Despite the challenging domestic and international environments, Mexico needs to be promoted abroad to attract investment, and the public and private sectors must work together to prepare for the upcoming period following the high volatility generated by U.S. policies.
For Julio Escandón, CEO of Banco Base, companies that withdraw their investments from the country due to the adverse situation will be making a serious mistake and will have a difficult time recovering after the adverse scenario is over, because they will lose competitiveness. On the other hand, companies that prepare now will have greater advantages, he predicted.
“Not because I’m optimistic, but because I’m realistic, I think that in the medium term, when things settle down and they sit down to talk about the renegotiation of the USMCA, it is in the best interest of the three parties to reach agreements, and we will begin to see these investment flows again,” the executive stated in an interview.
Within the framework of the 88th Banking Convention, Escandón affirmed that there is a great deal of interest in foreign investment in the country, but they are waiting for greater clarity in the outlook. Hence the importance of raising awareness of the business environment internationally to reduce uncertainty.
In this regard, he argued that “the market is not stupid. On the contrary, the market is the one that rules and the market knows. And the investments that investors make are not for four or six years. They are not in terms of the presidents’ tenure, but rather in terms of 20, 30, 50 years.”
Despite any circumstance, Mexico will remain on the side of the United States, and the conditions for trade integration with this country are undoubtedly in place. Therefore, he suggested, it is important to advance the renegotiation of the USMCA scheduled for 2026, in order to alleviate ambiguities regarding the relationship with the United States.
However, for the CEO of Banco Base, there is a risk of losing focus on what was already being done to boost investment attraction through nearshoring by addressing immediate issues. This would lead to neglecting infrastructure improvements, especially in energy, water, and roads.
“And when this wave of foreign investment comes again, let’s continue with the pending issues. This could halt these 50- or 100-year investments brought by large international corporations. They’ll say, ‘Hey, somewhere else in Latin America, they’ll give me tax incentives and have sufficient infrastructure, so I’d better go there with all your free trade agreement.’ That’s the main long-term risk,” the banker stated.
Therefore, he estimated that there is much to be done with Plan Mexico domestically and suggested that both the government and the private sector address the existing infrastructure debt, because “it could cost us dearly in terms of the opportunity cost of the investments that I’m sure will come at some point.”
Along with this, a slower economic dynamism due to uncertainty has impacted credit placement, as companies prefer to wait until the rules of the game are very clear before seeking expansion. He considered that this situation could improve towards the second half of the year.
Confidence in Mexico
Banco Base continues with its plans in the country, and proof of this is that it plans to invest two billion pesos over the next five years to improve its product offering, focusing on international transfers and specialized financing products to boost the global business of companies engaged in foreign trade.
“Today, we are very competitive. What we envision for the coming years is not only to continue with this agility advantage, but also to make life even simpler for customers through immediate digital processes, while ensuring they are advised and know there is someone available to assist them with any questions they may have.”
The executive added that the hybrid approach is their focus, hence the importance of investing in electronic banking to make it simple and user-friendly, as well as a complementary model through partnerships with non-bank financial intermediaries to offer foreign exchange and international payment services.
“Some banks in Mexico have done spin-offs or have another bank with those characteristics. Our vision isn’t that; it’s to be complementary with technology companies. It’s a win-win, especially for end customers who will have service with the agility we provide,” he noted.
Source: elfinanciero
