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Industrial Real Estate in Mexico with Rafael McCadden

Industrial Real Estate in Mexico with Rafael McCadden

by | May 4, 2024 | FDI Latin America, Podcast

Rafael McCadden
Executive Director for Industrial and Logistics
Colliers International
Mexico City, D.F. Mexico
rafael.mccadden@colliers.com

LATAM FDI: Today, we have Rafael McCaden with us. Rafael is the Executive Director for Industrial and Logistics with Colliers in Mexico. Good morning, Raphael. How are you today? Could you tell us about yourself and your company?

Rafael McCadden: Hi, Steve. Good morning. Thanks for this podcast. Of course, I’ve been in real estate most of my life, but industrial now, I would say, for almost 30 years. I started as the Executive Director of the Mexican NAIOP, which is called AMPIP, and then with Colliers for almost 20 years now.

LATAM FDI: Wow. For those who don’t know, AMPIP is the Mexican Maquiladora Association. Is that correct

Rafael McCadden: No. AMPIP is the Developers Association.

LATAM FDI: Okay.

Rafael McCadden: Yes. So, it’s more like NAIOP. Right.

LATAM FDI: Well, some key factors drive demand for industrial real estate in Mexico, given the country’s current landscape. What are those key drivers, Rafael?

Rafael McCadden: Yes. Well, I would say one of the key drivers right now is nearshoring, which is unshoring or friend shoring. It has so many different names now, but it’s the same thing. I would say that the global manufacturing supply chain has changed its course, and now it’s not as global as it used to be for many reasons. Regionalization is the new game. Of course, Mexico, being part of North America, plays a huge role in this, I would say, in many sectors. We’re busier than ever

LATAM FDI: Given this economic landscape, how does the availability of skilled labor influence the location decisions of companies that look to occupy industrial real estate in Mexico for manufacturing purposes?

Rafael McCadden: Great question. Well, you see, there are, I would say, important differences between the workforce in the US and Mexico. For one, if you start looking closely into the average age of engineers or the average age of the population, in the United States, baby boomers are in their late ’60s. The baby boomer generation in Mexico is in its late ’20s. That’s a huge difference. I say it because even though Mexico has pyramids, it’s a young country. The average age is 29 years. That’s a huge advantage. This has resulted in many US and European companies switching to Mexico. This, of course, has positive implications for industrial real estate in Mexico.  Also, design and technical centers are becoming more prevalent. Believe it or not, Mexico graduates the same number of engineers with a population of 130 million as the US with a population of over 350 million. So That tells you how many graduates and how many young students are looking to get a job in Mexico

LATAM FDI: Yes. That seems to be something that many people I speak with comment upon: the availability of good, skilled labor in Mexico. But beyond that, what role do government policies and regulations relations play in shaping the growth and development of the market for industrial real estate in Mexic

Rafael McCadden: The government doesn’t always help the business develop. I can put it that way. But I would say that the trends surpass that big time. Some governments have a more active role, especially state governments. I would say the federal government took a different path by shutting down Promexico, which was a government investment agency. But regardless of that, the trends are helping Mexico. Let me stop here a minute and tell you something that I’ve been, I would say, analyzing, and that is what we started talking about regionalization. Supply chain disruptions are playing a huge role in Mexico’s success. Supply chain disruption, as an example, we can mention the tsunami in 2011 in Fukushima, Japan. So, some people say, What does that have to do with Mexico? And I said, More than you think, Because the auto industry, especially tier one and tier two assembly plants, had to shut down because of the suppliers being affected by the tsunami. And so, some of the largest OEMs, Japanese OEMs, said, This will not happen again. I can’t keep having all the eggs in one basket. So, they started expanding their operations to occupy industrial real estate in Mexico.

LATAM FDI: So, after 2011, more than 300 Japanese auto industry companies, including OEMs like Mazda, Honda, and Nissan, moved to occupy industrial real estate in Mexico in the Bahia region. That played a huge role in that area’s industrial development. Then, as we all know, COVID-19 was a huge game changer in terms of supply chain disruptions. Now, newer supply chain disruptions like the Red Sea, the Panama Canal, and the Baltimore Bridge were torn down. These supply chain disruptions are helping Mexico, which has a 2,000-mile border with the US with 55 border crossings.

