Singapore Companies' Investment in Mexico: Boosting Logistics and Digital Economy

Mexican Logistics Boosted by Singapore Investment: Mexico as a Vital Business Center In the last year, logistics in Mexico has emerged as a vital business center for Singapore companies, evidencing a notable increase in foreign direct investment (FDI) from the Asian country. According to Gersón Garduño Chavero, CEO of the Singapore-Mexico Chamber of Commerce (SgMxCham), thirteen Singapore companies have established operations in Mexico, covering key sectors such as manufacturing, digital economy, and infrastructure. This phenomenon not only underlines Mexico's attractiveness as an investment destination but also highlights the growing importance of international collaboration in strengthening the Mexican economy and logistics. Expansion and Diversification of Singapore Investments Key Investment Sectors In the last year, significant diversification has been observed in Singapore companies' investment sectors in Mexico. Garduño Chavero mentions that between five and six companies have invested in the manufacturing industry, while four or five projects have been launched in the digital economy field. Additionally, a couple of large-scale projects have been developed in the infrastructure sector. This data reflects not only Singapore investors' confidence in the Mexican economy but also the diversity of opportunities Mexico offers. Impact on Logistics and Infrastructure The number of infrastructure and logistics projects financed by Singapore capital has been relatively smaller, due to the complexity and robustness of required investments. However, these projects have a profound impact on Mexico's logistics capacity. Singapore's participation in the Tehuantepec Isthmus project is a notable example. This strategic project has the potential to transform connectivity and logistics in southern Mexico, facilitating trade and improving transport infrastructure. Digital Economy Promotion Digital Sector Growth Mexico's digital economy has shown notable growth, and Singapore companies are playing a crucial role in this development. The arrival of a delegation of nine companies led by Singapore Precision Engineering and Technology Association and Enterprise Singapore in 2022 illustrates interest in investing in advanced manufacturing and high-tech precision services. This type of investment not only drives economic growth but also fosters innovation and adoption of new technologies in the country. The digital economy also extends to fintech and e-commerce fields. Companies affiliated with SgMxCham are actively involved in these sectors, taking advantage of Mexican digital market growth. This international collaboration not only facilitates technology and knowledge transfer but also opens new opportunities for both Mexican and Singapore businesses. Bilateral and Diplomatic Cooperation Cooperation between Mexico and Singapore has experienced significant increase in recent years. Singapore Prime Minister Lee Hsien Loong's visit to Mexico in 2019 marked a milestone in bilateral relations, with promises of participation in important projects like the Tehuantepec Isthmus. Additionally, the increase in commercial missions and business delegations between both countries has strengthened economic and diplomatic ties. SgMxCham, founded in September 2022, plays a crucial role in this process. With 160 affiliated companies, the chamber offers a wide range of services, from market intelligence to seminars and workshops, to support companies interested in investing in Mexico or Singapore. This institutional support is fundamental to close the knowledge gap and facilitate commercial relations between both countries. Nearshoring and Value Chains The nearshoring concept has gained relevance in recent months, with Singapore companies exploring the possibility of establishing factories or production lines in Mexico. This interest is a response to disruptions in global value chains caused by the COVID-19 pandemic and the 2020 global economic crisis. Mexico's strategic location, along with its proximity to the United States, makes it an attractive destination for companies seeking to optimize their logistics and production operations. Recently, a delegation of 20 entrepreneurs from 12 Singapore companies, organized by Enterprise Singapore and Singapore Business Federation, visited Mexico to explore opportunities in the manufacturing industry in key cities like Mexico City, Guadalajara, Monterrey, and Tijuana. These visits not only foster direct investment but also promote exchange of best practices and technologies between both countries. Challenges and Opportunities Overcoming Challenges Despite challenges such as violence and insecurity, the Mexican economy remains attractive to international investors. Garduño Chavero highlights that business decision-makers see Mexico as a country with great growth possibilities, thanks to its immersion in the US market and its diversity of industrial sectors. The geographical distance between Singapore and Mexico can be a barrier, but growing collaboration and knowledge exchange are closing this gap. Promising Future The future of the commercial relationship between Mexico and Singapore is promising. Continued investment in key sectors such as manufacturing, digital economy, and infrastructure not only strengthens the Mexican economy but also improves its logistics capacity and global competitiveness. Bilateral cooperation and institutional support will continue to be crucial to maximize the benefits of this relationship. Tesla and Trump: External Factors that Don't Stop Investment Mexico's Ministry of Economy has assured that neither Tesla's postponement of an electric car plant installation nor the protectionist rhetoric of Republican candidate for US presidency Donald Trump are reasons to stop Foreign Direct Investment (FDI) to Mexico. Raquel Buenrostro, Economy Secretary, stated that Tesla did not make a formal registration of its investment in the country, limiting itself to making media announcements. Buenrostro emphasized that Tesla's postponement will not stop other investments, highlighting that more established automotive companies like Stellantis and General Motors continue advancing their operations in Mexico. Donald Trump's Protectionist Rhetoric Regarding Trump's protectionist threats, Buenrostro explained that the Treaty between Mexico, United States and Canada (USMCA) was the result of negotiations during his presidency and that recently Trump has expressed satisfaction with the treaty's results. Alejandro Encinas, Undersecretary of Foreign Trade, added that North American economies are so intertwined that any protectionist measure would be counterproductive to US industrial competitiveness. Control Terrestre: A Success Example in Logistics One of the Mexican companies that exemplifies success in the logistics field is Control Terrestre. With coverage throughout the United States and Canada, Control Terrestre has managed to position itself as a key player in the logistics industry. Its capacity to handle cross-border operations with efficiency and reliability has been fundamental in attracting and retaining clients in these competitive markets. Control Terrestre's experience and network demonstrate how Mexican companies can compete globally, taking advantage of nearshoring opportunities and adapting to changing dynamics of international trade. Singapore companies' investment in Mexico is playing a crucial role in transforming the country's economy and logistics. Through sector diversification, digital economy promotion, and bilateral cooperation, this international collaboration is driving growth and innovation in Mexico. Despite external factors like Tesla's postponement and Trump's rhetoric, FDI in Mexico remains robust and promising, paving the way for a more prosperous and connected future. With examples like Control Terrestre, which stands out in cross-border logistics, Mexico demonstrates its capacity to compete and prosper on the global stage.