Mexico eyeing closer economic ties with Singapore

Mr Rios said the Mexican government has said that it wants to convert the TPP into bilateral agreements with the six TPP countries that it does not already have free trade deals with. These include Singapore, Australia, New Zealand and Vietnam.
Mr Rios said the Mexican government has said that it wants to convert the TPP into bilateral agreements with the six TPP countries that it does not already have free trade deals with. These include Singapore, Australia, New Zealand and Vietnam.ST PHOTO: NIVASH JOYVIN

As Mexico's relations with the United States become frostier because of US President Donald Trump's bellicose rhetoric, the Latin American country is looking to the East for new friends.

Mr Francisco Rios, IE Singapore's Mexico City-based centre director, said that he is seeing more private conglomerates come knocking on his door, looking to establish ties with the Asian market via Singapore.

"Mr Donald Trump has promised to review the North American Free Trade Agreement (Nafta), and that has made Mexico realise that keeping all your eggs in one basket, and having 80 per cent of your output delivered to one client, is not smart in the long term," he said.

In the wake of the collapsed Trans-Pacific Partnership (TPP) deal, of which Mexico had been a party, a bilateral free trade agreement could also be on the cards.

Mr Rios highlighted that the Mexican government has said it wants to convert the TPP into bilateral agreements with the six TPP countries that it does not already have free trade deals with.

These include Singapore, Vietnam, Australia and New Zealand.

"We feel that this moment of Mexico looking at Asia, and Singapore being a good gateway to Asia, could be an interesting moment for us to collaborate with them," Mr Rios said, singling out the potential of Mexico's special economic zones (SEZs).

Mexico is keen to learn from Singapore's business park expertise when it comes to its SEZs, which it signed into law last May. It aims to get them up and running by next year.

The SEZs will include tax incentives for companies investing in targeted sectors, and they present an opportunity for companies in infrastructure development areas such as logistics, petrochemical complexes, utilities and water and waste treatment, said Mr Rios.

Mr Rios, a Venezuelan who has worked for IE Singapore in both Singapore and Brazil, was here last week with a Mexican official involved in the SEZs.

He said that at least three Mexican state governors will visit Singapore in the first half of this year.

The heightened engagement follows President Tony Tan Keng Yam's visit to Mexico City in June last year - the first by a Singapore head of state to a Latin American country.

Mexico's massive new international airport, due by 2020, could also present an opportunity because of Singapore's brand name in airport management and associated activities, Mr Rios said.

There are about 40 Singapore companies of various sizes operating in Mexico, including water- treatment firm Hyflux, textile firm Kaybee Group and plastic- parts manufacturer Sunningdale.

Mr Rios urged small and medium-sized enterprises (SMEs) to look into engaging with the vibrant Mexican private sector, citing the success of some Singaporean SMEs in logistics.

He acknowledged that the biggest obstacles were the language barrier and understanding the culture, but added that IE Singapore can help companies look for local partners.

While Nafta may be renegotiated, Mr Rios said that the process would take time and there will not be a change overnight.

He said talk that manufacturers are reviewing investments in Mexico and rerouting investments to the US is restricted mostly to the automotive sector.

European and Asian manufacturers have emphasised the continuity of their operations and investment plans in Mexico - which Asian companies can look to service, particularly if US players bow out, he said.

A version of this article appeared in the print edition of The Straits Times on February 13, 2017, with the headline 'Mexico eyeing closer economic ties with Singapore'. Print Edition | Subscribe