11 Sept 2015
Mexico and Hong Kong Will Launch Bi-lateral Investment Talks Next Year
Mexico's Minister of Economy Ildefonso Guajardo and Hong Kong Secretary for Commerce and Economic Development Gregory So on 26 August announced following a meeting in Mexico City that Mexico and Hong Kong will launch negotiations on a bi-lateral investment promotion and protection agreement next year. Mexico's Ministry of Economy indicates that the IPPA with Hong Kong will contribute to the development of high value-added sectors where Hong Kong is a global leader, including automotive parts and medical and electronic devices, in an environment of legal certainty. Mexico currently has 33 IPPAs while Hong Kong has 17 such agreements.
According to a press release by the Ministry of Economy, Hong Kong is Mexico's tenth largest trade partner and the fifth most important destination for Mexican exports in Asia, while Mexico is Hong Hong's third largest trade partner in Latin America. The press release adds that in 2014 Hong Kong was the second largest contributor of foreign direct investment to other economies, with total flows amounting to US$143 billion. The fact that Mexico is the world's 15th largest economy offers an opportunity to enhance Hong Kong's investment flows to Mexico, which currently stand at US$49.8 million.
According to a 27 August article in Mexican newspaper El Economista, Mr. So considers that Hong Kong's investment in Mexico will grow in the years to come as a result of rising production costs in mainland China and the expected negotiation of the IPPA with Mexico. The article highlights the case of Hong Kong company Johnson Electric, which in 2012 invested US$40 million in an auto parts facility in Zacatecas and on 3 September will initiate an expansion process worth US$20 million. The article adds that Johnson Electric's facility is Hong Kong's largest manufacturing investment project in Mexico and may act as a catalyst for additional projects, as it happened in the port sector where Hutchison Port Holdings has invested US$800 million in the operation of the ports of Veracruz, Manzanillo, Ensenada and Lázaro Cárdenas.
The article quotes Mexico's Consul General in Hong Kong Alicia Buenrosto as stating that: "There are about 30,000 Hong Kong companies in mainland China and a share of those companies is looking to move their manufacturing operations due to higher costs in the mainland, including labour costs. What we are doing is promoting Mexico so that they come with added value."