Mexico: Foreign investment

FDI in Figures

Mexico is one of the emerging countries most open to foreign direct investment, ranking as the world's ninth-largest FDI recipient in 2023: according to UNCTAD's World Investment Report 2024, FDI stood at USD 36 billion, in line with the levels recorded in the previous year. At the end of the same period, the total stock of inward FDI stood at USD 778.3 billion. Automotive industry manufacturers, including Robert Bosch (Germany), Toyota Motor (Japan), and Volkswagen (Germany), have chosen to invest in Mexico due to its proximity to the United States and market access under the United States–Mexico–Canada Agreement (USMCA). Moreover, Mexico recently introduced incentives for nearshoring in the semiconductor, electromobility, and medical device sectors. According to the National Commission of Foreign Investments, investments mostly come from the United States (40.9%), Spain (9.5%), Canada (8.9%), Germany (5.9%), and Japan (5.7%). The manufacturing sector holds 49.7% of FDI stock, followed by financial services (13.3%), mining (7.9%), and trade (5.8% - data as of Q3 2024). Official governmental figures show that, in the first nine months of 2024, FDI inflows reached USD 35.7 billion, up by 9% compared to the corresponding period one year earlier, reaching the highest level on record.

As a member of USMCA, OECD, G20, and the Pacific Alliance, Mexico is very well integrated into the world economic order, making it an attractive country for FDI. Additionally, Mexico enjoys a strategic location, a big domestic market, a wide variety of natural resources, a relatively well-qualified workforce and a diversified economy. However, in recent years, Mexico's competitiveness has suffered from the rise of organised crime and a lack of reforms in the energy sector and in tax regulations. Corruption and administrative inefficiency have also been major issues and the business climate continues to suffer from safety risks in the country. Foreign investments are mostly concentrated in towns neighbouring the U.S. border (where many assembly factories are located), as well as in the capital. Thanks to its robust tourism industry, the Yucatan Peninsula also receives substantial foreign investment. FDI flows to the country fluctuate strongly depending on the arrival and departure of large international groups. The current Mexican FDI framework, primarily governed by La Ley de Inversion Extranjera and its regulations, mandates a pre-approval process for direct and indirect investments by foreign investors obtaining a majority share in Mexican companies engaged in "strategic activities" or holding assets valued around USD 1.1 billion. On December 7, 2023, the U.S. and Mexican governments signed a Memorandum of Intent ("MOI") to collaborate on enhancing foreign investment screening. Both nations have committed to forming a bilateral working group to share information and best practices, aiming to assist Mexico in establishing a CFIUS-like screening system and enhancing the collective security of the United States and Mexico. The country ranks 56th among the 133 economies on the Global Innovation Index 2024 and 68th out of 184 on the latest Index of Economic Freedom.

What to consider if you invest in Mexico

Protection of Foreign Investment

Procedures Relative to Foreign Investment

Freedom of Establishment

Guaranteed

Acquisition of Holdings

Having a majority of capital holdings in a Mexican corporation is legal, though there are some limitations. There are certain strategic sectors in which the percentage of foreign investment is legally regulated and limited in the following manner (Article 7, Foreign Investments Law - Ley de Inversión Extranjera):

• Up to 10% in co-operative production associations.
• Up to 25% in local air transportation.
• Up to 49% in insurance and bonding companies; currency exchange houses; leasing companies; factoring companies; investment funds (not private equity companies); companies involved in the manufacture and sale of explosives and firearms; newspapers, cable TV and basic telephone services; and port administration.

For more information, see the text of the the Mexican foreign investment law governing such limitations.

Obligation to Declare

The laws restricting or regulating certain takeovers and mergers are the following:

• Foreign Investment Law (Ley de Inversión Extranjera)
• Federal Antitrust Law (Ley Federal de Competencia Económica)
• Securities Law (Ley del Mercado de Valores)

Competent Organisation For the Declaration

Mexican Federal Tax Administration (in Spanish)

Requests For Specific Authorisations

A special authorisation is needed for foreign ownership from the National Foreign Investments Commission (Comisión Nacional de Inversiones Extranjeras) when foreign investment will exceed 49% in: Shipping companies, Air terminals, Cellular-telephone services.

To find out the total that must be declared visit the Mexican Federal Tax Administration.

