexico Tourism Board is even a chance you for their particular charm: know those lyrics: “Para bailar Coatepec, another colonial SLa Bamba / Se necesita un po- town in the coffee-producing co de gracia / Para mi, para ti / region; Papantla, near the ar- ay arriba ay arriba...” Adapted cheological sites of El Tajín by Mexican-American singer and Cuyuxquihui; and Xico, Ritchie Valens in 1958, it be- founded by the Spaniards in came a hit in the U.S. charts and the 16th century. is now considered as one of the The administrative capi- founding songs of rock ‘n’ roll. tal of Veracruz, Xalapa (pro- What you may not know is nounced “halapa”) gave its La Bamba is a folk song that name to the jalapeños, the originated from the state of hot green peppers that come Veracruz, known by connois- from this region. Xalapa is seurs for the musical talent of an oasis of peace and balmy its people. Here, everybody climate that contrasts with dances and sings, it seems. the hot and humid coastal And on a steamy night in the area. Its jewel is the Museum zócalo (central square) of the of Anthropology. Opened in port city of Veracruz, there is 1986, it is the second largest a chance you will succumb to museum of its kind in Mexico a danzón (a dance) as many lo- (after the more famous one cals do. There is an air of New in Mexico City), containing Orleans in this city, but with a some 27,000 artefacts, most- Latin beat. ly from three of the state’s Herein lies the charm of most important cultures: the Veracruz, the main city (al- Olmecs, the Totonacs, and though not the capital) of the Eco-tourism is a significant component of the tourism industry in Veracruz, with its wealth of natural attractions and variety of flora and fauna proving major draws the Huastecs. eponymous state situated in Eco-tourism is one of the the central part of the coun- “Veracruz is the most Latin places in Mexico. It is precisely If possible, the best time to strong points of the state, and veracruz state’s try, narrowly spread along the American state in the coun- because this city has long been visit is around the carnival, where better to enjoy it than coast of the Gulf of Mexico: it administrative try,” says Governor Javier overlooked by tourists that which will be held from 10 in the Biosphere Reserve of is authentically Mexican, in capital Xalapa gave Duarte de Ochoa. “We are you should make it a stopover. to 18 February 2015 and is Los Tuxtlas, about 105 miles the modern sense of the term. the world’s most the front door. Here is the Unless, of course, business expected to attract 1 million south of Veracruz City. With It is in Veracruz that the pre- famous chili pepper crucible in which Mexican has brought you here, since visitors. As any carnival should an area of approximately 600 Columbian roots of the na- its name, jalapeño, culture is based. Here, an in- there are many foreign com- be, especially in such a Latin square miles, it is a perfect tion and its Spanish heritage and features a dependent Mexico was born, panies operating in the re- American musical hotspot, it place for nature tourism and are best fused and enhanced. thriving arts and and here the Spanish crown gion – the vast oil reserves promises to be lively, noisy, bird watching. Nearly 60% of Founded in 1519, the culture scene had its last stronghold.” of Mexico are situated in the and a bit on the loco side too. all of Mexico’s birds live in city of Veracruz is the old- Now a sprawling port city, gulf nearby. Home to 7 million inhabit- Los Tuxtlas. With a bit of luck est European settlement Spain. It is also where, three one of the most important of Share real life with ants, Veracruz State has much and armed with a good pair of in Mexico, the place where centuries later, the last the country, Veracruz City is a Veracruzans and take the time to offer visitors, including the binoculars or a telephoto lens, Hernán Cortés disembarked Viceroy of New Spain signed modern urban bric-a-brac that to visit the aquarium, the larg- World Heritage colonial town you will be able to see (and and which he claimed as the Treaty of Independence of lacks the colonial charm and est in Latin America, and the of Tlacotalpan, where nothing virtually “touch”) parrots, ea- property of the King of its colony, in 1821. paradisiac beaches of other naval museum. much has changed since the gles, larks, and toucans. $6.6m tourism boost for Tlaxcala haven After attracting $36.5m in mostly industrial FDI in 2013, tourism is now being tipped as the next sector for growth