LATAM FDI: Concerning border crossing and other investments in Mexico, specifically infrastructure, including transportation and utilities, how does Mexico’s state of development in this area contribute to the attractiveness of locations for industrial real estate in Mexic

Rafael McCadden: Well, being very honest, this tsunami that hit Mexico, which is nearshoring, has challenged our utilities, infrastructure, and transportation. I would also say the developers are trying to play catch-up because we were hit by an unexpected demand for industrial real estate in Mexico. Let me give you an example: Never before has Monterey had over 30 buildings for industrial real estate in Mexico under construction, which they do have today. That tells you the roles that the developers are playing. Developers who weren’t even in the sector, those who were in office development or shopping centers, are moving and putting a lot of interest into the industrial market. They can see that industrial real estate development in Mexico will continue with this trend for a few years. So yes, it’s really interesting to see how also US developers that didn’t care much about Mexico, like Panettoni, for example, they were mainly concentrated on Eastern Europe and other places in the world now are saying, Hey, I’m more interested about Mexico than I was three years or five years ago

LATAM FDI: Getting a view and handle on the physical types of construction you just mentioned, are there any emerging trends in the design and construction of industrial real estate in Mexico

Rafael McCadden: I would say yes. For one thing, industrial buildings are much more environmentally friendly in many ways. So ESG… To give one example. The structures were not typically designed to hold solar panels. Developers didn’t design buildings that could hold them. Now, most developers are designing better structures that can hold solar panels, sprinklers, and HVAC units. That’s one thing. Then power is a huge issue, and that’s one of the reasons why they’re putting in solar panels. And, of course, clear height, that’s another thing. The distribution centers are being more automated than before. So, the requirement for power keeps growing and growing. Because everything that’s being brought into the buildings requires more power. And so, it’s not only on manufacturing, it’s also on distribution centers. Plus, truck fleets now also require charging stations. Those are the trends we can see in the evolution of industrial real estate in Mexico.

LATAM FDI: Can you provide some answers and insight into the competitive landscape of industrial real estate in Mexico? Maybe give us the names of major developers and operators in Mexico, including key players in market dynamics.

Rafael McCadden:  Sure, of course. Well, Prologis, besides being a major global industrial park developer and owner in the US and the world, is also a major player in Mexico. It’s interesting because even though they’re number one, they are focused mainly on six cities. They are concentrated in three border cities: Guadalajara, Monterey, and Mexico City. There are other developers, such as CPA, Amistad, Finsa, and Macquarrie. REITs in Mexico are only 10 years old. So, we didn’t have reeds in the past. Most of the industrial portfolios were owned by the developers. Once REITs were authorized and they had some tax advantages for investors, many insurance companies and retirement funds started investing in industrial real estate in Mexico. The portfolio has changed hands and is now mainly controlled by investment funds, which we call Fibras in Mexico, but it’s the same thing as in the US.

LATAM FDI: Well, Raphael, you’ve provided great information for our listeners. We intend to do this with each discussion with experts like yourself. We want to provide your contact information so that anybody with questions about what they’ve heard can reach you. How would somebody contact you with further questions?

Thank you. Sure. Well, my email is rafael.mccadden@colliers.com. Of course, they could also reach out through LinkedIn. That would be a good way to contact me, and I would say it would be the easiest way to reach out.

LATAM FDI: Thank you for joining me today to discuss industrial real estate in Mexico. This has been very interesting. We’ll put a link to your LinkedIn profile in the transcript section of the page on which the blog post is posted, and we’ll include your email and Collier’s URL for its website. How’s that

Rafael McCadden: Great. I like it. Thank you. Have a great day. It’s not just me, it’s a team. We work throughout Mexico, from Tijuana down to Cancun. We’re constantly traveling and helping companies do soft landings in industrial real estate in Mexico.

LATAM FDI: Well, that’s great. Hopefully, listeners will call you, and you’ll be able to get some new business.

Rafael McCadden:  I appreciate it, Steve. Thank you so very much.

 

 

Promising economic sectors in Colombia

Promising economic sectors in Colombia

by | Apr 21, 2024 | FDI Latin America

Colombia has emerged as a promising destination with significant potential for foreign direct investment. Thanks to its economic stability, diversity of growing sectors, and favorable policies for investors, the country is presented as fertile ground for those seeking to expand their horizons. Below, we explore several of Colombia’s most promising economic sectors and offer an essential guide for those interested in investing in the country.

