VZCZCXRO3856
RR RUEHCD RUEHGD RUEHHO RUEHMC RUEHNG RUEHNL RUEHRD RUEHRS RUEHTM
DE RUEHME #2154/01 1151112
ZNR UUUUU ZZH
R 251112Z APR 06
FM AMEMBASSY MEXICO
TO RUEHXC/ALL US CONSULATES IN MEXICO COLLECTIVE
RUEHC/SECSTATE WASHDC 0473
INFO RUEATRS/DEPT OF TREASURY WASHDC
RUCPDOC/DEPT OF COMMERCE WASHDC

UNCLAS SECTION 01 OF 02 MEXICO 002154 
 
SIPDIS 
 
SENSITIVE 
SIPDIS 
 
STATE FOR WHA/MEX, WHA/EPSC, EB/IFD, AND EB/EPPD 
STATE PASS USAID FOR LAC: MARK CARRATO 
TREASURY FOR IA MEXICO DESK: JASPER HOEK 
COMMERCE FOR ITA/MAC/NAFTA: ANDREW RUDMAN 
 
E.O. 12958: N/A 
TAGS: ECIN ECON EFIN MX SMIG
SUBJECT: MIGRATION AND REMITTANCES PART IV: CROSS BORDER 
INVESTMENT 
 
REF: A. REF A: MEXICO 2042 
 
     ¶B. REF B: MEXICO 2097 
     ¶C. REF C: MEXICO 2123 
 
Sensitive but unclassified, entire text. 
 
This is the fourth in a series of four cables examining the 
effect of U.S. migration and remittances on the economy of 
rural Mexico. 
 
¶1. (SBU) Summary.  According to Mexican authorities, the 
number of people immigrating illegally to the U.S. in the 
first three months of 2006 grew to 275,792, an increase of 20 
percent compared to the same time period in 2005.  Many of 
these migrants have traditionally lacked financial and 
investment services, although there are a growing number of 
cross-border programs which seek to capitalize on the growing 
purchasing power of this demographic group.  Without leaving 
the U.S., migrants now construct houses in Mexico, save for 
retirement, and even finance small businesses.  Most 
importantly, through these new investment opportunities in 
the U.S., migrants may have new prospects of a better life 
while creating economic development at home in Mexico.  End 
summary. 
 
MIGRANT CONNECTION TO HOMELAND STILL STRONG 
------------------------------------------- 
 
¶2. (SBU) Most migrants retain strong ties to their 
communities of origin; according to a Pew Hispanic Center 
survey, the vast majority of immigrants (71 percent) claim 
they eventually intend to return.  Alejandra Contreras, the 
director of remittance services for the state of Michoacan, 
agreed that the public expectation is that most migrants will 
return.  (Although in practice many migrant families remain 
in the U.S. indefinitely.)  Leonardo Hernandez, the mayor of 
Cojumatlan, a rural community on the shores of Lake Chapala 
in Michoacan, explained to Econoff April 6 his viewpoint that 
migrants leave for two reasons - to support their families, 
but also to save for a comfortable retirement in Mexico. 
 
¶3. (SBU) As migrants' disposable income has grown, so has 
their demand for investment opportunities.  Ricardo Mejia, a 
project manager for Construmex, Mexico's largest construction 
company, told Econoff that "migrants no longer just want to 
survive.  They intend to come back to Mexico and find a 
reward for their hard work."  Building a quality home appears 
to be a top priority for migrants - Mejia shared a Construmex 
survey that found that while 56 percent of immigrants intend 
to build a house within five years, only 18 percent are 
actually doing so. 
 
HAZLA PAISANO! 
-------------- 
 
¶4. (SBU) Satisfying that need for home construction is the 
aim of Construmex.  In 2003, a subsidiary of the cement giant 
Cemex inaugurated their "Hazla Paisano!" (Just Do It, 
Countryman!) program marketed to migrants throughout the U.S. 
 The program has been a success - Construmex now has offices 
located in 13 American cities with large Mexican populations, 
and they intend to open 17 additional branches within five 
years.  According to Mejia, Construmex has grown its customer 
base from 7,000 in 2004 to 18,000 in March 2006, with a goal 
of 25,000 by the end of the year.  Potential clients have the 
option of visiting a branch office or ordering by telephone, 
during which time they consult with an architect.  After 
finalizing their order, cement and other supplies are 
delivered by a local distributor to a construction team of 
the client's choice.  Mejia described some of the advantages 
of Construmex's program - low fees (USD 5 per project), fair 
exchange rate (tied to Bank of Mexico's official rate), and 
personal customer service.  Payment plans are flexible, with 
materials delivered as payments are made.  Customers even 
have the option of applying for credit, offered at an 
interest rate of 9.9 percent, compared with rates of 20 
percent or higher for much consumer credit.  Construmex 
spends very little on marketing, nearly all advertising is 
via word-of-mouth. 
 