any savvy resi- At the moment, its economy Situated about 75 miles east of the Aztecs to Hernán Cortés. dents of the in- is predominantly rural: 57.7% the capital, Tlaxcala is a minia- Nowadays, La Malinche, also credibly jammed per cent of its GDP comes from ture version of everything peo- called Matlalcuéyetl, is mostly and noisy sprawl agriculture, livestock and for- ple love about this country: mil- known by trekkers for being one that is Mexico City have a sanc- estry. However, it is also spe- lennium-old vestiges of civiliza- of the highest mountains of the Mtuary to escape their madden- cialized in light industry, but it tions whose art was full of noise country, peaking at 14,600 feet. ing urban environment that contributes only 0.6 per cent to and fury, tales of battles and be- The small and powerful em- only few outsiders know of. It the national GDP, with a total of trayal between native people pire of Tlaxcala was one of the is called Tlaxcala and it is tar- some $6.1 million. Its popula- and mustachioed conquista- few nations that resisted the geting tourism to raise both its tion of 1.24 million represents dores, the fascinating fusion of Aztecs. It was also heir to the profile and its revenues. just 1.1% of the Mexican popu- Catholic fervor and pagan tra- nation’s most ancient civiliza- Last year, Tlaxcala signed a lation and the average income is ditions, music and dancing in tions: archeological evidence at- convention with the Secretariat lower than the national average. abundance, a large and thank- tests to the presence of societies of Tourism, according to which One of its main assets is its as early as 10,000 BC. the federal state will invest proximity to both Mexico City Now Tlaxcala is determined MXN90 million ($6.6 million) and Puebla, to the south. As such, to reclaim its roots – after all, it for the development of tourism “it is part of a consumer mar- is the birthplace of the nation in Tlaxcala. The sector is seen ket of 20 million people,” says – and to make a name for it- by local and national officials as the trade and investment agency self in the world. “Tourism is a potential engine for growth in ProMéxico. Excellent transport very important for us,” says Mr. a state that is one of the least de- infrastructure allows it to benefit González Zarur. “We are do- The annual Tlaxcala Fair mixes contemporary pop culture and traditional craftsmanship veloped in the country. from this position, with easy ac- ing a lot of advertising and we cess to the international airports launched a few years ago the of Mexico City and Puebla, and yearly Tlaxcala Fair, a cultural eastwards to the main port of the festival that mixes contempo- country at Veracruz. rary pop culture and traditional According to a 2013 report by craftsmanship.” He also empha- the Organization for Economic sizes that Tlaxcala is one of the Cooperation and Development safest states in the country with (OECD), “Encompassing 39 “we have great the third lowest crime rate. municipalities in two states, potential When asked what he would Puebla-Tlaxcala is the fourth- thanks to our recommend to visitors, Mr. largest metropolitan zone in geographic González Zarur mentions Mexico.” It points out that over location and Huamantla, which is one of the the past five decades the region to our work “magical villages” selected by the has successfully attracted ma- force, which Mexican Tourism Office as part jor national and international of their worldwide campaign. A firms, building its reputation as is of excellent visit there mid-August for “The both a manufacturing hub spe- quality” Night In Which No One Sleeps” cializing in auto production and is highly recommended, when one of Mexico’s most important Mariano González Zarur, locals create a four-mile-long centers of higher education.” Governor of Tlaxcala State carpet of flowers and sawdust Tlaxcala’s Governor Mariano across town, leading parishioners González Zarur confirms this to the main church where they assessment. “Although we are pay homage to the Virgin Mary. small, we have great potential fully inactive volcano, and wel- He also highlights the sanc- thanks to our geographic lo- coming, laid back people who tuary of the fireflies (Villas del cation and to our work force, find wisdom in their daily dia- Bosque) in the Santa Clara which is of excellent quality,” logue with the earth, the trees woods. Each summer, count- he says. After having secured and the infinite sky. less fireflies flock to the oyamel $36.5 million of foreign direct One of the first things you trees, where females light up in investment (FDI) in 2013, main- see on the road from DF to order to attract suitable mates. ly in light industry, Tlaxcala now Tlaxcala is a large sign that Night after night, the whole hopes to lure more foreigners, reads “Volcán La Malinche” forest scintillates as if by magic. investors and visitors alike. (La Malinche volcano), named “The potential is here and eco- So what draws people to one after an infamous indige- nomic growth is well on its way,” of the smallest states in Mexico? nous woman who gave away adds the governor.