Invest in Colombia in technology and innovation

The rise of technology startups

Colombia has experienced notable growth in the startup ecosystem, one of Colombia’s most vibrant economic sectors. This is true, especially in areas such as fintech, e-commerce, and technology-based solutions. The growing digitalization of financial services and the rise of e-commerce have opened new avenues for investors. The Colombian government, in turn, has implemented various initiatives to promote innovation and entrepreneurship, offering tax incentives and support to new entrepreneurs.

In Colombia, several cities are hubs for technology startups, with Bogotá leading the pack. Bogotá boasts a vibrant startup ecosystem, thanks to its large population, access to funding, and support infrastructure. Medellín is another significant player, known for its innovation district and various programs supporting entrepreneurship and tech innovation. Cities like Cali, Barranquilla, and Bucaramanga are also emerging as important centers for technology startups, albeit to a lesser extent than Bogotá and Medellín. These cities collectively contribute to Colombia’s growing reputation as a hub for tech entrepreneurship in Latin America.

Investment in green technologies

Increased demands for sustainability have led to growing interest in green technologies, one of Colombia’s promising economic sectors. It is currently experiencing significant growth and innovation driven by various factors, including environmental concerns, government initiatives, and market demand for sustainable solutions. Here are some critical aspects of the green technology sector in Colombia:

  • Renewable Energy: Colombia has abundant natural resources suitable for renewable energy generation, including solar, wind, hydroelectric, and biomass. The country has been investing in expanding its renewable energy infrastructure, with projects such as solar and wind farms becoming more common. Initiatives like the “4G” road infrastructure projects include requirements for incorporating renewable energy sources into their construction.
  • Sustainable Agriculture: Colombia’s agriculture sector is adopting green technologies to improve efficiency, reduce environmental impact, and promote sustainable practices. This includes precision agriculture techniques, organic farming methods, biodegradable packaging, and crop protection materials.
  • Waste Management and Recycling: In Colombia, efforts to address waste management and promote recycling are growing. Green technologies play a crucial role in waste sorting, recycling processes, and converting organic waste into biofuels or fertilizers. Startups focusing on waste-to-energy solutions are emerging to tackle these challenges.
  • Clean Transportation: Colombia is exploring cleaner transportation alternatives to reduce emissions and combat air pollution. This includes promoting electric vehicles (EVs), developing charging infrastructure, and integrating sustainable mobility solutions such as bike-sharing programs and public transportation systems powered by renewable energy.
  • Water Management: Green technologies are being utilized to improve Colombia’s water efficiency, purification, and distribution systems. Innovative solutions such as water recycling, rainwater harvesting, and implementing smart water management systems help conserve water resources and mitigate the impact of droughts and water scarcity.
  • Sustainable Construction: The construction industry in Colombia is increasingly adopting green building practices and eco-friendly materials to reduce energy consumption and environmental footprint. Green building certifications such as LEED (Leadership in Energy and Environmental Design) are gaining popularity, driving the demand for sustainable construction technologies and practices.

Investing in Colombia in technologies that support sustainability benefits the planet and promises attractive returns as demand for green solutions grows.

Investment in the real estate sector

The expanding real estate market

The real estate market is one of the expanding economic sectors in Colombia that has recently shown an upward trend driven by urbanization and the growth of the middle class. Cities like Bogotá, Medellín, and Cali offer opportunities in both the residential and commercial fields. Investing in real estate provides the potential for profit through capital appreciation and passive rental income.

Agriculture and export

A sector with potential: the coffee grower

Colombia is world-renowned for its coffee but has much more to offer in the agricultural sector. With fertile lands and a diverse climate, investment opportunities extend to products such as avocados, cocoa, and exotic flowers. In addition, the government has been working to improve infrastructure and trade agreements to facilitate exports.

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Tourism: one of the most vibrant economic sectors in Colombia

Tourism is another sector with enormous growth potential. Colombia’s rich cultural heritage, biodiversity, and beautiful beaches attract visitors from all over the world.

