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P 221619Z JAN 08
FM AMEMBASSY MEXICO
TO RUEHC/SECSTATE WASHDC PRIORITY 0191
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RUCPCIM/CIMS NTDB WASHDC PRIORITY
INFO RUEHXC/ALL US CONSULATES IN MEXICO COLLECTIVE PRIORITY
RUEATRS/DEPT OF TREASURY WASHDC PRIORITY

UNCLAS SECTION 01 OF 07 MEXICO 000152 
 
SIPDIS 
 
SIPDIS 
 
STATE FOR EB/IFD/OIA AND WHA/MEX 
STATE PLEASE PASS TO USTR 
 
E.O. 12958: N/A 
TAGS: OPIC KTDB USTR EINV MX
SUBJECT: MEXICO'S 2008 INVESTMENT CLIMATE STATEMENT -- PART 2 OF 2 
 
REF:  07 SECSTATE 158802 
 
This is part two of a two part cable that provides text for the 2008 
Mexico Investment Climate Statement. 
 
--- 
 
Protection of Property Rights 
 
Two different laws provide the core legal basis for protection of 
intellectual property rights (IPR) in Mexico -- the Industrial Property 
Law (Ley de Propiedad Industrial) and the Federal Copyright Law (Ley 
Federal del Derecho de Autor).  Multiple federal agencies are 
responsible for various aspects of IPR protection in Mexico.  The 
Office of the Attorney General (Procuraduria General de la Republica, 
or PGR) has a specialized unit that pursues criminal IPR 
investigations.  The Mexican Institute of Industrial Property 
(Instituto Mexicano de la Propiedad Industrial, or IMPI) administers 
Mexico's trademark and patent registries and is responsible for 
handling administrative cases of IPR infringement.  The National 
Institute of Author Rights (Instituto Nacional del Derecho de Autor) 
administers Mexico's copyright register and also provides legal advice 
and mediation services to copyright owners who believe their rights 
have been infringed.  The Mexican Customs Service (Aduana Mexico) plays 
a key role in ensuring that illegal goods do not cross Mexico's 
borders. 
 
Despite strengthened enforcement efforts by Mexico's federal 
authorities over the past several years, weak penalties and other 
obstacles to effective IPR protection have failed to deter the rampant 
piracy and counterfeiting found throughout the country.  The U.S. 
Government continues to work with its Mexican counterparts to improve 
the business climate for owners of intellectual property.  Please refer 
to the Embassy's IPR Toolkit for more information: 
http://mexico.usembassy.gov/mexico/IPR.html 
 
Mexico is a signatory of at least fifteen international treaties, 
including the Paris Convention for the Protection of Industrial 
Property, the NAFTA, and the WTO Agreement on Trade-related Aspects of 
Intellectual Property Rights.  Though Mexico signed the Patent 
Cooperation Treaty in Geneva, Switzerland in 1994, which allows for 
simplified patent registration procedure when applying for patents in 
more than one country at the same time, it is necessary to register any 
patent or trademark in Mexico in order to claim an exclusive right to 
any given product.  A prior registration in the United States does not 
guarantee its exclusivity and proper use in Mexico, but serves merely 
as support for the authenticity of any claim you might make, should you 
take legal action in Mexico. 
 
An English-language overview of Mexico's IPR regime can be found on the 
WIPO website at: http://www.wipo.int/about-ip/en/ipworldwide/p df/mx.pdf 
 
Although a firm or individual may apply directly, most foreign firms 
hire local law firms specializing in intellectual property.  The U.S. 
Embassy's Commercial Section maintains a list of such law firms in 
Mexico at: 
http://www.buyusa.gov/mexico/en/business_serv ice_providers.html 
 
Transparency of Regulatory System 
 
The Federal Commission on Regulatory Improvement (COFEMER) under the 
management of the Secretariat of Economy is the agency responsible for 
reducing the regulatory burden on business. The Mexican government has 
made progress in the last few years.  On a quarterly basis, these 
agencies must report to the Presidency on progress achieved toward 
Presidential goals for reducing the regulatory burden. In December 
2006, President Calderon replaced the Regulatory Moratorium Agreement, 
issued by the previous administration to ensure agencies streamline 
their regulatory promulgation processes, with the Quality Regulatory 
Agreement.   The new agreement intends to allow the creation of new 
regulations only when agencies prove that they are needed because of an 
emergency, because of the need to comply with international 
commitments, or because of obligations established by law. 
 