Our World Insert is produced by United World. USA Today did not participate in its preparation and is not responsible for its content Our World Insert is produced by United World. USA Today did not participate in its preparation and is not responsible for its content 14 Distributed by USA TODAY MEXICO

On the rise

Visitor numbers increase as n Between January and July 2014, Chiapas received 2,913,172 visitors, which represents green agenda gains ground an 11.76% increase compared with Environmentally sensitive tourism approach taps into rising demand for adventure and eco-tourism in one of the safest states in the country: Chiapas the same period last year. hiapas is a reign of emerald and tur- n 87% of visitors quoise, where the to the state in this rainforest and the period were nationals waterfalls are so pure, so mag- (2,533,729), which Cic that we wish there were a represents a 15% hundred words to say “green” increase compared and another hundred to say with the same “blue”. Maybe the Mayans period in 2013. had such a wealth of vocabu- lary to describe their enchant- n Expenditures by ed land, just as the Inuit have tourists increased by a hundred words to describe 10.6% year-on-year. the snow. The southernmost state of n Hotel occupancy Mexico, Chiapas is the “green was 36%, compared lung” of the country. Its rich, with 38% last year. fertile lowland was once home But the number to the Mayas, one of the most of hotel rooms fascinating pre-Columbian increased by 250 civilizations, which spread (which explains from the Yucatán peninsula the decrease in to Guatemala and Belize. occupancy rate). To this day, people of The total number Chiapas, including direct de- of hotel rooms scendants from the ancient available is 19,008. Mayas, revere nature perhaps n The most visited the exceptional places are: San architectural and A series of magnificent blue-water falls, the Cataratas de Agua Azul cut through dense green rainforest in southern Chiapas and include a 120ft drop at Misol-Ha Cristóbal de Las sculptural remains Casas, Chiapa de at Palenque make Site. The grey pyramids Misol-Ha and the near- Corzo, Comitán de it “one of the most emerging from the jungle by translucent Cataratas Domínguez, Tuxtla outstanding Classic make it “one of the most out- de Agua Azul (blue-water Gutiérrez, Palenque, Tapachula, and period sites of the standing Classic period sites falls) 42 miles away from of the Maya area” according Palenque, in the heart of the Tonalá-Puerto Arista. Maya area” to UNESCO and attest to “the Lacandon jungle. creative genius of this civiliza- Another Maya site near n Chiapas is the more than many of their fel- tion”, which was initially es- Palenque that should not be second most visited low countrymen. Indeed, they tablished circa 2000 BC and missed are the twin ruins of state of the Maya elected in 2012 as governor a reached its peak between 500 Yaxchilán and Bonampak. World (mundo maya) member of the Green Party and 700 AD. The latter contains striking after Quintana (Partido Verde Ecologista The Mayan empire col- murals whose vivid colors Roo and before Mexicano, PVEM), Manuel lapsed around the 10th cen- of red, turquoise and yellow Yucatán, Tabasco Velasco Coello. As expect- tury for reasons that are still have been amazingly pre- and Campeche. ed, the protection of the en- unclear (war, diseases, envi- served in spite of the damp vironment and sustainable ronmental catastrophes are jungle environment. n Between January development are high on his all cited as possible causes), There are many other and July 2014, 16 agenda. For example, Chiapas but the Maya people managed things to see in Chiapas but cruise ships arrived is a world leader in organic to survive the Spanish con- with this selection, visitors in Puerto Chiapas, coffee production – it is the quest and to preserve some of will have a good idea of what compared with leading producer of coffee of their customs into modern- this place is about. Quite a 10 in the same Mexico, with 40% of the total day Mexico. far cry from the tired clichés period last year. production. Although it is not as popu- about Mexican culture. The total number Having a cup of locally lar as other world-renowned The governor is on a mis- of passengers grown organic coffee is not a sites such as Chichen Itza sion to make his state better they brought was bad way to start a journey into (Yucatán) and Teotihuacán known. “We have great tour- 