Gustavo Puente Orozco, Secretary of Economic Development, State of San Luis Potosí: Interview

 Gustavo Puente Orozco, Secretary of Economic Development, State of San Luis Potosí

Interview: Gustavo Puente Orozco

What markets besides the US is San Luis Potosí looking at to maximise its trade potential?

GUSTAVO PUENTE OROZCO: For obvious structural and geographic reasons, the Mexican and US markets are intrinsically linked together. This is not necessarily a disadvantage, as the North American Free Trade Agreement still exists, and Mexico is still the largest trade partner of a number of states. Having said that, increased interaction with other key global markets in Europe and diversification towards Asia is essential to maintain the strong growth San Luis Potosí has experienced over recent years.

The EU ambassador to Mexico recently visited the state and underlined the importance of our relationship with the world’s largest trading bloc. Nearly 40% of Mexico’s foreign direct investment (FDI) comes from Europe, with this number reaching 51.6% in San Luis Potosí, whereas 41.7% of investment comes from the US. However, looking at growth areas since the turn of the new century, the results are clear: investment and trade from Asia, especially from China, Japan and South Korea, has grown significantly from almost nothing in 2000. Eight years ago there were three Japanese companies in the state, and now there are 55, and it is the same story all over the Bajío region.

In what ways can San Luis Potosí’s central location be leveraged to bolster its economy?

PUENTE: Looking at the national picture, San Luis Potosí stands out as one of the top-seven growth regions in the country and consistently posts economic GDP growth well above the national average. In 2016 the state registered 4.6% GDP growth and received $658.9m in foreign investment in the manufacturing sector in the last five months alone, creating 7980 new jobs. This figure can always be improved; in spite of clear challenges, the state is expecting to reach at least $1bn in FDI inflows in 2017. Looking at the breakdown of industries, San Luis Potosí’s key growth sector is the automotive industry, which represents around 25.7% of the state’s GDP. In Mexico there are 250 original equipment manufacturers, 30% of which are located within 300 km of each other. The proximity of the value chain is enticing to firms looking to move to the state. Taking advantage of its location, the state has become a logistics centre for a variety of industries. Rail operator Kansas City Southern’s presence demonstrates this and is a big draw to industry, especially due to the presence of the World Trade Centre Industrial Park, which acts as an entry point for refined energy products arriving from the US by train. In other areas the state remains strong, especially in mining. San Luis Potosí is one of the most important producers of gold, silver, copper and zinc. In terms of manufacturing, we are a large producer of food products and domestic appliances, but most importantly all of the above-mentioned industries have a strong focus on research and development. This builds on work done by other institutions in neighbouring states such as Querétaro, which follows the vocational dual system of education pioneered in Germany.

How is infrastructure being prioritised to ensure it facilitates the state’s growth?

PUENTE: The state government is implementing various new projects to bolster the infrastructure of the state over the long term. A $4bn investment in the upgrade of the Querétaro-San Luis Potosí road using the new public-private partnership model approved by the federal government is just one example.

From an international angle, the expansion of the airport is crucial. In 2013 it had 261,699 arrivals and now has 504,313 annually, almost doubling over three years thanks to business and leisure travellers. In 2016 a new MXN400m ($24.1m) investment was initiated that will take 20 months and bring the capacity up to 1. 2m arrivals. Capacity is being added, and the development of new routes connecting Toluca with Santa Fé, Los Angeles and San Francisco is being studied; these routes will connect us to travellers coming from Asia.

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Gustavo Puente Orozco

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The Report: Mexico 2017

San Luis Potosí chapter from The Report: Mexico 2017