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Sunday, June 28, 2009

Paving the Way for Growth and Tourism

Paving the Way for Growth and Tourism
by Christa Thomas

Current federal and state initiatives aim to build a better Mexico. These projects will construct new and improved roads, rails, airports and ports to increase the coverage, quality, and competitiveness of Mexico’s infrastructure. The improved infrastructure means a brighter economic future for Mexico, and safer and more efficient travel for both residents and tourists.

President Calderón launched an aggressive initiative, the National Infrastructure Program (NIP), which plans to generate and spend a staggering amount of money over the next five years. The NIP began implementation in the second half of 2008.

In announcing the initiative, President Calderón stated, “Infrastructure is synonymous with social and human development. Nowadays, competitiveness, economic growth and countries' opportunities for well-being depend largely on the solidity and modernity of their infrastructure. As Mexicans, we have the opportunity and historic responsibility to make the decisions that will conclusively promote the country's development.”

The World Economic Forum’s 2007 Global Competitiveness Report ranked Mexico 61 out of 131 countries. According to President Calderón, in order to improve these results, the NIP has set the following general objectives:

increase the coverage, quality and competitiveness of infrastructure
make Mexico one of the world's main logistic platforms, particularly in transport and energy improve Mexicans’ access to public services, particularly among the most disadvantaged promote balanced regional development without reducing the growing competitiveness in the north of the country create more permanent jobs through the investment and economic growth that will be created by the development of infrastructure
promote sustainable development through projects that respect the environment
promote the infrastructure required to increase tourist activities that will trigger employment and regional development.
The Program identifies over 300 infrastructure projects, divided into four main areas:

highways, roads and bridges
railroads, ports, airports, urban and inner urban transport
water, irrigation, drainage and sanitation
projects designed to preserve the environment and biodiversity

The NIP seems to be more than just political rhetoric as it is backed by the National Infrastructure Fund which signals a decisive step in the financing strategy for the modernization and expansion of the country's infrastructure. The National Infrastructure Fund started with a $40 billion investment in 2008, with increases promised during the following five years.

International Support
The U.S. government also signaled its commitment to Mexico’s infrastructure development by signing grant agreements totaling more than US$1.7 million. U.S. Trade and Development Agency Acting Director Leocadia I. Zak said that the grants are to further five projects that support NIP objectives. The grants will be used to fund separate studies on plans to expand Puebla International Airport, Querétaro International Airport and San Luis Potosí International Airport; a study on a proposed municipal water desalination facility for the Municipality of Puerto Peñasco in the State of Sonora; and technical assistance to the Comisión Federal de Electricidad in strengthening environmental management at the power plants, substations, and power transmission and distribution facilities that it operates.

Highways, Roads and Bridges

President Calderón stated that this year $22 billion will be allocated to building and modernizing roads. The Program includes plans for the construction or modernization of more than 100 miles of highways and rural roads.

Over $1 billion will be spent on works such as the Toluca-Palmillas, Toluca-Naucalpan and Texcoco-Calpulalpan highways. Another $9 billion will be assigned for conservation and maintenance.

Tourism Minister Rodolfo Elizondo said top projects include Huatulco, a beach resort that will receive $108 million in investment from the federal budget plus $1.48 billion in private funds for a development that is expected to be finished by the end of the current administration. Riviera Nayarit, Golden Beach and Puerto Escondido will also benefit from the planned investments.

Early this year, the President inaugurated the Chalco 1 Junction, which involved a $120 million investment and is part of the Mexico-Cuautla highway project.

Also recently opened is the Coastal Highway north of Puerto Peñasco. Hal "Paco" Clark, President of San Felipe’s BC Lions Club says that the new highway makes a “very pleasant difference” as the trip, which used to take about 6.5 hours by car, is now reduced to 4.5 and is very scenic—passing miles of beautiful farmland and rugged coastline.

Railways

Mexico’s government and private partners will invest $47 billion in nine projects to expand Mexico’s railroad network. The NIP plans to expand the country’s railroad system by 881 miles of additional track over the next five years. This includes 10 multimodal corridors, which will be added to the current eight by 2012, as well as three new suburban train systems in Mexico City.

Maritime Ports

The Program will add five new ports to the existing 114. The new ports will be located in Baja California, Manzanillo, Veracruz, Campeche and Puerto Morelos. In January 2009, Mexico's Communications and Transport Ministry called for bids on seven tenders to expand ports' infrastructure. The budget for these projects is $9.72 billion, out of which 60 percent will come from public funding and 40 percent from private investors. Alejandro Chacon, head of ports and marine transportation, said that these tenders include the construction of a container terminal, facilities for fertilizers and minerals in Guaymas, an upgrade of the infrastructure in Mazatlan, a service station for oil platforms in Dos Bocas in Tabasco, and a container terminal in Manzanillo. Chacon said $23 billion of public and private funds will be invested between 2009 and 2013.

Airports

The NIP plans to construct three new commercial airports in Cancun, Sonora and Baja California. Other airports will be expanded, including those in Puebla, Cancun, Toluca, Loreto, Puerto Vallarta, Guadalajara, Monterrey and Merida. Most of the projects, valued at $5.4 billion, have already started.

Current Status of NIP
Like the rest of the world, Mexico’s economy has been hurt by the international financial crisis. In response, the Mexican government has introduced an economic stimulus program to support households and foster employment in the country. This includes accelerating the implementation of the NIP. President Calderón has announced that the government will use public spending to drive the economy and plans to execute the bulk of infrastructure investments during 2009. The construction of a new refinery, the expansion of ports and highways, new tourism projects and an aggressive home building program are part of the government’s plan.

Conclusion
President Calderón stated that his "government is making important decisions that will set us on the right path to putting Mexico on the world tourist map." And that “although the goal we have set is ambitious, I know it can be achieved. We are determined to turn Mexico into a leader as regards infrastructure development in Latin America and among emerging economies and by 2030 for it to be among the top 20 percent of [the] world's most highly rated countries as regards the competitiveness of its infrastructure.”

Mexico paving its way to economic recovery is good news for the tourist industry as it becomes easier to get to and move about the country. With already completed projects ranging from the new coastal highway out of Puerto Peñasco to the new cruise ship terminal in Guaymas, arriving in Mexico by car, plane or boat has never been easier. Plan your arrival soon, and plan to stay for awhile. But be careful—like thousands before you, you may not want to leave!

* $ represents pesos unless stated otherwise.