40,490, which Chiapas, for instance in one of (State of Mexico), Palenque’s ism potential, which we are represents a 50.6% the hip cafes of San Cristóbal reputation is, unsurprisingly, developing. We have demon- increase compared de Las Casas. Nestled in the growing. “Because of the in- strated that Chiapas is a safe to last year (21,667 mountains, it is refreshingly San Cristóbal de las Casas at night and rafting on the Cataratas de Agua Azul vestment and development state not only for vacations passengers). cool and surprisingly trendy. under way there, notably the but also for investment,” says It is also home to a large nity in the town of San Juan ers perform ceremonies in new international airport, it Mr. Velasco Coello. Indeed, n The income Mayan community, who still Chamula. Here, the local the church itself, where the is becoming one of the most in 2011, the administrative generated January live by their age-old customs church has been converted pews and the altar have been important destinations in capital of Tuxtla Gutiérrez to July in 2014 and beliefs as do their broth- into a native sanctuary after removed. Mexico,” says Mr. Velasco was the first in Mexico to reached $1,614,690, ers all around Chiapas. the priest was expelled de- Some 180 miles away sits Coello. be certified “safe city” by the compared with A few miles from San cades ago for trying to impose one of the most breathtaking From Palenque, it is quite federal government and by $757,680 in the Cristóbal you can immerse on the locals the Catholic sites of the whole of Mexico, easy to reach paradise, the independent Karolinska same period yourself in a thriving con- catalogue of do’s and don’ts. the sanctuary of Palenque, or so it seems when dis- Institute of Sweden, due to last year. temporary Mayan commu- Now, Mayan spiritual lead- a UNESCO World Heritage covering the waterfalls of its very low crime rate. Thousands benefit from sustainable growth and welfare

In just two years, Chiapas State has seen real changes take shape

Manuel Velasco Coello, In the area of transport in- the country. “It is very impor- the young governor of frastructure, the state govern- tant for us to care for and pre- Chiapas, and his team have ment is particularly proud of serve our rainforest,” he says. already achieved significant the new international airport “We have a comprehensive progress in the two years of Palenque. “This is a strate- environmental policy that in- since he took office with an gic equipment for the state,” cludes a curricular program in agenda based on sustainable says the governor. With a price schools, which was designed growth and welfare. tag of $19.7 million, it is be- with the help of environmen- Manuel Velasco Coello, Governor of Chiapas State, has overseen policies that have already benefitted 40,000 coffee producers One of the most important ing paid jointly by the federal tal experts. Indeed the best achievements is certainly the state and Chiapas. Obviously, way to care for the environ- investments of $16.1 million to see producers getting more doors sports centers planned record on safety. “Chiapas has ment is through education and from the private sector. profit, without the abuse of for 2014. The objective of the become one of the safest states health, education, awareness raising.” It is to be The agricultural policy also intermediaries.” state government is to reach in Mexico,” says Mr. Velasco infrastructure, noted that this educational includes initiatives to boost Regarding health, the 1,000 new gyms by the end of Coello. “The most important transport, public program, titled Educating on the all-important coffee sec- groundbreaking program the six-year mandate. factors, apart from the security safety and Environmental Responsibility tor. The program for the “Wellbeing from heart to Last but not least, the state of policy being carried out at the agriculture have all (Educar con Responsabilidad renovation of coffee planta- heart” (Bienestar, de corazón Chiapas recorded 5.2% growth federal level, is that we have set seen improvements Ambiental, ERA) has been se- tions has already benefitted a corazón), seeks to provide in the first quarter of 2014, up a new municipal police that through green party lected by authorities as a sub- 40,000 producers. The cre- help to single mothers through according to the National it is better paid, better trained pledges taking action ject for the first grade