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Understanding the Mexico of today

Between the 15th and 18th centuries, the relationship of the Philippines and Mexico was akin to our relationship with ASEAN today. We served as each other’s strongest political allies and were the closest of trading partners. Culturally, we shared intimate relations, each infusing customs and traditions relating to religion, social behavior, and yes even inter-marrying one another.

For 400 years, we helped each other make the most of the Spanish occupation, despite its many drawbacks. When the clamor for independence came, we helped each other in our revolutionary efforts. We were kindred nations, so intimately intertwined in a multitude of ways.

But like siblings seeking their own destinies, we have both gone our separate ways. After quashing the Spanish sovereign stronghold, Mexico went on to wage a territorial war with America, a war it lost. Later on, it sought its fortunes in oil. As for the Philippines, our struggle for independence continued, this time, from the clasp of America and for a brief moment, Japan. We won the fight in 1946 and became a self governing republic. Since then, our economic lifeline and cultural exchanges have been focused on America and Northern Asia.

Today, our relations with Mexico is no closer than our relationship with Hungary. Bilateral trade between our nations is minuscule at just $545.19 million last year. Mexico, today, ranks 28th among the Philippine’s trading partners. In terms of tourism, Mexico welcomed 29.3 million visitors last year from which less than five thousand were Filipinos. Our tiny share of inbound visitors is a metaphor for how our relations have diminished over the years.

In one of his public addresses last April, (then) presidential candidate Rodrigo Duterte asked the audience if they would dare visit Mexico what with kidnappings and crime in full swing due to the drug menace. It was an acerbic slur to the Mexican republic especially since Mexican Ambassador, Julio Camarena Villaseñor was in the audience. Naturally, the Mexican community took offense. The slight allegedly caused Coca Cola FEMSA to consider relocating the bulk of their operations to Indonesia.

Days after, I met Ambassador Camarena for dinner and we began talking about the “the incident”. If anything, Ambassador Camarena was more concerned about the misnomers and misinformation about his country among Filipinos. Fact is, Mexico is now a trillion dollar economy, the 14th largest in the world with global trade of $785 billion, Camarena underscored. Mexico is an economic force to reckon with, one that can help the Philippines through investments, technology transfers and trade. We are missing a golden opportunity by dismissing them as a narcotics nation

The Philippines, for its part, is now Asia’s fastest growing economy and global business process hub. There are countless opportunities by which we can leverage on each other’s strengths, I opined. Considering our shared history, it only makes sense that we revive our close relations to mutual benefit. To squander this opportunity is both reckless and foolish.

Ambassador Camarena and I agreed that there is much to gain by making the Filipino and Mexican people aware of the importance of the other. After all, it is in our best interest to cooperate and co-operate in the realms of commerce, diplomacy and cultural activities. He volunteered to arrange a meeting with Ambassador Mario Chaćon, the Head of the Pro Mexico (their equivalent of the Board of Investments) and Ambassador Sergio Ley Lopez, the President of the Council of Foreign Trade, Investments and Technology in Mexico City to get a better understanding of Mexico’s place in global trade. I accepted the invitation not only to hear what they have to say, but also to put context to what President Duterte had said last April.

Meetings with Ambassadors Chaćon and Ley

I was warmly welcomed by Ambassadors Chaćon and Ley, the former in his office in the Jardines de Pedregal district and the latter in his residence. After exchanging pleasantries, I reassured them that the Philippines considers Mexico a strategic partner in trade and that my intent was to paint an accurate picture of the Mexican economy today. I played the nostalgic card by recounting the many ways we had cooperated during the Spanish occupation and during world war 2. With that, defenses were down and there was no need to talk about “the incident”. They were eager to tell me about Mexico’s rise as an economic powerhouse.

