VTZ

Our second chapter of Doing Business in Mexico, Foreign Investment, will provide a general overview of the rules and restrictions on foreign capital in Mexico.

This chapter includes the following sections:

1. Foreign Direct Investment in Mexico in Numbers
2. General Context of Foreign Investment Law in Mexico
3. Prohibited Economic Sectors
4. Economic Sectors with Restrictions
5. Foreign Investment Reviews in Mexico?
6. Foreign Investment and Real Estate in Mexico
7. International Investment Agreements
   1. Bilateral Investment Treaties
   2. Free Trade Agreements with Investment Chapters
   3. Mexico’s Investor-State Dispute History and Record
   4. Considering IIA when Investing in Mexico?

1. Foreign Direct Investment in Mexico in Numbers

Mexico is an open economy that embraces foreign investment. According to foreign direct investment statistics from 1999-2020, almost half of Mexico’s FDI comes from the USA, followed by Spain, Canada, Japan, and Germany. 

For more information on FDI inflows per country, see Appendix 1- Table: Top FDI Inflows per Country.

Interestingly, China is a major exporting capital country in the world. In fact, Chinese investment in Latin America and the Caribbean has had a sharp increase in the last years. However, that has not been the case in Mexico. Chinese investment in Mexico only represents around 0.2% of the total investment in Mexico, according to official statistics of the Mexican Ministry of Economy.

As for economic sectors, FDI inflows have focused mainly on the manufacturing sector, followed by financial services, international trade, mining, construction, transportation, and hotel industry. For more information on FDI inflows per the economic sector, see Appendix 2- Table: Top FDI Inflows per Country.

In this chapter, VTZ will provide an overview of the foreign investment restrictions applicable to economic sectors and real estate, the role of the authorities regarding investment authorizations, and the Bilateral Investment Treaties. 

2. General Context of Foreign Investment Law in Mexico.

As a general rule, foreign investment is authorized without restrictions in the territory of Mexico, unless the Law expressly includes a limitation. In other words, Mexico does not have a special zone where foreign investment rules are more “flexible” as investment promotion policies because it has adopted a “negative list” approach that applies throughout its territory…Read More

3. Prohibited Economic Sectors.

From a practical standpoint of view, the Law expressly prohibits foreign investment in “ten” general economic sectors that are classified as “activities reserved to the Mexican State” or “activities reserved to Mexicans”…Read More 

4. Economic Sectors with Foreign Investment Restrictions

The Foreign Investment Law provides the following ownership interests limitations or caps to foreign investors in Mexican enterprises that may not be exceeded directly or indirectly in the following regulated activities:…Read More 

5. Foreign Investment Reviews?

Mexico has foreign investment reviews in place, but they differ from those carried out in other jurisdictions. United States, Canada, and China, for instance, have foreign investment reviews that are triggered by “national security” concerns. National security concerns… Read more

6. Foreign Investment and Real Estate

The transfer of real estate ownership is subject to several conditions, including where the property is located, the land regime, and the buyer’s legal nature and nationality…Read More 

7. International Investment Agreements

Mexico has a large network of International Investment Agreements, either in the form of a Bilateral Investment Treaty or as an Investment Chapter in a Free Trade Agreement.

An Individual or company, qualifying as an investor, and their “investment” in Mexico may benefit from international protection provided that he or she is from a State that is a party to an international investment agreement with Mexico and that the investment qualifies as such under the relevant agreement….Read More 

7.1 Bilateral Investment Treaties

7.2 Free Trade Agreements with Investment Chapters

7.3 Mexico’s Investor-State Dispute History and Record

7.4 Considering IIA when Investing in Mexico?

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BIT, Doing Business in Mexico, Foreign Direct Investment, Foreign Investment, Foreign Investment Reviews, Investment Treaties, Real Estate

By Vazquez Tercero y Zepeda  -        

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