Investing in Colombia’s tourism sector presents several promising opportunities due to the country’s diverse natural beauty, rich cultural heritage, and growing infrastructure. Here are some potential areas for investment:

  • Ecotourism: Colombia boasts a wealth of biodiversity, including lush rainforests, pristine beaches, and unique ecosystems such as the Amazon and the Andes. Investing in ecotourism ventures like eco-lodges, nature reserves, guided hiking tours, and wildlife watching can capitalize on the increasing demand for sustainable travel experiences.
  • Cultural Tourism: Colombia’s vibrant culture, colorful festivals, and historic sites offer ample investment opportunities. Projects such as heritage tours, cultural events, museum developments, and restoration of historical landmarks can attract domestic and international visitors interested in exploring Colombia’s rich heritage.
  • Adventure Tourism: Colombia’s diverse geography is an ideal destination for adventure seekers. Investments in hiking, mountain biking, rock climbing, whitewater rafting, and paragliding can appeal to adrenaline enthusiasts looking for thrilling experiences in breathtaking settings.
  • Hospitality Infrastructure: As tourism continues to grow, there is a demand for accommodation options ranging from budget hostels to luxury resorts. Investing in the construction or renovation of hotels, resorts, guesthouses, and boutique accommodations can capitalize on the increasing number of visitors to Colombia.
  • Cruise Tourism: Colombia’s coastal cities, including Cartagena and Santa Marta, are popular stops for cruise ships. Investing in port infrastructure, tour operations, and attractions catering to cruise passengers can tap into this lucrative market segment.
  • Health and Wellness Tourism: Colombia’s natural hot springs, spa resorts, and wellness retreats offer opportunities for investment in the burgeoning health and wellness tourism sector. Developments such as wellness resorts, holistic retreat centers, and medical tourism facilities can attract visitors seeking relaxation and rejuvenation.
  • Culinary Tourism: Colombian cuisine is gaining recognition worldwide, with its diverse flavors and regional specialties. Investing in food tours, cooking classes, gastronomic experiences, and culinary festivals can cater to the growing interest in exploring Colombia’s culinary offerings.
  • Infrastructure Development: Improving transportation infrastructure, including roads, airports, and public transportation, can facilitate easier access to tourist destinations across the country. Investing in infrastructure projects can support tourism growth by making it more convenient for visitors to explore Colombia’s attractions.

Overall, tourism is one of the most promising economic sectors in Colombia. It offers diverse opportunities for capitalizing on the country’s natural and cultural assets and contributing to its economic development and job creation.

Visas for entrepreneurs and investors in Colombia

Colombia offers several categories of visas that facilitate entry and stay in the country for those who wish to invest and contribute to the country’s economic development. Below is a brief guide on the visa process that presents the most relevant options for investors:

Migrant Visa (M) for Investors

  • Description: This visa is intended for foreigners who directly invest in Colombia in sectors such as real estate, shares of Colombian companies, or specific projects. The minimum investment amount is adjusted regularly, so it is important to check to determine current requirements.
  • Validity: It is generally valid for up to three years and allows multiple entries into the country.

Resident (R) Visa for Investors

  • Description: Foreigners who have maintained an investor M Visa for a minimum period (usually five years) may qualify for the resident visa. This visa is for those seeking to settle in Colombia permanently and offers additional benefits in terms of residency and access to services.
  • Validity: Indefinite, with the need to renew the immigration card every five years.

Conclusion

Investing in 2024 offers a panorama full of opportunities in various promising economic sectors in Colombia. From technology and sustainability to real estate and tourism, the country is open for business and ready to welcome international investors with open arms. With a well-defined strategy and a clear understanding of the local market, investing in Colombia can be a wise decision that leads to considerable financial success. Colombia is facing a moment of transformation and is positioned as a leader in the region, offering fertile ground for those seeking to diversify and expand their investment portfolio.

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The Foreign Direct Investment Costa Rica Summit 2024

The Foreign Direct Investment Costa Rica Summit 2024

by | Apr 21, 2024 | FDI Latin America, Podcast

Monica Umaña
General Manager – Foreign Investment
The Costa Rican Foreign Trade Promoter (PROCOMER)
San Jose, Costa Rica
mumanad@procomer.com

The Foreign Direct Investment Costa Rica Summit 2024


LATAM FDI: Hello. We’re fortunate to have a very interesting person to talk with today. Her name is Monica Umaña. She’s the general manager of foreign investment of an organization called Procomer, which is Costa Rica’s Foreign Direct Investment Promotion Agency. Monica, I’ll let you introduce yourself and tell us a little bit about your organization.

