The manufacturing sector is a key growth driver of the Mexican economy, accounting for 40% of the US$31.6 billion in foreign direct investments in 20211. Over the past decade, Mexico has become an attractive manufacturing location relative to other large economies.
With the nearshoring of US companies back to North America, the US-Mexico-Canada FTA, rising consumption because of economic recovery in the US, and a skilled and affordable Mexican workforce, more and more companies are leveraging Mexico’s infrastructure and logistics support to manufacture for the US market.
This growth has resulted in greater demand for suppliers, providing opportunities for Singapore’s component manufacturers. Singapore manufacturers supplying to aerospace, automotive and medical technology players in the US and Latin America can consider Mexico as a potential manufacturing base. Closer proximity to key clients translates to reduction in logistics costs and makes it easier to keep pace with developments in clients’ supply chains. In addition, Singapore component manufacturers with tooling, stamping and machining capabilities can support and complement the domestic Mexican manufacturing industry.
1: DataMexico, 2022
There are opportunities to improve Mexico’s infrastructure in areas such as roads, ports, airports and urban transport. Improving port infrastructure was a major focus of Mexico’s 2014-2018 National Investment Program, and there will be a continued need to improve port facilities to support increased trade and industrial activities.
There are also plans to develop intelligent urban transportation systems. Singapore companies can secure such urban transportation projects through early and comprehensive engagement of authorities and operators.
The development of four Special Economic Zones in the south of Mexico is expected to spur massive economic activity over the next decade. Singapore companies with expertise in industrialisation, master-planning, management of ports and airports, provision of intelligent transport systems, management of water, waste treatment plants, e-government solutions, hospitality and tourism infrastructure can benefit from these plans.
The Mexican economy is rapidly digitalising. Incumbents across sectors have been seeking technological solutions to improve their operations, increase cost efficiency, and expand their services. Sectors that have been adopting technology include fintech, healthtech, AI and IOT, agritech, and foodtech. There is also strong demand from multi-Latina corporates which are increasingly looking for sustainable innovations to capture a larger market share of a rapidly growing sector.
Mexico has a large population that encourages long-term market expansion and diversification of supply chains. Companies can also leverage Mexico’s strategic location, simplified customs clearance, and low import taxes to access markets across the Americas.
Mexico is the 10th largest food producer in the world, and the country's agrifood trade amounted US$44.4 billion in 2020. The agrifood industry is the country’s most dynamic export sector and the third largest, only behind manufacturing and automotive. There are many opportunities to source premium items from Mexico, such as avocados, berries, and meat. There is also immense potential to export Asian food items to Mexico. Enhanced integration between Pacific Alliance countries and the need to diversify Mexican exports both translate into a clear opportunity for Mexico to become a consolidator for food products which are exported from the Pacific Alliance markets to Asia – and for Singapore to play a role in this new trade corridor. Singapore can be a regional hub, helping products from Mexico reach South Asia and Middle East markets. There are many opportunities to improve digital and physical connectivity (air and sea) and logistics, and strengthen the cold chain for perishables, in particular.