VZCZCXRO2250
PP RUEHCD RUEHGD RUEHHO RUEHMC RUEHNG RUEHNL RUEHRD RUEHRS RUEHTM
DE RUEHME #3937/01 2061637
ZNR UUUUU ZZH
P 251637Z JUL 07
FM AMEMBASSY MEXICO
TO RUEHC/SECSTATE WASHDC PRIORITY 8150
INFO RUEHXC/ALL US CONSULATES IN MEXICO COLLECTIVE PRIORITY
RUCPDOC/DEPT OF COMMERCE WASHDC PRIORITY

UNCLAS SECTION 01 OF 02 MEXICO 003937 
 
SIPDIS 
 
SIPDIS 
 
STATE FOR WHA/MEX, WHA/EPSC, EB/IFD/OIA 
USDOC FOR 4320/ITA/MAC/WH/ONAFTA/GERI WORD 
 
E.O. 12958: N/A 
TAGS: ECON EINV ELTN ENRG MX
SUBJECT: MEXICO'S NATIONAL INFRASTRUCTURE PLAN 
 
REF: A. MEXICO 2852 
 
     ¶B. MEXICO 3246 
 
Summary 
------ 
 
¶1. (U) Summary.  President Calderon presented the National 
Infrastructure Program (NIP) on July 18.  The NIP is the 
infrastructure component of Mexico's National Development 
Plan (ref A) and seeks to improve Mexico's competitiveness. 
The plan presents ambitious goals for infrastructure 
investment with the participation of both the public and 
private sectors.  Calderon also highlighted three different 
outcomes based on the government's ability to pass structural 
reforms.  The NIP was well received and could prove a strong 
foundation for increasing Mexico's infrastructure posture. 
Calderon Administration (Presidencia) contacts expressed a 
strong interest in encouraging the participation of U.S. 
investment in the plan.  End Summary. 
 
National Infrastructure Program 2007-2012 
----------------------------------------- 
 
¶2. (U) Emboffs joined federal officials, state governors, 
Mexican congressmen, and private sector representatives for 
President Calderon's presentation of the National 
Infrastructure Program 2007-2012: "Constructing a better 
Mexico" (NIP) on July 18.   The infrastructure program is 
divided into four parts: the current situation, the long term 
vision with objectives and strategies, the sectoral vision 
with indicators and specific goals, and the investment 
requirements to achieve the goals.  Sectors covered by the 
plan include highways, airports, intermodal terminals, water 
projects, and telecommunications and information technology. 
The Secretariat of Communications and Transportation (SCT), 
the Secretariat of the Environment and Natural Resources 
(SEMARNAT), the Secretariat of Energy (SENER), and the 
Secretariat of Tourism (SECTUR) share roles in carrying out 
 
SIPDIS 
the proposal. 
 
¶3. (U) The NIP calls on the government and private sector to 
join together to increase the quality and quantity of public 
investment in infrastructure, adding that Mexico needs to 
take advantage of its economic stability to develop its 
infrastructure.  The World Economic Forum ranks Mexico 64th 
out of 125 countries for infrastructure competitiveness. 
Infrastructure investment averaged only 3.2 percent of GDP 
for the previous 5 years with non-energy related 
infrastructure investment only accounting for 1.8 percent of 
GDP.  This compares to Chile where infrastructure investment 
is 5.8 percent of GDP and China at 7.3 percent. 
 
¶4. (U) Calderon presented three objectives to be accomplished 
during his term: improve water, electricity and sewage 
systems and construct schools and hospitals to connect poorer 
regions of Mexico to the rest of the country; construct and 
improve the infrastructure necessary to increase national 
competitiveness; and convert Mexico into a "logistical 
powerhouse" by taking advantage of its geographical and 
commercial advantages.   The NIP calls for Mexico to be a 
leader in Latin American infrastructure coverage and quality 
by 2012 and among the top 20 percent of all countries by 2030. 
 
 
Three Infrastructure Scenarios 
------------------------------ 
 
¶5. (U) Calderon calls for investments of USD 231 billion over 
the next 5 years, a 50 percent real increase in 
infrastructure investment over the last administration.  The 
majority of the investment will be joint public-private with 
55 percent from federal, state and municipal sources and 45 
percent from the private sector.   He noted that the 
estimates depend on passage of the fiscal reform package (ref 
B).  He planted three scenarios for infrastructure 
development termed "base", "inertia" (decreased investment), 
and "outstanding" (greater investment).  The "base" scenario 
assumes that the Mexican Congress passes the fiscal reform 
law and at least half of the increase in revenue is channeled 
towards infrastructure.  Under this scenario, with the 
support of private sector investments, Mexico can expect an 
additional 0.6 percent in economic growth and an additional 
700 thousand new jobs.  The "inertia" scenario assumes that 
Congress does not pass the fiscal reform law and would call 
for a decrease in infrastructure spending as moneys intended 
for infrastructure projects are used to support other 
government expenditures.  The last scenario, dubbed 
"outstanding", would require not only fiscal reform, but also 
labor, energy, or telecommunications reform.  According to 
 
MEXICO 00003937  002 OF 002 
 
 
Calderon, these structural changes would accelerate 
development in the country and could free up nearly USD 300 
billion over the next 6 years representing infrastructure 
investment of 5.5 percent of GDP.   To achieve the best 
results, Calderon said that, in addition to pushing the 
structural reforms needed his administration is taking other 
concrete steps, including: increasing resources for 
infrastructure development, increasing judicial certainty 
(through the elimination of excessive regulation on 
infrastructure investment) and improving coordination between 
the government and private sector. 
 
U.S. Business Sector Participation Encouraged 
--------------------------------------------- 
 
¶6. (U) In meeting with Emboffs, Presidencia contacts 
highlighted the time frame for the various projects presented 
by Calderon.  While the initial 300-plus projects under 
consideration are set to be completed by 2012, Presidencia 
would also look towards adding to the list of projects if 
certain reforms are passed (i.e. adding energy projects after 
the passage of energy reform), and adding projects with 
completion dates into the next administration.  To encourage 
U.S. business participation, the Embassy FCS office is in 
talks with the GOM over a possible TDA-supported conference 
to be held in winter 2007-2008.  Presidencia expressed a 
strong interest in the conference whose purpose would be to 
present key projects listed in the plan for consideration by 
U.S. contractors and providers. 
 
Comment 
------- 
 
¶7. (U) Comment:  The groups in attendance supported the NIP. 
Calderon added extra credibility to the viability of the plan 
by detailing the various reforms that would be needed to 
fully realize the program, as well as the outcome if the 
fiscal reform package, on which the program is strongly 
based, is not passed.  If the administration manages to push 
any number of the needed reforms through, the plan is a 
strong foundation for the infrastructure development needed 
to improve Mexico's overall competitiveness.  As an added 
benefit, there is ample room for American companies to 
participate as private sector investors.  End Comment. 
 
 
Visit Mexico City's Classified Web Site at 
http://www.state.sgov.gov/p/wha/mexicocity and the North American 
 Partnership Blog at http://www.intelink.gov/communities/state/nap / 
GARZA