The federal law on administrative procedures has been a significant 
investment policy accomplishment. The law requires all regulatory 
agencies to prepare an impact statement for new regulations, which must 
include detailed information on the problem being addressed, the 
proposed solutions, the alternatives considered, and the quantitative 
and qualitative costs and benefits and any changes in the amount of 
paperwork businesses would face if a proposed regulation is to be 
implemented. Despite these measures, many difficulties remain. Foreign 
firms continue to list bureaucracy, slow government decision-making, 
lack of transparency, a heavy tax burden, and a rigid labor code among 
the principal negative factors inhibiting investment in Mexico. 
 
The Secretariat of Public Administration has made considerable strides 
 
MEXICO 00000152  002 OF 007 
 
 
in improving transparency in government, including government 
contracting and involvement of the private sector in enhancing 
transparency and fighting corruption. The Mexican government has 
established several Internet sites to increase transparency of 
government processes and establish guidelines for the conduct of 
government officials. "Normateca" provides information on government 
regulations; "Compranet" allows for on-line federal government 
procurement; "Tramitanet" permits electronic processing of transactions 
within the bureaucracy thereby reducing the chances for bribes; and 
"Declaranet" allows for on-line filing of income taxes for federal 
employees. 
 
Efficient Capital Markets and Portfolio Investment 
 
The Mexican banking sector has strengthened considerably since the 1994 
Peso Crisis left it virtually insolvent. Since the crisis, Mexico has 
introduced reforms to buttress the banking system and to consolidate 
financial stability.  These reforms include creating a more favorable 
economic and regulatory environment to foster banking sector growth by 
reforming bankruptcy and lending laws, moving pension fund 
administration to the private sector, and raising the maximum foreign 
bank participation allowance.  The bankruptcy and lending reforms 
passed by Congress in 2000 and 2003 effectively made it easier for 
creditors to collect debts in cases of insolvency by creating Mexico's 
first effective legal framework for the granting of collateral. 
Pension reform allows employees to choose their own pension plan. 
Allowing banks or their holding companies to manage these funds 
provides additional capital to the banking sector, while the increased 
competition focuses fund managers on investment returns.  In December 
2007, the Mexican Congress approved amendments to the Law of Credit 
Institutions (LIC) that include creating a new limited banking license 
and transferring power from Hacienda to the Banking and Securities 
Commission (CNBV), the primary banking regulator. 
 
The financial profile of the banking sector has improved due to the 
reduction in the problem assets brought about by write-offs, problem 
loan sales, and the conclusion of most debt-relief programs.  These 
developments, combined with more stringent capital requirements, have 
contributed to an improvement in the level and composition of capital 
across the banking system, particularly among the larger institutions. 
 
The banking sector remains highly concentrated, with a handful of large 
banks controlling a significant market share, and the remainder 
comprised of regional players and niche banks.  Hacienda has approved 
the opening of several new banks since 2006, including Wal-Mart Bank 
and Prudential Bank, but the sector's competitive dynamics and credit 
quality are still being driven by the six large banks-five of which are 
foreign owned.  The newcomers are mostly focused on the unbanked 
population (D, E market segments) and will present only limited 
competition to group of old banks. 
 
Bank lending, especially consumer lending and mortgages, grew rapidly 
in 2005 and 2006, fueled by lower interest rates and historically low 
inflation.  Small- and medium-sized businesses still complain of a lack 
of access to credit, but government-owned development banks have 
expanded their lending to this sector.  Despite the expansion, such 
lending remains low as a percentage of GDP.  Private banks argue that 
due diligence in lending to such business is difficult given the large 
amount of revenue they keep off the books to avoid increased tax 
liability. 
 
Commercial loans to established companies with well-documented accounts 
are available in Mexico, but many large companies utilize retained 
earnings to fund growth.  Supplier credit is the main source of 
financing for many businesses.  The largest companies are able to issue 
debt for their financing needs, tapping into a growing pool of pension 
funds looking for investment options.  Non-bank financing is generally 
available, however, only to large companies with strong credit ratings 
and important commercial ties with their suppliers -- i.e., companies 
that could easily procure bank financing. 
 