of sec- ation of the Chiapas Institute financial support, health ser- Institute of Statistics and and better equipped. We have ondary school. of Coffee (Incafech) is anoth- vices, education, empower- Geography (INEGI). Growth strong crime prevention poli- Regarding agriculture, a key er important initiative in this ment for self-employment, is mainly based on the indus- cies in which citizens are en- this equipment will go a long sector for Chiapas, a leading sector, in which investment and micro-credits. trial sector (20.4%) and partic- couraged to participate. We way to foster tourism in and project is the creation of an has so far reached $39.3 mil- Another important land- ularly the construction sector, have reclaimed urban public around the famous Maya site. agro-industrial park, which lion, including investment mark is the new 180-bed Dr. with the service sector grow- spaces that had been taken As a member of the will bear the brand name from the coffee federation. Jesús Gilberto Gómez Maza ing by 0.5%. over by delinquency, and we Green Party (Partido Verde “Chiapas”. The initial invest- Concerning this sector, the hospital, which is expected to Such projects and results campaign against alcohol and Ecologista de Mexico, PVEM), ment of $29.3 million is co- Chiapas brand “will help pro- carry out some 193,000 medi- are becoming the hallmarks drug abuse. Also, we receive Mr. Velasco Coello has a sol- financed by the Secretariat of ducers to advertise and com- cal examinations a year. This of an impressive couple of strong support from the fed- id pro-environment policy, Agriculture, Livestock, Rural mercialize their products on represents a 57% increase in years for the governor and eral level to design and imple- a theme particularly impor- Development, Fisheries and the national and internation- health services in the state. his proactive policies making ment our crime prevention tant in a state which boasts Food. In addition, the proj- al markets,” says Mr. Velasco Also of note is the con- a tangible difference to life in policies and programs.” the greatest biodiversity of ect has already obtained total Coello. “Our ultimate goal is struction of 650 new out- the state.

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ESSA aims to produce 12m metric tons by the end of 2016, representing a 50% increase in six years

Potential 100x rise in salt sales Parastatal salt exporter obtained from the efficiency mand, Mr. López Portillo is With the chemical indus- that ESSA could increase metric tons, it is no surprise ESSA aims to dramatically and growth of the company ensuring that Mexico has try as the largest consumer its sales value – currently at that the Mexican government add to already rising profits affect the salaries of its work- an impact on the chemical of salt – NaCl being the base $150 million – 100-fold. recognizes salt as their na- and production by adding ers. “President Peña Nieto is industry: one that, as em- of bromine, potassium sul- Considering ESSA’s ad- tional asset. “Chemical indus- value to its products mandating the democratiza- phasized by President Peña phate, and polyvinyl chlo- vancements and the fact that tries around the world prefer tion of productivity and social Nieto during the September ride, amongst others – by global demand for salt is fore- to use Guerrero Negro salt; resident Enrique responsibility, and we, as a 2013 G-20 summit in St. tapping into the derivatives cast to climb 1.5% annually it’s the purest on the market,” Peña Nieto’s Mexico, parastatal, should set the ex- Petersburg, is a key market. industry, the CEO estimates through 2018 to 324 million highlights Mr. López Portillo. among many things, ample,” the CEO says. is in the process of fa- Indeed, with the salt works cilitating the creation of glob- embedded in an environ- allyP competitive industries. mentally significant location Taking advantage of this new – with 132 documented bird scenario of global compet- species and a large migration itiveness is Exportadora de of grey whales – social and Sal (ESSA), the world’s larg- environmental responsibility est saltworks, situated on the is also, in the CEO’s words, a salt flats of Baja California Sur “key matter”. near Guerrero Negro, a town The company’s commit- that has become a byname for ment to protecting the sur- the purest quality of salt. rounding environment is ev- A co-investment between ident by not only the work of