Mexico says foreign firms have pledged $20 billion in investments, but many are old or uncertain

[October 16, 2024]  MEXICO CITY (AP) — Mexican officials announced Tuesday what they claimed was $20 billion in new foreign direct investment in Mexico, but much of that was neither new, nor completely certain.

Investor confidence in Mexico has been shaken recently by controversial reforms to the energy sector and the judiciary, and the government is eager to regain the trust of foreign companies.

Among the bigger announcements Tuesday was what appeared to be a final investment decision by Mexico Pacific LLC for an LNG gas terminal on Mexico’s Gulf of California, also known as the Sea of Cortez.

That $15 billion project would import U.S. natural gas, liquefy it and ship it to customers largely in Asia. It is planned for Puerto Libertad, between the coastal towns of Guaymas and Puerto Peñasco.

Mexico Pacific CEO Sarah Bairstow said “this represents the largest foreign direct investment to date.”

However, that plan has been on the drawing boards since at least 2020, and still depends on getting cross-border gas pipelines approved and built.

Mexican Economy Secretary Marcelo Ebrard said the second-largest investment was a $6 billion commitment by Amazon.

While Ebrard did not specify what it was for, Amazon Web Services had already announced in February an investment of “more than $5 billion” to build cloud-computing infrastructure in Mexico.

And Ebrard said the cruise line Royal Caribbean pledged to invest $1.5 billion in the Caribbean coast resort of Mahahual, south of Tulum.

That was apparently a reference to the company plan — announced last week — to build a second “Perfect Day Mexico” on-shore facility for cruise ship passengers in Mahahual, which was once a sleepy coastal village until a cruise ship dock was built.

Mexican President Claudia Sheinbaum, right, and Mexican businessperson Francisco Cervantes arrive for a news conference at the National Palace in Mexico City, Tuesday, Oct. 15, 2024. (AP Photo/Fernando Llano)

Ebrard said that, together with other projects, investments could total as much as $30 billion in 2025.

“The message of President Claudia Sheinbaum is certainty, assurance, investments in Mexico are safe,” Ebrard said at the event.

However, foreign governments and some foreign business groups have expressed concerns about a reform passed in September that would make all judges — including the justices of the Supreme Court — stand for election.

The fear is that would politicize court cases and put foreign firms — who obviously have no vote in the elections — at a disadvantage. They fear judges would be likely to heed the will of their constituents than the letter of the law.

And foreign energy companies are still smarting from their treatment at the hands of Sheinbaum's predecessor and political mentor, former president Andrés Manuel López Obrador, who left office on Sept. 30.

López Obrador pushed through laws to guarantee the state-owned electric utility a majority share of the power market. The reforms put foreign-owned electricity generating plants at the back of the line for power purchases, even though their power plants were often cleaner and used more renewables than the government's dirty coal and fuel-oil fired generators.

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