The Secretariat of Finance and Public Credit sets regulatory policy and 
oversees the CNBV .  Mexico's central bank, the Bank of Mexico (BOM), 
also has a regulatory role in addition to setting monetary policy.  The 
Institute for the Protection of Bank Savings (IPAB) handles deposit 
insurance. 
 
Reforms creating better regulation and supervision of financial 
intermediaries and fostering greater competition have helped strengthen 
the financial sector and capital markets.  These reforms, coupled with 
sound macroeconomic fundamentals, have created a positive environment 
for the financial sector and capital markets, which have responded 
accordingly. 
 
The implementation of NAFTA opened the Mexican financial services 
market to U.S. and Canadian firms.  Banking institutions from the U.S. 
and Canada have a strong market presence, holding approximately 40 
 
MEXICO 00000152  003 OF 007 
 
 
percent of banking assets (as of June 2006). Under NAFTA's national 
treatment guarantee, U.S. securities firms and investment funds, acting 
through local subsidiaries, have the right to engage in the full range 
of activities permitted in Mexico. 
Foreign entities may freely invest in government securities.  The 
Foreign Investment Law establishes, as a general rule, that foreign 
investors may hold 100 percent of the capital stock of any Mexican 
corporation or partnership, except in those few areas expressly subject 
to limitations under that law (Table I).  Regarding restricted 
activities, foreign investors may also purchase non-voting shares 
through mutual funds, trusts, offshore funds, and American Depositary 
Receipts. They also have the right to buy directly limited or 
non-voting shares as well as free subscription shares, or "B" shares, 
which carry voting rights.  Foreigners may purchase an interest in "A" 
shares, which are normally reserved for Mexican citizens, through a 
neutral fund operated by a Mexican Development Bank.  Finally, state 
and local governments, and other entities such as water district 
authorities, now issue peso-denominated bonds to finance infrastructure 
projects. These securities are rated by international credit rating 
agencies.  This market is growing rapidly and represents an emerging 
opportunity for U.S. investors. 
 
Political Violence 
 
Potential investors should not find political violence a source of 
major concern.  Peaceful mass demonstrations are common in the larger 
metropolitan areas such as Mexico City, Guadalajara, and Monterrey. 
Actual violence generally takes the form of  local conflicts and 
inter-communal disputes and has occurred mostly in limited regions of 
Mexico's southern states.  Since the initial January 1994 uprising of 
the Zapatista National Liberation Army (EZLN) in the state of Chiapas, 
government forces and the EZLN have clashed only once, although Chiapas 
has also experienced unrelated local violence. The Popular 
Revolutionary Army (EPR) and the Revolutionary Army of the People's 
Insurgency (ERPI) emerged in June 1996 and June 1998, respectively. 
They have carried out a number of small attacks, principally confined 
to the state of Guerrero. 
 
In November 2006, the EPR claimed responsibility for three explosions 
in Mexico City, one of which damaged a branch of Scotia Bank.  On two 
occasions in the summer of 2007, the EPR also claimed responsibility 
for bombings of PEMEX pipelines in the states of Guanajuato and 
Veracruz.  While no injuries were reported, there was extensive 
property damage and temporary disruption to flows of oil and natural 
gas along damaged pipelines, negatively impacting up to 1000 
businesses.  Economic losses were reported to be in the hundreds of 
millions of dollars. 
 
The last half of 2006 saw intense protests in the state of Oaxaca 
demanding, principally, the state governor's resignation.  The capital 
city of Oaxaca was under siege by demonstrators for more than five 
months.  Businesses - particularly those in the tourist sector -- 
reported millions of dollars in losses and many Western countries, 
including the United States, issued travel warnings advising their 
citizens to avoid the area.   At least 11 civilian deaths, including 
that of an American journalist, occurred as a direct result of the 
violence in Oaxaca and hundreds more were injured and/or arrested. 
State police forces were accused of denying due process to protestors 
and using excessive force to break-up the demonstrations.  In response 
to the escalating violence, the federal government sent the sent the 
Federal Protective Police to restore order.  In 2007 , Oaxaca remained 
calm for the most part and experienced only sporadic disturbances. 
 