Monica Umaña: Thank you, Steve. It is very nice to see you again, especially because of the topics we will talk about today, the Foreign Direct Investment Costa Rica Summit 2024.

As you said, my name is Monica Umaña. I have been working for the past year as the Foreign Direct Investment Division manager at Procomer. Procomer, as you said, is the National Agency for Investment and Export Promotion in Costa Rica. Still, I have been attending and receiving investors in Costa Rica for the past 11 years. So very nice to see you again and talk to you today.

LATAM FDI: Well, thanks. Today, we’re going to talk about something that’s very important. It’s a little bit exciting. We all know that Costa Rica has been very successful, especially because of the size of the country,  in attracting foreign direct investment for the last 30 years. Today, we’re going to talk a little bit about the Foreign Direct Investment Costa Rica Summit 2024 that you have coming up that you can give more information on. But the first question I want to ask you is specifically related to that. You assumed the general manager role at the National Agency for Attracting Foreign Investment (Procomer) a year ago. Now, you’re preparing an event you will tell us about to showcase the benefits of investing in Costa Rica. What’s this all about?

Monica Umaña: Costa Rica has been a reference for foreign direct investment. With our responsibility as the Costa Rican Investment and Export Promotion Agency, we decided to have the Foreign Direct Investment Costa Rica Summit 2024 to showcase why we host more than four hundred multinational companies. As you said, this will be the first edition of the FDI Summit. This represents a unique opportunity to keep positioning Costa Rica as a highly attractive destination for international investors. Costa Rica is well known as a country with highly skilled human talent, but also because it offers attractive fiscal incentives under the free trade zone regime. That is one of the main reasons many companies analyze and choose Costa Rica to have a manufacturing or services facility here in the country. We offer an excellent business climate, legal security, and, of course, sustainability. We have a record of stability and peace. We want to show this during the Foreign Direct Investment Costa Rica Summit 2024. We’re inviting new investors from key sectors. Costa Rica is interested in specific and strategic sectors such as the agro-industry and food industry, manufacturing, light and advanced manufacturing, life sciences, and the main export products from Costa Rica right now. We are also highly interested in targeting corporate services, digital technologies, and semiconductors. This is one of the most recent sectors of interest since we launched the roadmap for the semiconductor sector recently with the Ministry of Foreign Trade. Additionally, tourism investment is another sector that we want to attract to Costa. The Foreign Direct Investment Costa Rica Summit 2024 will take place on June 11th and 12th at the Costa Rican Convention Center, which is very close to the international airport in Alajuela.

LATAM FDI: Well, can you give us a little bit of a preview of what agenda is being planned?

Monica Umaña: Absolutely. Actually, the FDA Summit offers a comprehensive experience in two days. This is going to be an in-person format. On the first day, we will have a keynote speaker. He’s going to highlight the global landscape for foreign direct investment. We want to start with an overview of what’s happening worldwide. Our general manager, Laura López, will also share some updates regarding Costa Rica’s landscape and especially our opportunities in terms of strategic sectors inside and outside the Greater Metropolitan Area of Costa Rica. Since launching our strategy a year ago, we have highlighted the importance of capturing investments outside the Greater Metropolitan Area. Diversification of sectors is really important for us, as well as diversification of countries of investment origin. We will have dedicated sessions for specific topics during the first day of the Foreign Direct Investment Costa Rica Summit 2024. For example, we’re going to examine digital technologies and global interconnectivity. I mean, this is a new level of complexity for companies, so we will talk about it. We discussed this earlier year, Steve, 2024 is the biggest election year ever. We have general elections in more than seventy countries around the world. This is something that will definitely shape decisions this year in terms of foreign direct investment.

Supply chain resilience is something that is still catching the attention of every single investor. When we receive new companies in Costa Rica, we must discuss this. Artificial intelligence will be present as one of the main topics, as will sustainability, Steve. Sustainability is a pillar of our Costa Rica value proposition for investors, and we will discuss this. But going back to the second day of the summit, we’re talking with each company about having a tailor-made agenda according to the sector and according to the needs of the company. We will be visiting industrial parks and academia. We will have benchmark meetings with companies already established in Costa Rica, and we’re organizing visits to the regions outside the Greater Metropolitan Area to ensure we present all the benefits we offer as a country and offer a comprehensive view of investment opportunities in Costa Rica.

