Mexico Political Consensus Grows on Easing Foreign Stake Limits
Mexico’s incoming and outgoing presidential administrations are finding common ground on the need to ease foreign investment caps, including a 49 percent limit on holdings of land-line phone companies.
President-elect Enrique Pena Nieto may support a bill by Felipe Calderon’s administration to lift foreign direct investment limits in some sectors, Ildefonso Guajardo, a top Pena Nieto economic adviser, said in an interview in Mexico City today.
If the bill “boosts competition and doesn’t endanger national security frameworks or strict sovereignty, it probably has possibilities,” Guajardo said, in his first interview with foreign press since the July 1 election. “You have to re- evaluate where these restrictions still make sense,” and caps in the land-line sector “probably won’t pass the test.”
Outgoing President Felipe Calderon’s government will send the bill to Congress in the next couple of weeks, Deputy Economy Minister Jose Antonio Torre said today in an interview. Officials are still determining which industries the bill will address, Torre said, adding that transportation, telecommunications and financial services are “restricted.”
“If we don’t open the energy sector, the telecom sector, Mexico is going to be stuck around the same level of FDI we’re getting: $20 billion, $22 billion, $23 billion,” Torre said. “If we can do some of the deep reforms Mexico needs and raise some of these restrictions, I think we could double, easily, the amount of FDI we’re getting.”
Pena Nieto of the Institutional Revolutionary Party takes office Dec. 1, ending 12 years of rule by Calderon’s National Action Party.
The Mexican peso rose 0.2 percent to 12.8290 per dollar at 3:21 p.m. in Mexico City. It touched an intraday high of 12.8214 per dollar following Torre’s comments.
Mexico’s antitrust and telecommunications regulators have both called for the elimination of the 49 percent limit on foreign ownership of land-line telecommunications companies to encourage competition. The current law also includes a 25 percent cap on domestic airline stakes and says broadcasting services must be exclusively under Mexican control.
Pena Nieto “will promote competition in a decisive way in all sectors,” Guajardo said in Mexico City. The conditions have changed since the investment caps were put in place 20 years ago, including among phone companies, he said.
“Twenty years ago many of these groups were just starting up and growing. Today they are very strong corporations,” Guajardo said.
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