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New Special Economic Zones Proposed by Mexico’s Peña Nieto
By admin October 6, 2015

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On September 29th, the Mexican President, Enrique Peña Nieto, presented a bill to create three special economic zones in Mexico’s poorer southern states. Mexico’s southern states have historically lagged behind the rest of the country in education and living standards. Over the past three decades, the southern states per capita domestic product has increased just 7%. In contrast, per capita output has grown 47% in the industrialized northern and north-central regions of Mexico. According to the National Council of Evaluation of Social Development Policy, 74% of Chiapas residents, 67% of Guerrero residents, and 61% of Oaxaca residents live in extreme poverty. These three states also have the lowest scores in the UN Human Development Index.

According to the Peña Nieto government, the special economic zones will complement social policies with cutting-edge economic policies that raise productivity, create new jobs and wealth, and increase social welfare. In an effort to bridge the north-south divide, the government plans to establish the first special economic zones in the industrial Inter-Oceanic Corridor in the Isthmus of Techuantepec, which joins the Gulf and Pacific coasts between Coatzaocoalcos and Salina Cruz, the Pacific ports of Puerto Chiapas, and the municipalities adjoining the Port of Lazaro Cardenas. According to the Finance Minister, Luis Videgaray, the Peña Nieto administration hopes to see the legislation implemented this year and to have designated zones by 2016 with the first companies setting up in the designated areas by 2018.

The special economic zones are designed to provide a framework of measures to ensure a favorable environment for business development. The proposal, which was drawn up with the aid of the World Bank, hopes to foment industrialization, attract foreign direct investment, create jobs, and generate export revenue. The zones would include tax incentives for companies investing and employing in the designated areas, trade facilities and duty-free customs benefits, as well as a streamlining of regulatory processes.

According to Mexican officials, special economic zones have proved as an effective measure in over 3,500 cases in countries such as Brazil, South Korea, and China. However, Gerardo Corrochano, the World Bank’s country director for Colombia and Mexico, Latin America and Caribbean, warned that not all special economic zones have been successful without a strong role of private sector investors connecting the zones to the region. Peña Nieto, with a long-term vision in mind, said that the special economic zones would require a capacity to coordinate policy decisions at different levels of government and for officials to keep in mind the objectives of higher productivity and competitiveness.

Mexican economist and policy analyst, Pedro Valenzuela Parcero, says that the “municipal and state-level institutions often don’t have the political will or the human capital to set these programs in motion.” Furthermore, Parcero believes that the government will need to improve transparency and accountability, as well as make a credible commitment to diminish corruption before implementing such a proposal. Moreover, in a February report on special economic zones, the World Bank reported that “special economic zones have problems attracting high quality investments and talents, and face great challenges in sustaining their growth or upgrading their industrial structures.” However, the Peña Nieto administration believes that Mexico’s special economic zones proposal is designed differently to guarantee inclusive growth for the regions and the nation.

 

For More Information:

http://www.wsj.com/articles/mexico-to-create-special-economic-zones-to-develop-poor-southern-states-1443568912

http://abcnews.go.com/International/wireStory/mexico-start-special-zones-underdeveloped-areas-34134595

http://panampost.com/luis-eduardo-barrueto/2015/10/01/pena-nieto-rolls-out-special-zones-for-flagging-mexican-economy/

http://www.mexidata.info/id4222.html

 

Image Source: WSJ


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