LATAM FDI: Can you give us a little bit of a preview concerning some of the speakers that will be present at the Foreign Direct Investment Costa Rica Summit 2024?

Monica Umaña: Yes, sure. Actually, we’re about to send an updated version of the agenda and the speakers since we have confirmed participation. For example, FDI intelligence will be present. You know this platform is important for every person making investment decisions. Of course, we, as an investment promotion agency, want to have FDI Intelligence as one of our keynote speakers. Deloitte and other big names in terms of consultant firms outside Costa Rica will also be at the event. We want to highlight the success stories of multinational companies. With operations in Costa Rica. They will be part of these conversations because it’s important not only to mention benefits and what we offer but to let the companies talk about what they have been experiencing in Costa Rica in the past year. We will consider why Costa Rica is a natural hub for new investment. I hope to share the complete agenda of the Foreign Direct Investment Costa Rica Summit 2024 with you and the audience soon.

LATAM FDI: Okay, that’ll be great. I’m sure it’ll be very informative, and you’ll have some good speakers. Before we started the interview offline, we were talking about how things are going right now concerning foreign direct investment in Costa Rica. Could you share some information about that?

Monica Umaña: Sure, Steve. Costa Rica reached a historic milestone in 2023 by closing the year with record figures in foreign direct investment. The country reached a 24 % increase compared to December, surpassing the estimated goal for that year by 131%. As part of the investment, 61% of this investment is under the free trade zone regime, followed by 19% in the definitive regime, 7% in tourism, 7% in real estate, and 6% in various other sectors. In terms of the activities, manufacturing leads with 55 % of the total, followed by the services sector with 25%. When we discuss the country of origin of each project we discussed earlier, we’re working to diversify our investment origins. The United States remained the main source of foreign direct investment in Costa Rica, the source of 71 % of the total. Belgium follows the US with 11 %, Switzerland and Panama with 4 % each. Last year, Procomer announced fifty-nine new investment projects. This is the highest number in recent years. It represents 64% growth compared to the thirty-six projects announced in 2022. Out of these fifty-nine new projects, thirteen were installed outside the country’s Great Metropolitan Area.

So, this is such a considerable number for us since then. This represents one of the pillars of our strategy to bring new investment outside the Great Metropolitan area. We confirm the ones in Orotina, San Carlos, the northern region of Costa Rica, the south region, Puntarenas, Cartago, Grecia, and Liberia in the northern Pacific. So additionally, out of these fifty-nine new projects, seventeen come from origins other than the United States, such as Italy, Japan, Peru, and France, to mention a few sources of investment.

LATAM FDI: It sounds like you’ve been pretty busy.

Monica Umaña: Yes. It has been busy and happy. Really exciting times.

LATAM FDI: That’s a good thing. Well, returning to the Foreign Direct Investment Costa Rica Summit 2024 again. If you could repeat the dates, I think that would be good.

Monica Umaña: Yes. It’s June 11th and 12th. On the first day, we will be at the National Convention Center, and on the 12th, we will be outside having agendas and visiting specific areas.

LATAM FDI: If a company that’s listening to this wants to participate, what should they do?

Monica Umaña: Yes, definitely. I will share the link for the event so you can have all the details I haven’t mentioned before. Procomer is covering meals, local transportation, and lodging in terms of the hotels in Costa Rica. This is part of what we’re offering to the investors who would love to visit the country in June. But most importantly, we have offices all over the world. Interested parties can contact me, of course, here in San Jose and my colleagues overseas. We have offices in New York, Houston, Miami, Mexico, Canada, Central America, Latin America in general, Europe, and Asia. They can guide you through the process of signing up. Of course, the team here in Costa Rica is eager to receive investors and create new opportunities for the country. I’ll be sharing my email and the link for the event so you can read in detail what I mentioned before during the podcast. We’ll be more than happy, Steve, to have you. I hope you can visit us in June, and many investors, too.