Narcotics trafficking-related violence is prevalent along the northern 
border region of Mexico and has shown signs of spreading to other areas 
-- including the states of Guerrero and Michoacan -- as the federal 
government has attempted to crack down on the trade.  President 
Calderon has made fighting organized crime and curbing violence one of 
his highest priorities.   During 2007 he mounted large-scale military 
and federal police operations against criminal organizations in eight 
Mexican states and initiated wide-reaching law enforcement and criminal 
justice reforms.   President Calderon has signaled his commitment to 
significantly stepping up cooperation with the US Government on law 
enforcement and security issues, particularly in combating illegal 
narcotics trafficking.    Narcotics-related violence remained 
widespread at years-end with more than 2600 individuals (including 
close to 250 federal, state and local officials) killed during the 
course of the year. 
 
Though not political in nature, the Embassy has noticed that general 
security concerns remain an issue for companies looking to invest in 
the country.    Many companies find it necessary to take extra 
precautions for the protection of their executives.  They also report 
increasing security costs for shipments of goods..  The Overseas 
Security Advisory Council (OSAC) monitors and reports on regional 
security for American businesses operating overseas.   Eligible 
companies should become OSAC members.  OSAC constituency is available 
 
MEXICO 00000152  004 OF 007 
 
 
to any American-owned, not-for-profit organization, or any enterprise 
incorporated in the U.S. (parent company, not subsidiaries or 
divisions) doing business overseas.  (https://www.osac.gov/) 
 
Corruption 
 
Corruption has been pervasive in almost all levels of Mexican 
government and society. President Calderon has stated that his 
government intends to continue the fight against corruption and 
government agencies at the federal, state and municipal levels are 
engaged in anti-corruption efforts. The Secretariat of Public 
Administration has the lead on coordinating government anti-corruption 
policy. 
 
Other government entities, such as the Supreme Audit Office of the 
Federation (equivalent of the GAO), have been playing a role in 
promoting sound financial management and accountable and transparent 
government with limited success as most Mexican external audit 
institutions (mostly at the state level) lack the operational and 
budgetary independence to protect their actions from the political 
interests of the legislators they serve. Technical assistance is being 
provided to them by USAID to promote the use of modern auditing 
practices. 
 
Mexico ratified the OECD convention on combating bribery in May 1999. 
The Mexican Congress passed legislation implementing the convention 
that same month. The legislation includes provisions making it a 
criminal offense to bribe foreign officials. A bribe to a foreign 
official cannot be deducted from Mexican taxes. Mexico is also a party 
to the OAS Convention against Corruption and is one of 13 countries 
that have signed and ratified the United Nations Convention against 
Corruption. 
 
The government has enacted strict laws attacking corruption and 
bribery, with average penalties of five to ten years in prison. A 
Federal Law for Transparency and Access to Public Government 
Information Act, the country's first freedom of information act, went 
into effect in June 2003 with the aim of increasing government 
accountability. With USAID assistance, 20 of Mexico's 31 states have 
replicated federal efforts by passing similar freedom of information 
legislation, the vast majority of which meets international standards 
in this field. Three years after its passage, transparency in public 
administration at the federal level has noticeably improved, but access 
to information at the state and local level has been slow. 
 
Mexico is ranked 72nd in international NGO Transparency International's 
Corruption Perception Index for 2007, on par with China, India, and 
Brazil.   Local civil society organizations focused on fighting 
corruption are still developing in Mexico. The USAID-funded Project 
Atlatl has worked to coordinate and promote anti-corruption activities 
with Mexican civil society (www.atlatl.com.mx) and other key players in 
the anticorruption arena, such as federal and state audit institutions. 
The Mexican branch of Transparency International also operates in 
Mexico. The best source of Mexican government information on 
anti-corruption initiatives is the Secretariat of Public Administration 
(www.sfp.gob.mx). 
 
Bilateral Investment Agreements 
 
NAFTA governs U.S. and Canadian investment in Mexico. In addition to 
NAFTA, most of Mexico's eleven other free trade agreements (FTAs) cover 
investment protection, with a notable exception being the 
Mexico-European Union FTA. The network of Mexico's FTAs containing 
investment clauses encompasses the countries of Bolivia, Chile, Costa 
Rica, Colombia, El Salvador, Guatemala, Honduras, Japan, and Nicaragua. 
 
