President Peña Nieto says ‘Mexico is open for business’

Recently elected President Enrique Peña Nieto of the Partido Revolucionario Institucional (PRI) made a public statement that government-owned concessions including the energy sector might be available to foreign investors under his administration.

Traditionally owned by the state and the world’s second largest non-publicly traded company, the oil giant Petroleos Mexicanos (PEMEX) is a $415.75 billion company that pays over 60 percent of its revenue in royalties and taxes to support 40 percent of the Mexican federal budget. Lack of reinvestment in infrastructure and innovation, terminal decline of some of its oil fields and vast stolen amounts of oil by the drug cartels have placed the company in disarray.

Opening the door to oil foreign investors might be a challenge, as the national oil company is protected by the Constitution and requires two-thirds of the Congress votes to be changed. But it may also be a solution to the declining productivity of the company and the cash-strapped federal government.

Under the promise of economic growth, Peña Nieto also faces new challenges in economic policies, having pledged to balance the federal budget for the first time in four years. He has also committed to strengthen the North American Free Trade Agreement (NAFTA), a policy that has decimated the agricultural industry in Mexico unable to compete with U.S. subsidized imports, and impedes measures to basic protectionism of national industries or vulnerable sectors.

via Latin America: Important Events That Will Impact The World’s Economy In 2013.