LATAM FDI: Well, that’d be great. One of the things I know that you’d recommend is that I’ve never met anybody who doesn’t or didn’t like going to Costa Rica if they’ve been there. Would you recommend people build a few extra days to see the country?

Monica Umaña: Absolutely. Actually, we have enough time before and after the event. We need to extend the stay for  a couple of days, the agendas, and of course, tourism. This is part of the proposal.

LATAM FDI: It would be a shame to go there and be all occupied with business and not have a chance to see how beautiful your country is.

Monica Umaña: Thank you. Yes, definitely. We can provide support for that, too.

LATAM FDI: Well, I want to thank you. I wish you great success with the Foreign Direct Investment Costa Rica Summit 2024 and look forward to speaking to you on different topics in the future.

Monica Umaña: I hope so. I hope so. Thanks a lot, Steve.

Foreign direct investment in Chile in 2024 tops the 2023 monthly year-over-year total by 17.8%

Foreign direct investment in Chile in 2024 tops the 2023 monthly year-over-year total by 17.8%

by | Apr 20, 2024 | FDI Latin America

Foreign direct investment in Chile in 2004 started on a positive note. According to Chilean Central Bank figures, foreign direct investment inflows of US$ 1.9 billion were received in January 2024. This figure represents investments of US$ 851 million more than those recorded in December 2023.

InvestChile leads the way

According to the analysis of InvestChile, the investment promotion agency belonging to the Chilean Ministry of Economy, this figure is 17% higher than that registered for the average for the first month of 2003-2024, which is approximately US$ 1.7 billion.

In the detail by category of foreign direct investment, the one that stood out the most in January was the reinvested profits for US$ 1.3 billion, followed by debt instruments with US$ 428 million and equity participations with US$ 223 million. This was a smaller flow compared to previous months.

The director of InvestChile, Karla Flores, pointed out that the figures are “good news” and extend the positive momentum that foreign investment had in 2023 to foreign direct investment in Chile in 2024.

“These are amounts that motivate us to continue working diligently to promote foreign investment in Chile in 2024, to consolidate our ability to attract investments and generate the employment opportunities that the country needs. Such foreign direct investment is especially needed in sectors where Chile must make leaps in the quality in an accelerated manner and in regions that require greater capital inflows and quality jobs,” he said.

Overtures to the Mining industry

Thus, she commented that the agency is deploying international promotion and coordination with the country’s regions. In addition to participating in the Prospectors & Developers Association of Canada (PDAC) trade fair in Canada to promote the new portfolio of mining exploration and exploitation projects among the most important investors in the sector, she will soon make trips to Korea and Japan, together with the Minister of Public Works, Jessica López, promoting the concession portfolio.

“This is also a special year because we will have our 7th InvestChile International Forum on May 15th, 2024. The event is anticipated to involve more than 100 international companies to assist with specific investment projects in sectors such as the lithium industry, technological and digital infrastructure, infrastructure concessions, and clean energy and storage.

 

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Additional sectors  that are attractive for foreign direct investment in Chile in 2004

In addition to mining, several economic sectors will continue to attract foreign direct investment in Chile in 2004 and beyond. Some of the prominent sectors include:

Forestry and Wood Products: Chile boasts extensive forestry resources, and the wood products industry, including timber production and processing, presented opportunities for FDI. The country’s well-managed forests and export-oriented industry made it appealing for investors.

Renewable Energy: With its diverse geography, Chile has significant potential for renewable energy development, particularly solar, wind, and hydroelectric power. The Chilean government encouraged FDI in renewable energy projects, especially as the country aimed to diversify its energy mix and reduce dependence on fossil fuels.

Agriculture and Agribusiness: Chile is a significant exporter of agricultural products, including fruits, vegetables, wine, and seafood. The agribusiness sector offered opportunities for FDI in areas such as large-scale farming, food processing, and agro-technology.

Tourism: Chile’s natural beauty, diverse landscapes, and cultural attractions made tourism a promising sector for foreign investment. Infrastructure development, hospitality services, and eco-tourism ventures attracted FDI as Chile sought to expand its tourism industry.

Telecommunications and Information Technology: As Chile’s economy modernized, there was a growing demand for telecommunications and IT services. FDI in telecommunications infrastructure, internet services, and technology companies contributed to the country’s connectivity and digital development.