Mexico has enacted formal bilateral investment protection agreements 
with 21 countries: 13 European Union Countries (Austria, Belgium, 
Luxemburg, Czech Republic, Denmark, Finland, France, Germany, Greece, 
Italy, Netherlands, Portugal, Spain, Sweden), as well as Australia, 
Argentina, Cuba, Iceland, Panama, South Korea, Switzerland, and 
Uruguay. Agreements with Australia, Iceland and Panama were signed in 
2005, but the Senate still has to ratify them. Mexico continues to 
negotiate bilateral investment treaties with China and India. 
 
The United States and Mexico have a bilateral tax treaty to avoid 
double taxation and prevent tax evasion. Important provisions of the 
treaty establish ceilings for Mexican withholding taxes on interest 
payments and U.S. withholding taxes on dividend payments.  The recent 
implementation of the IETU has led to questions as to whether the new 
tax meets the requirements of the bilateral tax treaty.  As of January 
2008, when the tax initially goes into effect, the U.S. Internal 
Revenue Service will allow businesses to credit the IETU against their 
U.S. taxes.  Businesses should monitor this issue as it develops. 
 
Mexico and the United States also have a tax information exchange 
agreement to assist the two countries in enforcing their tax laws. The 
 
MEXICO 00000152  005 OF 007 
 
 
Financial Information Exchange Agreement (FIEA) was enacted in 1995, 
pursuant to the Mutual Legal Assistance Treaty. The agreements cover 
information that may affect the determination, assessment, and 
collection of taxes, and investigation and prosecution of tax crimes. 
The FIEA permits the exchange of information with respect to large 
value or suspicious currency transactions to combat illegal activities, 
particularly money laundering. Mexico is a member of the financial 
action task force (FATF) of the OECD and has made progress in 
strengthening its financial system through specific 
anti-money-laundering legislation enacted in 2000 and 2004. 
 
OPIC and Other Investment Insurance Programs 
 
In June 2003, Mexico and the U.S. Overseas Private Investment 
Corporation 
(OPIC) signed an agreement that enables OPIC to offer all its programs 
and services in Mexico.  The Mexican Senate approved full OPIC 
operations in August of 2004.  Since then, OPIC has aggressively 
pursued potential investment projects in Mexico.  OPIC increased its 
support for U.S. investment in Mexico more than tenfold when it 
approved 570 million USD in financing for new projects in February of 
¶2005. 
 
OPIC-supported funds are among the largest providers of private equity 
capital to emerging markets.  Since 1987, OPIC has committed (as of FY 
2005) over 2.6 billion USD in funding to 32 private equity funds.  The 
OPIC funds currently investing in Mexico include Darby-BBVA Latin 
America Private Equity Fund, LP with a primary focus on equity 
investments in media and communications, transportation, consumer 
goods, housing, energy, and non-bank financial services and Latin Power 
III, L.P. focusing on equity investments in independent power projects 
("IPPs") in Latin America and the Caribbean with a focus on renewable 
energy and Mexico. 
 
Details of OPIC programs and recent investment project announcements 
can be found at their website: www.opic.gov. 
 
In October 2007, Mexico signed the convention of the World Bank's 
Multilateral Investment Guarantee Agency (MIGA).. To complete the 
membership process, Mexico needs to pass legislation legalizing 
membership, as well as make required capital contributions to the 
agency. 
 
Labor 
 
Mexico's Federal Labor Law, enacted in 1931 and revised in 1970, is 
based on article 123 of the Mexican constitution. Under the law, 
Mexican workers enjoy the rights to associate, collectively bargain, 
and strike.  The law sets a standard six-day workweek with one paid day 
off. For overtime, workers must be paid twice their normal rate and 
three times the hourly rate for overtime exceeding nine hours per week. 
Employees are entitled to most holidays, paid vacation (after one year 
of service), vacation bonuses, and an annual bonus equivalent to at 
least two weeks pay. Companies are also responsible for these 
additional costs.   These costs usually add about 30 to 35 percent to 
the average employees' salary. Employers must also contribute a 
tax-deductible two percent of each employee's salary into an individual 
retirement account. Most employers are required to distribute ten 
percent of their pre-tax profits for profit sharing.  Speaking on 
behald of the current administration the Labor Secretary has repeatedly 
affirmed that labor reform is and remains one of the top priorities of 
President Calderon's government. 
 
