Sheinbaum kicks off Mexico nearshoring incentives with decree
21 Jan 2025, 08:24 pm
main news image

(Jan 21): President Claudia Sheinbaum’s administration will offer greater incentives for companies to relocate their manufacturing operations to Mexico in order to be closer to the US market, including by granting tax incentives, according to a decree published on Tuesday.

The decree provides fiscal incentives “to support the national strategy called ‘Plan Mexico’, to foment new investments, encourage dual training programmes and drive innovation”, according to the order, which was published in the official gazette.

The decree was designed to extend to Mexican and foreign companies alike, and it applies to all sectors of the economy, Sheinbaum said last week during the presentation of the “Plan Mexico”, a framework intended to reduce the country’s imports from China in a bid to support local industry.

Tax deductions, which will be higher for industries involved in technology, research and development, will remain in place until October 2030, Sheinbaum added. The decree provides additional tax cuts if companies train their workers in educational and research institutions, according to the “Plan Mexico” presentation.

Mexico has not been able to develop nearshoring to its full capacity due to limitations in providing access to essential services such as electricity and water. Still, the government reported US$36 billion (RM161.13 billion) of foreign direct investment in 2023, a 27% increase from the prior year.

Sheinbaum has sought to align her trade policy with the interests of the US and Canada, countries with which Mexico has a trade agreement known as USMCA, which is up for renewal in 2026.

But following Donald Trump’s victory in November, the relationship between the three allies has been shaken, especially by the US president’s promise to impose 25% tariffs on both countries if they do not contribute to curbing migration and drug trafficking into the world’s largest economy. 

Trump has also expressed concern that China, his main trade foe, uses Mexico as a back door to send cheap goods to the US, affecting local producers.

Sheinbaum told Trump in a phone call that Mexico is making efforts to curb border crossings by undocumented migrants, as well as drug seizures. She has also expressed confidence that the relationship with the US — Mexico’s main trade partner — will be positive and that the USMCA is the best way to compete commercially against China.

Uploaded by Arion Yeow

Print
Text Size
Share