Mexico’s Record Foreign Investment Awaits Nearshoring Wave

In 2023, Mexico is experiencing a record high in foreign investment as it anticipates the surge of the nearshoring trend.

The country got $32.926 billion in foreign investment from January to September. This is 2.4% more than the same time in 2022.

The Ministry of Economy shared these figures. They are the highest since records began.

But this record has a new pattern. Most of the investment is from reinvested profits. This is different from last year. Then, new investments were almost equal to reinvested profits.

The Ministry of Economy explained this change. They said the investment is shifting. More money is now coming from reinvested profits and loans between companies.

In the first nine months of 2023, 4,378 new companies started in Mexico. This number is almost the same as last year. So, new investments aren’t really dropping.

Raquel Buenrostro’s Ministry noted that 92% of the investment is to support existing companies in Mexico. They use reinvested profits and loans for this.

These methods help companies buy new things, grow, or move investments. This is due to Mexico’s good business environment and stable economy. It makes big companies want to supply more.

Juvenal Lobato from Lobato Díaz Abogados talked about why companies reinvest profits. He said it’s because they already have investments in Mexico. They plan to stay for a long time.

The Ministry says reinvested profits are part of foreign investment. This is because they increase the foreign investor’s money in Mexico.

Lobato added a tax point. By not giving out profits as dividends, companies save on a 10% tax. So, they reinvest in Mexico and keep earning.

Ariana Martínez from the Mexican Institute of Public Accountants discussed new investments. She said nearshoring investments take time, maybe 2-3 years.

Before investing, companies look at many things. These include company setup, taxes, accounting, debt, and permissions for operating.

Martínez mentioned that reinvesting profits could lead to new investments. She said nearshoring means bringing supply chains closer. This helps with production.