Doing Business

Doing Business in Mexico 2015

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15 Doing Business in Mexico 2015 Chapter 2 Business environment Investor considerations • Currently Mexico has a broad free-trade agreement network that includes North America, the European Union, Japan and some South American countries and has substantially reduced tariff and non-tariff barriers to free trade between Mexico and those regions. • Almost all non-strategic government assets have been privatized. • Foreign investment is welcome and can be made in a wide variety of forms. • Strong government efforts to reduce inflation have placed Mexico at a level comparable to the top economies in the world. • Internal interest rates have been stable. • Mexico has a common border with the United States, one of the largest markets in the world. • Government policy encourages exports and establishment of in-bond processing operations. • Young, skilled, moderate-cost labor force. • Public/private sector cooperation. • No exchange controls exist, exchange rates are determined by supply and demand and foreign currency is freely available. Industrial climate Private investment is dominant in the manufacturing, construction and hospitality industries, as in wholesale and retail trade operations. The federal government has intensively promoted the establishment of manufacturing operations for export and labor-intensive industries, such as in-bond manufacturing and tourism, taking advantage of the relatively low wage costs expressed in U.S. dollars and the proximity to the US market. Framework of industry Most domestic small businesses are operated as unincorporated units, although many of the larger units are organized as family- owned corporations. A few of the larger businesses have gone public by listing in the Mexican Stock Exchange. The main government investments are directed to utilities, water supply and irrigation, the electrical system, petroleum and basic petrochemical industries. However, major reforms have now made it possible for private investment in most of these sectors. 2

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