Transportation secretary calls for private sector investment in infrastructure of 20 pesos for every peso of public funds
Thursday, August 23, 2018
Two key members of the incoming federal government said yesterday that the private sector must make a significant financial contribution in order for Mexico to be able to fund the infrastructure projects it needs.
Javier Jiménez Espriú, president-elect Andrés Manuel López Obrador’s nominee for secretary of communications and transportation, said that he will seek a 20-peso contribution from the private sector for every peso that the new government allocates to new infrastructure projects.
Speaking at a strategic forum organized by the bank Banorte, Jiménez explained that private money will be required because the federal budget will not have sufficient resources to fully fund all the highway, airport, maritime and aerospace projects the new government plans to undertake.
Private investment could take the form of public-private partnerships, concessions or other arrangements permissible by law, he explained.
“All these actions have to do with a significant investment need [for infrastructure projects] and even though we’re going to redirect public spending, it’s not going to be possible to meet [all the costs]. Our ambition is to encourage the private sector to participate in a modest ratio of 20 to one,” Jiménez said.
Among the projects slated to be built with a combination of public and private funds are the so-called Maya Train between Cancún and Palenque and telecommunications projects to guarantee internet and mobile telephone services for all Mexicans.
At the same event, López Obrador’s prospective chief of staff said that programs to combat poverty and other social problems as well as projects such as the development of the Isthmus of Tehuantepec and reforestation in the south of Mexico would also require the participation of the business sector.
“Mexico has to become a country that breaks paradigms and takes risks that it has never taken before,” said Alfonso Romo, a Monterrey businessman who owns a major brokerage firm.
“I include myself [as a member of] the private sector. We have to self-finance a lot of the projects that have been mentioned. Who’s going to be the engine? The national and foreign private sector,” he added.
In order to turn Mexico into an investment paradise and achieve the target of 4% economic growth, the new government must also work to strengthen the rule of law, improve security conditions, boost business confidence and combat corruption through the elimination of the use of cash for large transactions, Roma said.
With regard to Jiménez’s public-private investment proposal, the president of the Confederation of Chambers of Commerce, Services and Tourism (Concanaco) said the 20-to-one idea would be viable so long as the government ensures that conditions favorable to investment are in place.
“An invitation from the government to contribute in a proportion of one to 20 is a proposal that has to be taken very seriously . . . Just two conditions are needed: certainty in the investment and profitability of the projects,” José Manuel López Campos said.
“Investors are willing to risk their capital but in a legal framework that offers certainty and where there is a scenario with the possibility of a return on investment and reasonable profits.”
Source: Milenio (sp)