Office Real Estate and Land Ownership

Possible Temporary Solutions

Temporary office solutions

The Possibility of Buying Land and Industrial and Commercial Buildings

Only Mexican nationals (by birth or naturalisation) and Mexican companies can acquire the ownership of land, water and their associated items and obtain concessions for mining or water sources and waterways.
The state may grant the same rights to foreign individuals, provided they agree with the Ministry of Foreign Affairs to consider themselves Mexican nationals with respect to such property and undertake not to invoke the protection of their governments in respect of such property. Otherwise, the land acquired in case of default is confiscated and transferred to the Mexican State.
Under no circumstances can foreign individuals acquire direct ownership of lands and waters located within 100 kilometres from Mexico's international borders and within 50 kilometres from its coastlines (for commercial use).

Risk of Expropriation

Foreign investors have a right to a compensation if they are victims of expropriation for public means. Expropriations are governed by international law and require rapid fair market value compensation.

Investment Aid

Forms of Aid

Land grants or discounts, tax deductions, and technology, innovation, and workforce development funding are commonly used incentives.

Privileged Domains

Investment aids aim to promote innovation, research and development and job creation.

Privileged Geographical Zones

Companies setting up in these Special Economic Zones will be offered tax, customs duty and administrative and regulatory benefits.
The main SEZs:

• The Pacific port of Lázaro Cárdenas (on the border of the states of Michoacán and Guerrero)
• Salina Cruz
• Puerto Chiapas (Chiapas)
• The Coatzacoalcos Corridor / Ciudad del Carmen (Campeche)
• Champotón
• Progreso
• Dos Bocas

Special Economic Zones (Zonas Económicas Especiales or ZEEs) are now entirely under state jurisdiction. As of April 2020, there are only two federal ZEE-style projects being developed where fiscal incentives would apply. These are the Trans-Isthmic Interoceanic Corridor and the Chetumal State border area.

Free-trade zones

Mexico's first foreign trade zone is located at an industrial park located in the city of  San Luis Potosí and consists of:
1. The 'maquiladora' zone (assembly factories) as well as bonded warehouses;
2. Bonded zones (in customs), free trading posts to perform activities such as manufacturing, repairing, distribution and sales of merchandise;
3. Free zone "Recinto Fiscal Estratégico" with a customs office (WTC industrial zone)

In general, the Mexico version of the foreign trade zone reportedly permits raw materials and components to enter Mexico duty-free for manufacturing, assembly and other services (similar to the Maquila industry in Mexico).

Public aid and funding organisations

Nacional Financiera, Banca de Desarrollo and Bancomext.

Investment Opportunities

The Key Sectors of the National Economy

Auto parts, machinery, equipment, chemicals, financial services and insurance services.

High Potential Sectors

After-sales services for the automotive sector (repairs, maintenance, sale of parts and accessories), electronics, distribution chains, renewable energies, food, beverages and tobacco products, specialised and customised professional technical services. The banking sector is also growing fast and represents an opportunity for investors. The government has expressed its desire to modernise the country's infrastructure, including hospitals and transport, and seeks to attract increased FDI.

Privatization Programmes

Mexico's Oil And Gas Industry privatization efforts have begun in 2015, following the privatization reforms introduced that year.

Tenders, Projects and Public Procurement

Compranet , Public Procurements
Tenders Info: Mexico , Tenders in Mexico
DgMarket Tenders , Tenders Worldwide

Sectors Where Investment Opportunities Are Fewer

Monopolistic Sectors

The following activities can only be carried out by the Mexican government:

• Exploration and extraction of oil and other hydrocarbons (however, private investors can participate under a scheme that was initiated in 2015).
• Planning and control of the national electricity system and provision of the electricity transmission and distribution public service.
• Nuclear power generation.
• Radioactive minerals.
• Telegraphs, telegraphy and mail.
• Currency issuance.
• The control, supervision and surveillance of ports, airports and heliports

Finding Assistance For Further Information

Investment Aid Agency

National Bank of Foreign Trade

Other Useful Resources

Mexico Projects Hub

Doing Business Guides

Mexico Country Commercial Guide (trade.gov)
Doing business in Mexico (Thomson Reuters)
Investment Climate in Mexico - US Department of State

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