Corporate executives and investors agreed Thursday that Mexico’s ambitious reform agenda is a step in the right direction and will boost development in the country, although the progress may be slow to begin with.
At the 11th Cumbre Financiera Mexicana, panelists agreed that the health of the domestic economy is stronger than it may appear, not withstanding headlands ahead both domestically and internationally.
“When you are in the eye of the hurricane, you lose a bit of perspective … Clearly there are enormous challenges in the short-term that the country needs to face, but let’s not lose perspective,” said Carlos Ramírez Fuentes, President of the pension fund Consar (National Retirement Savings Commission).
“When you are in the eye of the hurricane, you lose a bit of perspective.”
Carlos Ramírez Fuentes, President, Consar
Dr. Rafael Alexandri Rionda, general director for energy planning and information at the Ministry of Energy, took a similarly upbeat view of the energy sector. The current volatility in the oil markets is natural and inevitable, and the country must develop long term goals in order to overcome them, he said.
“The energy sector is cyclical … it is very fragile. If Mexico wants to grow, we can’t expect to see results in one or two years. We are changing the structure of the domestic sector — this process could take 15 years.”
Alexandri added that the opening of the energy sector is designed to boost participation throughout the industry.
“The energy reform aims to encourage more participation in all aspects of the sector. We also have to prioritize development of renewable energy technology,” he said.
From an investor perspective, the panel agreed that Mexico is becoming more and more attractive. Javier Chavarria, senior vice president of infrastructure investor Partners Group, explained that he has been encouraged by the domestic reform process. The opening of the energy sector will finally allow Mexico to reach its potential, he said.
“Mexico is a more attractive market than any of the other markets in the region, or globally. Mexico is now, aside from Brazil, the largest economy in the region, and there is great potential here.”
However, Charria also had words of caution.
“A lot of clarity is still needed (on the reforms), especially on the power side … there will be a very steep learning curve,” he said.
América Móvil Chief Financial Officer Carlos García Moreno admitted that the corporate sector on a global scale is adopting a more cautious approach than previously, due to restrictions on capital markets access, but insisted that on a domestic level results have been positive.
“At this moment we are paying the price for being part of the American market … but if you talk to corporates about the domestic market, they will tell you that their sales increased by five, seven, 10 percent … Compared to the United States and the emerging markets, Mexico is actually doing very well,” he said.
García was similarly bullish about the future prospects for the telecoms industry, thanks to the reforms.
“The mobile operators in Mexico were financially weak for many years, but that is changing now … we are seeing a much more dynamic, energetic industry.”
The 11th Cumbre Financiera Mexicana is an annual capital markets discussion forum organized by LatinFinance.