¶5. (SBU) Migrant home construction can also provide a 
significant boost to the local economy and employment.  In 
Pacambaro, a small community on the highway to Lazaro 
Cardenas in the state of Michoacan, there were seven new 
 
MEXICO 00002154  002 OF 002 
 
 
Hazla Paisano construction sites, many standing in stark 
contrast to the dilapidated shacks nearby.  Alberto Ruiz, 
manager of the Construmex distributor in Pacambaro, told 
Econoff that branch revenue had increased by 52 percent since 
2003, primarily due to the Hazla Paisano program.  Jose 
Lopez, an immigrant currently living in San Jose, California, 
is expanding the size of his house near Morelia, the capital 
of Michoacan, from 449 to 2254 square feet.  According to 
Lopez's wife, this construction will enable him to return to 
Mexico, open an auto body shop, and hire three employees. 
Lopez is also providing employment for several family members 
who are building the home for him while he is the U.S. 
 
YOUR LITTLE PIECE OF MEXICO 
--------------------------- 
 
¶6. (SBU) The banking sector is also aggressively marketing to 
migrants.  "Your Little Piece of Mexico", a program offered 
by Su Casita Hipotecaria, a leading Mexican mortgage lender, 
allows migrants to qualify for a mortgage on a Mexican home 
while working in the U.S.  Manuel Spoor, Vice-President of Su 
Casita, told Econoff March 23 that cross-border sales had 
risen by 32 percent in less than a year, and by 2010 he 
expects 10 percent of all mortgages provided by his company 
to have originated north of the border.  Contreras described 
a joint program between the government of Michoacan and 
Hipotecaria Nacional, Mexico's largest mortgage lender, to 
provide low-cost mortgages to migrants.  The trans-border 
banking boom will probably not remain confined to mortgages. 
HSBC Director of International Products Juan Lavalle 
described for Econoff March 15 a variety of potential 
products marketed to migrants, including auto and business 
loans. 
 
A CHRISTMAS CELEBRATION 
----------------------- 
 
¶7. (SBU) Breaking new ground for the public sector, the state 
governments of Michoacan, Jalisco, and Guanajuato began a 
pilot program in March 2006, allowing 200 migrants to invest 
in a pine tree planting program.  Under the guidelines of the 
project, migrants provide 60 percent of the initial outlay of 
approximately 9 million dollars (with the federal and state 
governments covering the rest), funding the planting of 7,000 
pine trees on 5 hectares of public land.  The plan is 
expected to provide long-term retirement income for the 
migrants, who will be paid their return in annual 
installments as the pines are gradually sold as Christmas 
trees.  Carlos Garcia, director of the Office of Migrant 
Services for the state of Michoacan, explained to Econoff 
that the program was conceived as a means of funneling 
remittances into more productive enterprises that should 
generate long-term economic development. 
 
COMMENT 
------- 
 
¶8. (SBU) The number of cross border investment programs 
should continue to increase in the near term, offering 
migrants growing opportunity to save and invest at home.  The 
accessibility of these programs is critical, for several 
reasons.  Remittances are Mexico's second largest income 
source, with its rapid rate of growth not likely to slow in 
the near future.  Moreover, programs that channel migrant 
income to productive ends, such as the Three-for-One program 
(Ref C), and Hazla Paisano, appear to offer greater potential 
for long-term economic development than ordinary remittance 
transfers.  Introducing and protecting policies which 
encourage the exploitation of this income for sustained 
economic development will likely be one of the incoming 
administration's greatest challenges and opportunities. 
 
 
 
 
Visit Mexico City's Classified Web Site at 
http://www.state.sgov.gov/p/wha/mexicocity 
 
GARZA