There is a large surplus of labor in the formal economy, largely 
composed of low-skilled or unskilled workers. On the other hand, there 
is a shortage of technically skilled workers and engineers. 
Labor-management relations are uneven, depending upon the unions 
holding contracts and the industry concerned. Mexican manufacturing 
operations are experiencing stiff wage competition from Central 
America, China, India, and elsewhere in low technology work, such as 
textile and garment manufacture. 
 
For the past few years, with the possible exception of the mining 
industry, strikes have been limited and usually settled quickly. 
Strikes that are more difficult will usually draw government mediators 
to help the settlement process.  Independent unions have been playing 
an increasingly significant role, particularly since the formation of 
the new Labor Federation (National Union of Workers) in November 1997. 
  Information on unions registered with federal labor authorities is 
supposed to be available to the public via Internet (www.stps.gob.mx), 
but this database is incomplete. 
 
Foreign-Trade Zones/Free Ports 
 
In addition to the IMMEX programs that operate as quasi-free trade 
zones, in 2002 Mexico approved the operation of more traditional free 
trade zones (FTZ). Unlike the previous "bonded" areas that only allowed 
 
MEXICO 00000152  006 OF 007 
 
 
for warehousing of product for short periods, the new FTZ regime allows 
for manufacturing, repair, distribution, and sale of merchandise. There 
is no export requirement for companies operating within the zone to 
avail themselves of tax benefits. Regulatory guidance for the new 
regime is still being amended; therefore investors should consult a tax 
lawyer for detailed information. Most major ports in Mexico have bonded 
areas ("recinto fiscalizados") or customs agents ("recintos fiscal") 
within them. There are currently two approved FTZ's, both operating in 
San Luis Potosi. The first major plant in the FTZ is currently under 
construction. Several states have filed to convert their bonded areas 
into Free Trade Zones. 
 
Foreign Direct Investment Statistics 
 
        Foreign Direct Investment in Mexico 
(USD Million) 
                            2003   2004    2005    2006     2007* 
 
Total FDI Inflow:         16,589  22,777  20,960  19,212   18,397 
-New Investments           7,245  13,791  10,952   7,406    7,307 
-Earnings Reinvestment     2,073   2,337   3,471   4,167    3,985 
-Inter-company Investment  7,271   6,649   6,537   7,639    7,105 
 
 
        Foreign Direct Investment Realized in Mexico By Industrial 
Sector Destination (USD Million) 
                      2003    2004    2005    2006    2007* 
Inflow Total        16,589  22,777  20,960  16,909  15,097 
Agriculture             12      17       5      20      (4) 
Extractive              84     173     194     335   1,017 
Manufacturing        7,550  12,964  11,935   9,379   7,714 
Electricity and Water  323     202     192     (96)     90 
Construction            81     390     282     349     253 
Retail               1,434   1,237   2,869     537     858 
Transport and Communication 
                     2,216   1,254   1,427     760     428 
Financial Services   2,900   5,581   1,208   2,752   3,699 
Others               1,990     959   2,84    2,874   1,043 
 
        Foreign Direct Investment Inflows Realized By Country/Economy 
of Origin (USD Million) 
                 2003   2004   2005   2006   2007*     5 year 
                                                       Totals 
Total Inflow   16.589 22,777 20,960 16,909 15,097      92,332 
United States   9,281  8,511 10,512 10,830  7,612      46,746 
Spain           3,002  7,436  1,473    624  1,485      14,020 
Holland           892  3,329  2,431  3,091  1,905      11,649 
France            530    170    553    697  1,408       3358.16 
United Kingdom  1,074    140    985    788     69       3055 
Virgin Islands     (6)    56  2,051    281    383       2765 
Canada            262    490    414    527    366       2060 
Switzerland       286  1,135    180    356     14       1970 
Germany           466    400    339     81    232       1518 
Argentina           3     10    541     22     16        592 
South Korea        57     34     95     43     16        245 
Brazil             19     48     49     41     16        174 
Taiwan             10      8     16     22      5         61 
China              26     12      5      4      2         49 
Japan             122    363    115  (1479)    74.55    (804) 
Notes FDI Investment Charts: 1) Sources: Inflow - Mexican Secretariat 
of Economy, Director General of Foreign Investment 2) Period: 2007 data 
January through September 3) Data: Millions of U.S. Dollars (USD), 
unless noted.  4) The Secretariat of Economy has recalculated values 
for past years. All values for past years are the most up to date data 
provided by the Secretariat of Economy. 5) With the passage of the 
IMMEX law integrating Maquila and Pitex industries, "Maquiladora 
Investment in Fixed Assets is no longer reported separately and is 
included in the category "Inter-company Investments) 6) Yearly amounts 
may differ from 5 year totals due to rounding error.  7) The total FDI 
inflow for 2006 and 2007 by sector and country is less than the total 
FDI in Mexico because it does not include an estimate that has been 
reported in the total FDI. 
 
