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At Long Last, Investors Respond to AMLO’s Call


Photo: wealthprofessional.ca

By RICARDO CASTILLO

Suddenly, and apparently out of nowhere, the Mexican business community, has shown an inkling of positivity toward President Andrés Manuel López Obrador (AMLO) after his first nine months in power, since he announced on Tuesday, Aug. 27, a settlement that assured the nation’s gas input from Texas for the next 20 years. The dispute with the gas pipeline owners was settled amiably.

Most definitely, Mexican entrepreneurs did not like the outcome of the July 1, 2018, election, in which AMLO swept the opposition with the vote of the people. This had caused an icky uneasiness for everyone as purposely entrepreneurs held back investment in their own endeavors. This decision was bad for their business, bad for the economy (which will not reach even a 1 percent growth this year), and definitely bad for AMLO’s image. It was, however, a lose-lose situation, and entrepreneurs knew it. By withholding planned investments for business growth, they knew they were also shooting themselves in the foot.

Then on Tuesday, Aug. 27, the tide turned. AMLO invited a select cadre of business leaders — guided by the hand by Mexico’s wealthiest tycoon Carlos Slim, who had induced the path to settlement over the pipelines to feed electricity production by the state-owned Federal Electricity Commission (FCE) as well as for industry in general — to invest in Mexico.

Slim fully backed AMLO by sending a message to the entire business community saying that in order to have economic activity and employment there must be investment.

“The moment we get an investment program going things will be very different,” he said.

Slim outlined not just “an investment program” spearheaded by the AMLO administration, but announced that there are 1600 projects open to all interested and will “reflect the confidence and interest from business in injecting resources into the nation.”

“We’re now in a situation in which growth can be zero or anywhere from 0.2 to 0.8 percent this year,” Slim said. “That is not important. What is important is that it is that way because there’s not been a great deal of investment that has been included within government programs. It is important to launch it, even starting this very year,” Slim provoked a teethy grinning smile from the president.

Slim added: “I am convinced we’re going to grow well and soon. I don’t know if we’ll grow this year or not, but that is inconsequential. What is relevant is that there is a potential and great possibilities for growth.”

He described AMLO’s investment programs as “versatile” and with opportunities galore in other things the government is now investing in, such as fuel pipelines, hydrocarbons, roads, water, education, health and “even” airports.

“The conditions for the money to flow are here,” Slim said.

A reporter immediately asked Slim if he’d like to have the New International Mexico Airport (NAIM), a nearly $15 billion project scrapped by AMLO and which caused a rift between Slim and AMLO a year ago, reinstated.

“The future will tell,” Slim replied. “I don’t know, but that could be one of the 1,600 projects – it’s a big project – but there are 1,600 more in infrastructure alone. There’s a lot of room for investment.”

Also present were business leaders who have not declared war on AMLO, such as Business Coordinating Council president Carlos Salazar, who also held the subject that favorable “conditions are here to return to a growth rhythm,” particularly with new financial capability and the “clean management of public finances.”

Reactions to the Slim and Salazar’s backing of the president’s investment programs – as well as the settlement of the CFE conflicts with gas pipeline companies – were varied, but, for the most part, positive.

For instance, one of AMLO’s wickedest critics and a major proponent of withholding investment, the president of the Mexican Employers Confederation (Coparmex), Gustavo de Hoyos Walther, received – with a grain of salt – the invitation to invest.

De Hoyos praised the deal with the pipeline companies, which will help to make the nation’s economy more dynamic, but said, “there are still in the current administration fundamentalist ideas that affect the federal government.”

“Fundamentalist” meaning that the political parties that backed AMLO are of a socialist brand, which he does not like at all. Nevertheless, De Hoyos showed a willingness to cooperate.

Other business leaders such as José Manuel López Campos of the National Confederation of Chambers of Commerce, Services and Tourism and Enoch Castellanos Férez of the powerful National Manufacturing Industrialists Confederation (Canacintra) praised the gas deal since it will bring abundant and cheaper fuel to their respective industries.

AMLO’s settlement also brought good news from one of the Big Three international rating companies, which have been battering foreign investment to Mexico, saying the deal with the gas pipeline companies “gives certainty to investment and assure that projects will continue to advance.

There are a lot more reactions, and in the Mexican press, even the sternest stalwarts of capitalism and harshest critics turned around and praised AMLO for not continuing in the path of friction with government suppliers and focusing his administration on “the poor will always come first” by allowing businessmen to do what they do best: business and making tax-paying money.

This was all great news for AMLO because having the backing of the business community at this moment will mean the greatest asset – the people’s vote was seemingly not sufficient – to pacify once and for all investors’ concerns and give them what they thought was lacking: confidence in the government.

On Sunday, Sept. 1, at noon, during his State of the Nation Address, AMLO will surely be underscoring this among his many achievements in his first nine months in office.

 

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