Mexico’s Ministry of their Department of Ecology Economy’s Mining Pro- and Safety, which ensures motion Trust Fund, which that all of its activities, prod- ucts and services remain essa ensures all 100% compatible with the of its activities are environment, but also by the 100% compatible with certifications that ESSA has the environment been awarded, such as the and meet exacting Clean Industry Certification international granted in 2000 by Mexican quality standards environmental authori- ties, and the certification of Environmental Management owns 51% of the shares, and System under the interna- the Japanese Mitsubishi tional standard ISO-14-001. Corporation, owning the re- “Recently, Achim Stenier, maining 49%, ESSA was orig- Executive Director of the UN inally established in 1954 by Environmental Program, American naval entrepreneur told me that never in his Daniel K. Ludwig, whose in- life had he been surround- genious idea to extract salt ed by so much biodiversity from the ocean water by evap- and natural wealth while be- oration has turned this every- ing in a factory,” relates Mr. day element into Mexico’s López Portillo. “white gold”. “This made us very proud In fact, the company and because it acknowledges that the salt industry have been so not only are the geographic, important to Mexico’s indus- geological and atmospheric try that in May this year, the conditions unique in this cor- National Lottery presented a ner of the world – nowhere special commemorative 60th else is there so much flat land anniversary lottery ticket in along the coast with low pre- honor of ESSA. It was also an- cipitation (under two inch- nounced earlier this year that es) and with winds that help Los Cabos was chosen as the erode the water to form the site for the 2016 International crystals – but also our instal- Salt Symposium; this will be lations coexist with the en- the first time the conference is vironment and even serve as held in a developing country. a habitat. Some 170,000 sea- Mexico’s efforts in fur- birds, some of which fly all the ther opening its economy to the rest of the world has not In 2013, ESSA’s been the only advantageous revenues rose 26% element aiding ESSA’s grow- and profits by 23%, ing presence in the world salt and global demand market. ESSA was also re- for salt is forecast cently blessed with the arriv- al of Jorge Humberto López to climb 1.5% Portillo, who took over as the annually through company’s CEO in July 2013. 2018 to 324 million Mr. López Portillo’s impres- metric tons sive leadership and immedi- ate decision to increase salt way from Russia to spend the production and profit led winter here with us, call our the company full throttle in- artificial lagoons home.” to what seems to be the begin- Despite the degree of in- ning of a golden era. stability that permeates the In the first six months of salt industry – in both world Mr. López Portillo’s manage- market demand and pro- ment, ESSA’s production in- duction – ESSA has for de- creased by 10%, producing a cades maintained an increase record 8 million metric tons in its production, enabling of industrial salt (compared the company to become the to an average of 7.2 million world’s third largest exporter metric tons in previous years). of salt, with exports to Japan, A 26% increase in revenue the U.S., South Korea, Central (amounting to $136 million at America, Canada, Taiwan the end of 2013) increased the and New Zealand. However, company’s net profit by 23%. with smart strategies and big “As a mainly publicly owned visions, Mr. López Portillo company, we are world lead- plans to gain momentum: by ers in terms of quality and the end of 2014 ESSA will quantity of production,” Mr. produce 9.5 million metric Lopez Portillo proudly states. tons, with an ultimate ob- The CEO largely attri- jective of reaching 12 mil- butes ESSA’s recent achieve- lion metric tons by the end ments to the efforts of his of 2016, an increase which staff. Recognizing the impor- would represent a 50% rise tance of his workforce, Mr. during the six years of the cur- López Portillo’s new strategy rent administration. affects the treatment of his Through the decision to workers by means of, what transcend from salt produc- he calls, “the democratiza- tion alone to transformation tion of Mexican productiv- into value-added products ity,” whereby the dividends based on global market de-

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