 
        FDI INFLOW AS A PERCENTAGE OF GDP 
                   2003     2004    2005      2006        2007 
GDP             639,100  683,500  767,700  840,000     878,900 
FDI Inflow       16,589   22,777   20,960   19,212      23,000 
Percent of GDP      2.6      3.3      2.7      2.3         2.6 
 
Notes on "FDI as a Percentage of GDP" chart: 1) GDP figures are taken 
from the Mexican Statistics Agency, INEGI. Figures in millions of 
dollars at current market prices. 2) 2007 GDP is an estimate using a 3 
percent growth rate.  3) FDI for 2006 includes estimate from 
Secretariat of Economy.  4) FDI is 12 month 2007 Secretariat of Economy 
 
SIPDIS 
estimate. 
 
 
MEXICO 00000152  007 OF 007 
 
 
        U.S. FDI Flow and Stock in Mexico (USD Millions) 
                             2003      2004      2005     2006 
U.S. FDI flow in Mexico     3,664     7,712     7,385   10,645 
U.S. FDI Stock in Mexico   56,851    66,428    75,106   84,699 
 
Notes U.S. FDI Flow and stock in Mexico chart: 1) Source: U.S. 
Department of Commerce Bureau of Economic Analysis 
 
        Mexico FDI Flow and Stock in U.S. (USD Millions) 
                             2003      2004     2005     2006 
Mexico FDI flow in U.S.     2,173      (629)     142    2,387 
Mexico FDI Stock in U.S.    9,022     7,592    3,806    6,075 
 
Notes U.S. FDI Flow and stock in Mexico chart: 1) Source: U.S. 
Department of Commerce Bureau of Economic Analysis 
 
In 2007 there were several large foreign investments in Mexico by U.S. 
and other nations' companies, including: 
 
1) Union Fenosa (Spanish) invested 2.5 billion USD in Mexico's energy 
sector (electricity and LNG) 
2) Members of the Global Business Council, which include companies such 
as American Express, Mitsubishi, Sabritas, and PepsiCo, invested a 
combined 3 billion USD and created 10,000 jobs 
3) Wal-mart invested approximately 1 billion USD 
4) Michelin will invest 740 million USD in the coming four years to 
construct a plant in Silao, Guanajuato. 
5) DaimlerChrysler will invest 450 million USD. 
6) Holcim Apasco will invest 400 million USD to construct a plant in 
Hermosillo. 
Siemens USD 150 million 
7) Bridgeton will invest 300 million USD in the states of Tamaulipas 
and Nuevo Leon 
8) Hershey will invest 275 million USD in Nuevo Leon 
 
Web Resources 
ProMexico: http://www.investinmexico.com.mx 
Secretariat of the Economy: http://www.economia.gob.mx 
 
SIPDIS 
National Infrastructure Plan: http://www.infraestructura.gob.mx 
Department of State, Office of Legal Advisor: http://www.state.gov/s/l/ 
Mexican Development Bank: http://www.nafin.gob.mx 
Mexican Foreign Trade Bank: http://www.bancomext.gob.mx 
Mexican Civil Society: http://www.atlatl.com.mx 
Overseas Private Investment Corporation: http://www.opic.gov 
Overseas Security Advisory Council: http://www.osac.gov 
Secretariat of Labor and Social Security: http://www.stps.gob.mx 
 
SIPDIS 
United States Department of Commerce Bureau of Economic Analysis: 
http://www.bea.doc.gov/