Yucatán is betting big on nearshoring

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Yucatán, Mexico’s safest state is betting big on nearshoring, hoping to attract foreign investors who are weary of the rising criminality and government corruption in other parts of the country.

Yucatán, a state that occupies about a third of its namesake peninsula, has historically had low crime in part because it is geographically isolated from the rest of the country.

Yet under Gov. Mauricio Vila, the state has surged security spending from about $875 million per year to about $2.1 billion.

“What I’ve talked about with some governors is that once you have criminality [in your state], it costs 10 times as much as prevention,” Vila told The Hill in a recent interview.

“What we have done is invest in security, see it not as an expenditure but as an investment, because security also becomes a competitive advantage when it comes to attracting investments.”

That security investment so far is paying off at least in one way: The State Department issues travel advisories for Mexico state by state, and Yucatán and its southwestern neighbor Campeche are the only two in the “exercise normal precautions” category.

Yucatán is not just safe relative to its high-crime compatriots — Mexican federal data shows the state’s murder rate in 2022 was about 2 homicides for every 100,000 inhabitants, and state officials say the intentional homicide rate in 2023 was 0.81 per 100,000.

“For companies that are so heavily integrated already into the U.S.-Mexico economy — think of anybody in the automotive sector — they may well want to be in Mexico, but which state in Mexico, which place? That’s going to depend on what they see in the local environment,” said Andrew Rudman, director of the Wilson Center’s Mexico Institute.

But national issues still affect the state. Mexico’s national homicide rate in 2022 was 25 per 100,000, according to federal statistics.

“Sure, the geography is an advantage in that most of the drug routes are up the coast, so [Vila is] far away from that,” Rudman said.

“When I met with him maybe five, six months ago, they were talking about how trucks weren’t being hijacked in Yucatán, but when they left the state — that was the concern that a lot of businesses had.”

Vila’s pitch to investors worried about conditions in the rest of Mexico is a matter of infrastructure.

“If there’s one thing that I have to recognize about [President Andrés Manuel López Obrador] is that his rhetoric about strengthening the country’s Southeast — in Yucatán, it’s a reality, with these infrastructure projects,” Vila said.

“We are generating a before-and-after in infrastructure, and today that has helped us to promote the state and [to say] we have the same [business] conditions as in the Bajío region or in the north of the country.”

Vila is one of the few opposition leaders who has maintained a cordial and productive relationship with López Obrador.

He is a member of the center-right National Action Party, which has opposed López Obrador throughout his political career and now also opposes presidential pet projects such as the Mayan Train, a rail loop around the Yucatán peninsula.

“The reality is we’ve had a very good relationship with the federal government, despite being in different political parties. That doesn’t mean we don’t have differences, but our coincidences are bigger,” Vila said.

And he added that he supports the much-maligned Mayan Train project not just for its tourism mission, but because it connects Yucatán to the rest of the country and to Salina Cruz, a relatively nearby port on Mexico’s Pacific coast.

Vila said the project to ship containers over rail from Salina Cruz is in a “soft launch” phase, but it opens Yucatán as a manufacturing hub, paired with a new natural gas pipeline to power industry.

The state’s main port, Progreso, is less than 600 miles directly south of New Orleans, across the Gulf of Mexico, a 48-hour crossing to ports that also include Mobile, Ala., and Houston.

“The reality is that today you’re not just competing with other states in the republic. When you want to attract investments, you compete with Vietnam, with Indonesia, with a lot of other countries, especially Asian countries,” Vila said.

Source: El Financiero

The Yucatan Post