Mexico Boasts $20 Billion in Foreign Investment, But Details Remain Murky

MEXICO CITY – Mexican officials have announced a wave of new foreign direct investment, claiming $20 billion in pledges. However, closer inspection reveals that many of these investments are not new, and some are still uncertain, raising questions about the true impact of these announcements.

Investor confidence in Mexico has been shaken recently by controversial reforms to the energy sector and the judiciary, leading to a desire to regain the trust of foreign companies.

Among the larger announcements was a final investment decision for an LNG gas terminal on Mexico’s Gulf of California, by Mexico Pacific LLC. The $15 billion project, set to import U.S. natural gas, liquefy it, and ship it to customers in Asia, is planned for Puerto Libertad, but still depends on getting cross-border gas pipelines approved and built.

While the project has been in the works since 2020, Mexico Pacific CEO Sarah Bairstow described it as “the largest foreign direct investment to date,” fueling the narrative of new investment.

Mexico’s Economy Secretary Marcelo Ebrard also touted a $6 billion commitment from Amazon, which is likely a reference to a previously announced investment of “more than $5 billion” for cloud-computing infrastructure in Mexico.

Additionally, Ebrard mentioned a $1.5 billion pledge from the cruise line Royal Caribbean, apparently referring to their plans for a second “Perfect Day Mexico” on-shore facility in Mahahual. This plan was announced just last week.

Despite these announcements, concerns remain about the recent reform that would make all judges, including those on the Supreme Court, stand for election. This reform has raised concerns about the politicization of the judiciary, potentially putting foreign firms at a disadvantage.

Furthermore, foreign energy companies are still dealing with the fallout from former President Andrés Manuel López Obrador’s policies that prioritized the state-owned electric utility, often at the expense of foreign-owned, cleaner energy sources.

While the Mexican government is emphasizing a message of “certainty” and “assurance” for investors, the true impact of these investment pledges remains to be seen.

Key Takeaways:

• Mexico announced $20 billion in new foreign direct investment, but much of it is not new or fully certain.
• The announcement comes amid concerns about recent reforms that have shaken investor confidence.
• The $15 billion Mexico Pacific LNG terminal project is still contingent on approvals and construction.
• Amazon’s investment is likely related to a previously announced cloud-computing project.
• The Royal Caribbean pledge is for a second “Perfect Day Mexico” facility, which was just announced last week.
• Concerns remain about the impact of judicial reforms on foreign companies.
• The true impact of these investment pledges remains uncertain, as the Mexican government works to rebuild investor confidence.