- POSTED: 28 May 2014 17:34
- UPDATED: 28 May 2014 17:35
IE Singapore says the recent wave of reforms in Mexico could pave the way for more firms to invest there, as business environment improves.
SINGAPORE: Some 40 Singapore companies are currently operating in Mexico and trade agency IE Singapore says the recent wave of reforms in the country could pave the way for more firms to invest there, as business environment improves.
The three key sectors that present good opportunities include oil and gas, manufacturing and urban solutions.
The trade agency adds that Singapore enjoys a growing economic relationship with Mexico.
For instance, bilateral trade doubled in the last decade to S$4.2 billion in 2013, and Singapore is Mexico's second largest investor from Asia Pacific, with direct investment totalling S$1.14 billion as at end-2012.
At a seminar on doing business in Mexico, IE Singapore observed that there is a growing trend of near-shoring to Mexico, which shares its border with the US to the north.
And some companies serving the North American market have moved their manufacturing operations to Mexico from China.
One reason is the rising costs in China.
On average, labour cost in Mexico is currently about 7 per cent lower than China, according to Francisco Rios, Centre Director for Mexico Overseas Centre, IE Singapore.
The trade agency added that some Singapore firms in the aerospace, med-tech and automotive sectors are also showing interest in setting up in Mexico -- primarily to be closer to their customers.
“We are increasingly seeing more interest from Singapore companies, and also in Asia, to come to the market,” said Rios. “What we have seen is that the tier one suppliers are asking the tier two suppliers to come and produce next to them, again it is this near-shoring effect.
“Not only between the US and Mexico, but also between the suppliers.
“The big push is people will actually want their manufacturing facilities close to where they develop and design the different components."
Last year, Mexico drew a record of US$35.2 billion in foreign direct investment, nearly double that in 2012.