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HH the Deputy Amir poses with the visiting Mexican Foreign Minister and his Kuwaiti counterpart. Also pictured are the Mexican Ambassador to Kuwait and other officials.
Reforms grease wheels for investment in Mexico AGREEMENTS SIGNED TO AVOID DOUBLE TAXATION, PROTECT INVESTMENTS

KUWAIT CITY, March 3: Mexican Secretary of Foreign Affairs Jose Antonio Meade Kuribrena and First Deputy Prime Minister and Foreign Minister Sheikh Sabah Khalid Al-Hamad Al-Sabah signed two agreements to further bilateral cooperation between the nations and allow diplomatic and official visits without entry visas.  “The two agreements will allow us to complement the legal framework and give support to the relationship. Mexico has today, a treaty to avoid double taxation and a treaty to reciprocally protect investments, both of Mexico in Kuwait and Kuwait in Mexico,’ Meade stated. The agreement would help both parties identify topics such as health, education and science and the possibility to cooperate amongst each other and between ourselves with third countries. 
 
Meade, who is visiting Kuwait with a delegation on tour of the Gulf that includes agencies like the Mexican Foreign Trade Bank, ProMÈxico, the National Council for Science and Technology and the National Infrastructure Fund.  He remarked that the Kuwaiti-Mexican relationship, first established in 1975, was very old although both parties only recently decided to open embassies bilaterally in the recent years. He remarked that although there existed a good framework that would give support to investment and trade, this had not yet materialised. “Trade between Kuwait and Mexico is growing from a very small base”, he shared.  He expressed that this visit was an attempt to signal the interest that Mexico has in a more fluid, systematic political dialogue and the desire for that political dialogue to open up more opportunities for investment and trade.
 
“Mexico is transforming its economy and therefore is providing for new opportunities for investment. At the same time, Mexico is a country that has done well in the world markets through trade and we would want for the trade relationship to start increasing to reflect importance of both the Mexican and Kuwaiti economies.”  While he admitted that no specific bilateral trade targets had been set during the visit, the delegation did intensify official contacts that would help identify opportunities in the future. Kuwait is not yet an investor in the Mexican economy but Meade stressed that both parties were in the process of developing mechanisms and identifying specific projects. 
 
On meeting with officials from the Kuwait Investment Authority and establishing ‘first contact’, Meade is optimistic. “The conversations were very good and we think that there is a possibility of them to become involved in the Mexican economy”, he shared, adding that technical teams would be put together.  Even though the timeframe remains open, Meade hopes that both parties would meet more regularly for political dialogue and that the technical teams would meet at the earliest possible time. 
 
In speaking to the Arab Times, Meade expounded further on the transformation of the Mexican economy, challenges and its expectations for the future.  Mexico expanded modestly at 1.3 % in 2013 while new frontier markets like Indonesia and Nigeria grew by 5.8 percent and over 6% respectively. Meade shared that Mexico has to its advantage good fundamentals, to attract foreign investors. “Mexico has no fiscal imbalance, has its foreign accounts in order, inflation, interest rates and unemployment is low”, he pointed out.  
 
He further explained that 2013 was a very complex year from a global perspective. “All of the OECD countries with the exception of Japan grew to less than what was predicted, due to the weak economic environment. From the world perspective, Mexico chose to participate in world trade and therefore its economic capacity is influenced by the state and the health of the global economy. This year most predictions would suggest that Mexico should continue to increase its rate of growth and to maintain it at a relatively high level.”
 
Meade affirmed that growth prospects would be increased by the reforms that Mexico had passed in the last year. “Mexico has brought about very relevant labour reforms as well as in telecommunication, an anti-trust law reform, very important reform in terms of energy and also financial and fiscal reform.”
He also drew attention to Mexico’s multiple geographical belongings from the regions of North American and Central American markets as well as ties to the Pacific region and the Caribbean that has challenges and immense opportunities. “In the short run, the projections consensus for 2014 is in the neighbourhood of 4% and as we implement the reforms that we have approved, this growth rate should accelerate in the future”, he remarked.
 
Mexico recently passed what is held to be a landmark reform in the energy sector that will hopefully open doors for private and foreign companies although many remain sceptical. Meade asserted that the energy reform would allow for more participation in the sector, “It is the energy sector that has a lot of important challenges and a lot of important opportunities that would require for a lot of investment in order to grow, in order to supply the quality and quantity of electricity that we need. That opens up opportunities by itself through Pemex or directly through the state, through Mexico’s government. Also having a competitive energy sector means expanding the type of opportunities that Mexico has to further its capacity to manufacture.” He also noted that a competitive energy sector will make the whole economy as a whole, more competitive. When asked if Pemex would have the power to block private competition, he said, “No, Pemex will have the opportunity to develop joint ventures and outside of Pemex, private investors will also have the opportunity to participate within our energy sector.”  Responding to threats from the Mexican opposition that the reforms could easily be reversed in 2015, he said, “Today the reform is legally binding in Mexico.” 
 
Meade responded to the safety concerns surrounding the country in light of the abhorrent drug related violence and death toll. “Mexico is very safe for business; testament to that is the fact that last year Mexico received the highest level of external investment in its history. We received more than $35 billion worth of international investments.” He also informed that Mexico’s trade just in North America amounted to more than $1 million every minute.  “Mexico has the rule of law and has created an environment that is very safe for investment and that environment has improved in recent years. Mexico has challenges in security that it has faced and he results are very promising. Violence in Mexico peaked in 2011 and since then it has started to trend downwards.” He shared that some regions that were very complex in terms of security not just in the last year but over several years were able to regain peace to the point that other in the continent were now looking at those same regions to understand what policy mix actually worked and how that can be implemented outside of Mexico. 
 
In speaking of transparency within financial institutions against the backdrop of the recent HSBC Mexico money laundering scandal, he pointed out, “That was a result of transactions that took place more than 20 years ago. They took place in Mexico in the early 90s. If you look at those reports, those reports acknowledge the fact that Mexico today has regulation and an environment that provides   and insures that our financial sector complies with the most stringent of qualifications. So Mexico today has a financial system that works well, that is very well capitalised and that has been observing for a long time, best practices in terms of accounting and transparency.”
 
Meade also touched upon the scope of green technology. “We think that green technology is an interesting area to invest and Mexico has been blessed with a very large potential in many of the renewable sources of energy. He shared that Mexico has the second best geography for wind energy, ample sun for the generation of electricity, and second largest field in the terms of geothermal potential among others, while also making headway in waste management and water treatment. “So any technology that is being used for renewables in the world can be seen exemplified and working in Mexico and it is an exciting area of opportunities to invest. Mexico has a target to increase its energy produced from renewables so that will open very good opportunities.”

By Cinatra Fernandes

Arab Times Staff

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