(Bloomberg) -- Mexico has talked to some of the world’s biggest manufacturers of cars, auto parts and steel about opportunities to invest in a narrow strip of land in southern Mexico, according to the nation’s top trade official.
The government has pitched General Motors Co. and Toyota Motor Corp. among others eyeing opportunities in the Interoceanic Corridor, Economy Minister Raquel Buenrostro said in an interview Wednesday.
The corridor, a flagship project of President Andres Manuel Lopez Obrador, is intended to connect a port in the Gulf of Mexico with a Pacific port via a rail link lined with industrial parks. Authorities hope the development could one day rival the Panama Canal, and are trying to tempt potential investors with a favorable tax structure.
“We have had several approaches from the automotive industry, for example, the auto parts industry and also some industries related to the steel and metallurgical parts that are complementary to the development of electromobility,” Buenrostro said during a visit to New York to meet with investors. “We have flown over the area with business leaders so that they can get to know it.”
The project is part of a push by Lopez Obrador to attract business to Mexico’s less-developed southern states, instead of having it concentrated in central and northern parts of the country. Buenrostro said that the southern region has several advantages, including good water supplies, and an ample availability of clean energy.
But it’s a tough sell for automakers who have long preferred to build in the north for easy access to the US market. GM and Toyota confirmed they’d had conversations with Mexican officials about the Isthmus but said they had no investment plans to announce.
Honduras, Costa Rica, Guatemala and Nicaragua have all announced projects in recent years to compete with Panama’s canal, but with limited success.
“We have had several meetings with her and her work team to bring our supply chain closer together and for them to review investment opportunities in the Transisthmic corridor,” said Teresa Cid, a spokeswoman for GM in Mexico. “Additionally, we have shared lists of new potential suppliers that could arrive in Mexico so that they can contact them and also show them the opportunities of the corridor.”
Toyota confirmed its local unit participated along with others in meetings organized by the government to learn more about it the project. “However, there are no specific conversations about investment plans,” the company said in a statement.
Mexico is also in talks with Taiwanese companies in the autos and semiconductor industries, Buenrostro said, without elaborating.
Nearshoring, a term used to describe the relocation of international companies to North America to be closer to their US customers, has been gaining momentum in Mexico as companies including Elon Musk’s Tesla Inc. and BMW AG announce new investments south of the border.
Mexico’s foreign direct investment had the largest inflow of new equity investment in almost a decade in 2022, and the country is providing a growing share of US imports. Mexico’s computer and electronic products sector has also benefited from friction between the US and China.
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Last month, Lopez Obrador’s government seized a 120-kilometer stretch of a rail line in the area from billionaire German Larrea, raising doubt about the security of investments in the country.
Buenrostro reiterated the president’s argument that this was not an expropriation but rather a change in the company’s operating concession, and said she has assured investors that their money is safe in Mexico. Investors who have been rattled by Lopez Obrador’s move, and a legislative proposal that would make it easier for the government to terminate contracts, are being swayed by “disinformation,” she said.
--With assistance from Chester Dawson and Andrea Navarro.
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