Mexico is a success story on many levels. The days of dependence on oil are long gone. Since the enactment of the North American Free Trade Agreement in 1993, Mexico has become a manufacturing dynamo – they are to the Americas what China is to Asia. They have become the 8th largest auto, truck and auto parts manufacturer in the world and major manufacturer of consumer electronics, computers, smart phones, medical instruments and agro industrial products, among others. All things told, they export some $400 billion worth of goods a year, an amount which comprises 73.5% of all Latin American exports. This was made possible by the massive influx of foreign direct investments (FDIs), which, between 2013 and 2015, averaged $32 billion a year. They are the 9th largest recipient of FDI’s globally. NAFTA has allowed the Mexican economy to expand by 2.5 times its size in 1993.

Mexico is a magnet to FDI’s not only for its strong workforce and excellent infrastructure, but because it has forged 46 free trade agreements with countries like the US, Canada, Brazil, Russia, Chile, Peru and the EU. They are also a member of the Trans Pacific Partnership. All these makes Mexico an ideal manufacturing base and export hub with duty free access to key markets.

In 2013, Mexico invested some $14 billion overseas for which more than a billion went to the Philippines.

A robust manufacturing sector has reduced unemployment rate to just 4 percent. The Mexicans are now an upper middle income society with per capita income (nominal) of $10,800, double that of the Philippines.

Looking to the future, Mexico hopes to become a precision manufacturer. It has laid the groundwork to become a force in the aerospace industry what with 283 aerospace manufacturers operating from the country including Boeing, Airbus, Bell Helicopters, Honeywell and Embraer, among others. They are also building capacities in manufacturing chemicals, medical equipment and pharmaceuticals.

Similarities

Apart from the obvious religious and cultural similarities, our talks revealed more commonalities between our nations.

Mexico and the Philippines have approximately the same population size at 120 million and 102 million, respectively. Both are in a demographic sweet spot with the average age of its people being 26 for Mexico and 23 for the Philippines. In Mexico’s case, however, 22 percent have a college degree in engineering and IT- related courses. This is why 6 of every 10 certified software professional works out of Mexico. In the Philippines, the preferred courses is in the field of medicine, medical services and business. Either way, both consider their workforce as its greatest competitive advantage.

Both countries are partially dependent in overseas remittances from abroad. The Philippines received $29.7 Billion last year while Mexico received $25.7 Billion. Both are classified as investment grade by credit raters, Moody’s Fitch and Standard & Poor’s.

More importantly, both countries are on the fast-track of growth. Bloomberg forecasts Mexico to be the become the 8th largest economy in the world by 2050 driven by its manufacturing sector. For its part, the Philippines is poised to be the 18th largest, driven by services.

Infrastructure

This was my second time in Mexico and first time in its capital city. I was surprised at the uncanny resemblance of Mexico City to Manila. The layout of major road arteries, pueblos (small barangays), mass housing, posh villages and central business districts are fashioned the same way. Its infrastructure, however, is first class. It has to be – given the need to support its 22 million population. I reckon that if anyone would like to see how Manila could possibly evolve into in 15 years, they should pay a visit to Mexico City.

Supporting the metropolis are 12 underground subway lines, a network elevated Light Rail Transits, a Bus Rapid Transit and a labyrinth of highways, skyways and bridges. The city lies within a tectonic fault line which has honed Mexican expertise in building earthquake-proof edifices.

I spoke lengthily about this administration’s ambitious infrastructure program and invited their infrastructure companies to explore opportunities in our Public Private partnership programs. There was great interest on their part. I hope Ambassadors Chaćon and Ley would relay the opportunities we spoke about to their infrastructure companies

Going back to the words of President Duterte…. is Mexico a narcotics country? Let’s put it this way….yes, it has a drug problem just like any other country. But it is much more than that. As illustrated, they are successful economy that continues to grow in importance. This is the bigger story.

It’s about time we look at Mexico with fresh eyes. There are tremendous opportunities to mine, not the least of which is their position as our gateway to the north American and Latino markets and our position as their gateway in the eastern hemisphere. Done right, we can revive the glory days of the  Galleon trade, this time, in the 21st century context.

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Andrew is an economist, political analyst, and businessman. He is a 20-year veteran in the hospitality and tourism industry. For comments and reactions, e-mail andrew_rs6@yahoo.com. More of his business updates are available via his Facebook page (Andrew J. Masigan). Follow Andrew on Twitter @aj_masigan.