MEXICO: Economy Minister Gerardo Ruiz says Mexico's foreign direct investment may rise as much as 75 pct to $20 billion in 2010 but adds he is unsure if more sugar imports are necessary

Record ID: 303971

  • Title: MEXICO: Economy Minister Gerardo Ruiz says Mexico's foreign direct investment may rise as much as 75 pct to $20 billion in 2010 but adds he is unsure if more sugar imports are necessary
  • Date: 5th May 2010
  • Summary: MEXICO CITY, MEXICO (MAY 04, 2010) (REUTERS) REPORTER DURING INTERVIEW (SOUNDBITE) (Spanish) MEXICAN ECONOMY MINISTER GERARDO RUIZ, SAYING: "Of course China has to revalue (the yuan). Policies that protect a currency are a kind of subsidy. There will come a time when they will have to do this because you can't fight with the market and it's losing competitiveness. Each peso invested to subsidize the currency will cost money and money is not eternal, no, so sooner or later they will have to reevaluate the currency, that's very clear." RUIZ' HANDS ON DESK (SOUNDBITE) (Spanish) MEXICAN ECONOMY MINISTER GERARDO RUIZ, SAYING: "I hope, there is a lot of pressure on behalf on the Americans, on behalf of the world in general to try and set, as we say in Mexico, a clear path for commerce and have politics of protection for the currency because it's not a subsidy." MORE OF INTERVIEW
  • Embargoed: 20th May 2010 13:00
  • Keywords:
  • Location: Mexico
  • Country: Mexico
  • Topics: Industry
  • Reuters ID: LVA849FX6MKSYUBC3NGM6IRNIGUC
  • Story Text: Mexico expects foreign direct investment will surge by as much as 75 percent in 2010 as the global economy recovers, although the sum will still be lower than it was two years ago.
    Mexican Economy Minister Gerardo Ruiz told the Reuters Latin American Investment Summit that direct investment from abroad, which includes new factories making goods for export, should rise to between $17 billion and $20 billion.
    Foreign direct investment plunged more than 50 percent in 2009, compared to the previous year, as Mexico sank into its deepest recession since the 1930s. But Ruiz said manufacturers from Japan and Europe were eager to invest more in Mexico as the U.S. economy recovers.
    "We have estimated between $17 billion and $20 billion dollars depending on the behaviour of the financial cash flows. There is some installed capacity which is a fundamental theme within investment, but if we continue trying to gain market share in the United States, we'll have some interesting investment cash flows. I think that in the first quarter of the year, when we see the cash flow from foreign investment, we'll be able to give a better figure. At the end of the adjustment from the crisis last year, we have seen Mexico has had a boost to its competitiveness on a global scale but it's difficult to estimate this and in the first quarter of the year, we'll have a clearer idea on how investment cash flows globally will recover," Ruiz said.
    Mexico's economy depends heavily on factories that send around 80 percent of their exports to the United States, where consumer demand has been slowly recovering after last year's slump.
    Mexico took in $11.4 billion in FDI in 2009 and $23.2 billion in 2008. The economy ministry had previously forecast a rise in FDI to between $15 billion and $17 billion this year.
    Ruiz also said Mexico has yet to decide if it will allow further sugar imports in 2010. Mexico opened a 250,000 tonne sugar import quota early this year but has yet to dole out import permits for about 63,000 tonnes of the quota.
    Ruiz said Mexico could also open an additional import quota.
    "We have authorized the original quotas (sugar), the preventive quota which is 250 thousand tonnes. The national quota is around 5.2 tonnes but we also have to consider the initial stock list and the security stocks we need. We will then have a real balance and we'll make a clear decision, thought in terms of these stocks so that we avoid oversupply and lack of supply."
    At a recent congressional hearing, Ruiz said the government will wait until the sugar harvestaround late May before deciding on any additional quotas.
    Mexican sugar production has been declining steadily this harvest as bad weather hits crops. Mexico's local sweetener demand has been adding to pressure on global sugar prices and spurring more imports of high fructose corn syrup into Mexico.
    Ruiz also told Reuters on Tuesday (May 4), Mexico would side with other countries at the next G20 meeting in June to pressure China to revalue its yuan currency.
    China is under increasing pressure to let its currency strengthen again after being virtually pegged to the dollar since mid-2008.
    "Of course China has to revalue (the yuan). Policies that protect a currency are a kind of subsidy. There will come a time when they will have to do this because you can't fight with the market and it's losing competitiveness. Each peso invested to subsidize the currency will cost money and money is not eternal, no, so sooner or later they will have to reevaluate the currency, that's very clear," Ruiz told the Reuters Latin American Investment Summit in Mexico City.
    "I hope, there is a lot of pressure on behalf on the Americans, on behalf of the world in general to try and set, as we say in Mexico, a clear path for commerce and have politics of protection for the currency because it's not a subsidy," Ruiz added.
    Mexico competes with China in selling manufactured goods to the United States and feels that China's policies with respect to the yuan amount to a de facto subsidy which gives its exporters an unfair advantage.
    Leaders and senior officials from the G20 -- which represents 20 countries, rich and poor, including Mexico -- will meet in Toronto in June to discuss the global economy.
    It is unclear if China's currency will be formally discussed in Toronto.
    In April, after months under pressure from the United States, Europe and other economic powers, China's controversial yuan currency peg drew no fire at the last meeting of the G20's finance ministers and central bankers. A joint statement at the end of that G20 meeting made no direct mention of currencies.
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