Infrastructure Investment in Mexico

July 24, 2013

Mexico financial representatives announced plans to invest approximately 100 billion U.S. dollars in rail, road, telecom and port projects over the next five years, to include Mexico’s first high-speed rail links. With manufacturing in Mexico and the maquiladora industry projected to be affected by this formidable investment, it is also believed the decision will affect those businesses looking to make Mexico a manufacturing base. Included in the plan’s prospective concepts are the modernization and/or building of four airports, seven seaports and approximately 3,350 miles of highway. Further, the government is expected to strengthen fiber optic networks while expanding broadband Internet access in addition to “speeding up” freight train service.

“Nobody can argue against the fact that better infrastructure translates to healthy competitiveness and productivity, ultimately igniting economic growth and social well-being,” said Mexico’s President Enrique Pena Nieto about the positive impact this plan is expected to have on the country’s economy. “These are investments that will translate into jobs.”

Many inside the Mexican government believe the country can very well operate as a stable logistics platform for Latin America, if changes can be made to create significant savings in time and cost of transporting goods. Still, President Pena Nieto has repeatedly emphasized the important goal of reviving passenger trains in Mexico as a first step. “For more than a century, Mexico has depended on railways to move goods and passengers, while rebels even fought much of the 1910 to 1917 Revolution from trains,” he said. “But Mexico abandoned all regular passenger trains more than a decade ago because the service exuded poor quality and was used very little; existing lines were given priority for moving freight and only a handful of short tourist train routes remain.

“With 360 miles of high-speed rail links to be built, including links between Mexico City and nearby Toluca and Queretaro as well as a line scheduled to be built across the Yucatan Peninsula, vital commerce connections can be facilitated to link the Caribbean coast resort of Cancun with the colonial city of Merida, Yucatan. And that’s good for manufacturing in Mexico and the maquiladora industry.”

The key, he stressed, is finding future routes with the right length – between 60 and 600 miles as he sees it – with enough passenger demand to make these trains competitive.