The Border Security and Immigration Enforcement Improvements order is one of the most controversial and divisive bills ever to be raised by a US president, and whilst Donald Trump continues to battle to “make Mexico pay”, the country is working hard to grow its economy.
In an exclusive interview with Craig Dempsey, founder of back-office service provider Biz Latin Hub, we discuss Mexico’s bright economic future and opportunities for investors.
Would you say Mexico’s economy is on the up?
Mexico has a $2.4 trillion economy – the 11th largest in the world. Over the past several decades, the country has grown through manufacturing, and thanks to the North American Free Trade Agreement, is the United States’ second largest export market, with two-way trade reaching $623 billion in 2017. Despite being demonized, trade between the two countries is important, although trade with Peru, Colombia, and Chile is also on the up.
As well as manufacturing, I’ve witnessed a boom in Mexico’s mining sector, with investors pouring billions into the country to extract precious metals. Tourism, on the other hand, is another industry on the rise – it’s the third-largest source of foreign exchange, with Mexico attracting 40 million tourists in 2018.
What is the government doing to change its country’s fate?
President Andrés Manuel López Obrador only entered office in December 2018 but has already made radical changes. As well as cutting the highest government salaries and increasing lower ones, he has announced plans to expand social programs to help the poor and marginalized. That may not seem to benefit to businesses, but by distributing money, demand will rise, and we’ll see middle-class citizenship increase (it currently stands at 47%).
In January 2019, he announced a plan to stimulate economic activity on the US-Mexico border and will slash income and corporate taxes to just 20 percent (from its previous 30%) in six states south of the United States, and half VAT in the region to encourage growth and investment. Business leaders have also announced plans to increase minimum wage on the border to 176.2 pesos a day (around US$9).
How easy is it to get started in Mexico?
Starting a Mexican company is a straightforward process. Foreign ownership is encouraged, and the incorporation process completed in four weeks. You will need an address and legal representation, and a minimum of two shareholders, but there is no minimum share capital, reducing the barriers to entry and making it an attractive opportunity for businesses looking to grab a slice of Mexico’s lucrative markets.
If I could offer entrepreneurs one piece of advice, I’d encourage them to make the leap and get started in Mexico as soon as they can. The economy is on the up, investment is rising, and opportunities are harder to find. It’s best to enter the market before your competitors get there, so don’t wait around!