Tycoon Carlos Slim says Mexico is attractive for institutional investors

On Wednesday, Mexican billionaire Carlos Slim said that the private sector would step in to help finance ambitious infrastructure projects in Mexico so long as public finances are healthy and inflation is under control.

Slim described the prevailing conditions in Latin America’s second-largest economy as an opportunity to attract institutional investors , such as pension funds that often finance large-scale projects.

“This is a great opportunity for these funds to invest in these infrastructure projects ,” Slim said at an event held in Mexico City, adding that Mexican banks also had resources to finance projects.

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He spoke a day after the government announced the first phase of an ambitious infrastructure plan underwritten by the private sector that covers a wide range of transportation and other public works projects over five years.

Slim said he, too, planned to invest and would put USD $10.32 billion over five years into improving telecommunications in areas with little or no coverage, dovetailing with the government’s plan to get internet access to the entire population.

Slim’s family controls América Móvil , the largest Mexican telecommunications provider whose operations include mobile and fixed-line voice services, wireless and fixed-data services, internet access and pay television. Just last month, Slim said that he expected to invest up to USD $5 billion in Mexican infrastructure during the current administration.

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Slim said financial investors can get better yields in Mexico, where central bank interest rates of 7.5% are well above the United States and Europe.

The rate differentials have helped support the peso, although the economy has stagnated under President Andrés Manuel López Obrador, who took office a year ago.

Slim said it was important to protect the country’s credit rating, which has been under pressure from state oil company Pemex’s heavy debt load.

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The tycoon hailed the infrastructure package , but his experiences with the new government have been mixed.

Shortly before taking office a year ago, López Obrador canceled a partly built USD $13 billion airport for Mexico City in which Slim was a major investor. The government compensated the investors, but business groups were furious at the decision.

Slim also questioned the efficiency of one of López Obrador’s signature public works plans, the Transisthmic Train , a train route to connect the Pacific Ocean and the Gulf of Mexico at the Isthmus of Tehuantepec, the shortest point between the two bodies of water.

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“Thinking that a huge boat from China unloads and transports while there’s another huge boat waiting to transport east to the United States , I believe, is a bad idea,” he said.

Slim said a good idea would be to concrete a special agreement with the U.S. for them to purchase what is produced in that area, “Beyond the free trade agreement, there should be a special agreement for everything that is produced in that area to go automatically to the American market, that would be a good alternative,” he proposed.

About the investments and infrastructures unveiled on Tuesday by the government and the private initiative, the Mexican tycoon commented that wages must be improved too.

“That will give more goods demands and with the generation of works, the total payroll will significantly increase,” because high demand generates economic dynamism in Mexico.

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