Financial Services: The stability of Chile’s economy and its well-regulated financial sector made it an attractive destination for FDI in banking, insurance, and other financial services. Foreign investors sought opportunities to participate in Chile’s growing financial market.

Manufacturing: Chile’s manufacturing sector, particularly industries like automotive, electronics, and pharmaceuticals, attracted FDI. The country’s strategic location for accessing regional markets and its stable business environment favored foreign manufacturers.

In conclusion, the robust start to foreign direct investment in Chile in 2024, exemplified by the significant inflows recorded in January, sets a promising tone for the year ahead. With InvestChile’s proactive approach to promoting investment opportunities, particularly in sectors like mining, renewable energy, agriculture, tourism, telecommunications, financial services, and manufacturing, Chile is poised to continue attracting substantial foreign investment. As the country strives to enhance its economic diversification and create quality employment opportunities, the positive momentum observed in the early months of 2024 underscores Chile’s attractiveness as a destination for foreign investors seeking stable and lucrative ventures.

 

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Summit highlights the Dominican Republic as a Latin American logistics hub

Summit highlights the Dominican Republic as a Latin American logistics hub

by | Apr 20, 2024 | FDI Latin America

Dominican Republic Logistics Summit 2024 examines the country’s role as a center for Latin American logistics.

The Minister of Industry, Commerce and Small and Medium Sized Enterprises (MICM), Víctor Ito Bisonó, said on Thursday, April 18, that the Dominican Republic is among the countries in the Latin American and Caribbean region with the best maritime connectivity.

At the Summit, it was communicated that the Dominican Republic boasts superior maritime connectivity due to its strategic geographical location in the heart of the Caribbean. It is positioned at the crossroads of major shipping routes and serves as a vital hub for trade and commerce between North and South America, Europe, and beyond. The country’s extensive network of ports, including the Port of Santo Domingo, one of the oldest in the Americas, facilitates the efficient movement of goods and services. Moreover, ongoing investments in port infrastructure and modernization initiatives ensure that the Dominican Republic remains a preferred destination for maritime trade, offering reliable and cost-effective transportation solutions to global markets. With its favorable geographic position, well-developed port facilities, and commitment to continuous improvement, the Dominican Republic is a beacon of maritime connectivity in the Caribbean region.

“This is how, in 2022, the United Nations Conference on Trade and Development recognized the Dominican Republic as the country with the sixth-best performance in this area among 36 countries in the region. Worldwide, the Dominican Republic occupies the 50th position out of 187 countries,” he observed.

Air connectivity is highly developed as well

He said that the country has eight international airports, which have experienced notable growth in terms of air connectivity. Last year alone, the country received more than 132,500 commercial passenger flights, an increase of 12% compared to 2022.

“This historic milestone consolidates the position of the Dominican Republic as an important Latin American logistics hub of connections to some 170 destinations around the world,” said the official after the first edition of the Dominican Republic Logistics Summit 2024 (DRLS2024).

Regarding port connectivity, he noted that the country has several world-class ports, which have consolidated their position as critical maritime terminal operators. These ports now play a vital role in the sustainability of global supply chains.

“The excellent air, sea, and port connectivity of the Dominican Republic as a Latin American logistics hub has been a key factor for developing efficient logistics operations and positioning the country as a regional leader,” he indicated.

Also participating in the closing ceremony of the Dominican Republic Logistics Summit 2024 were Eduardo Sanz Lovatón, director general of customs (DGA), and Jaak Rannik, president of the Shipowners Association of the Dominican Republic (ANRD).

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Joint work to develop a modern Latin American logistics hub

“Together, we have laid the foundations for new growth opportunities for the Dominican Republic as a Latin American logistics hub. We take away not only knowledge and new relationships but also the renewed commitment to continue working together for the well-being and progress of our country,” said Rannik.

He said the Logistics Centers bill is pending approval in the short term in the Chamber of Deputies, which has had the consensus of the main actors in both the private and public sectors.

“This is a key piece of legislation so that we can have a legal framework that represents another competitive advantage in favor of the consolidation of the Dominican Republic as a Latin American logistics hub,” he added.

Furthermore, he stated, “This is undoubtedly a firm step necessary to turn logistics into the next important economic axis of the country and turn our national vision into reality.”

Modernization of Customs

For his part, Eduardo Sanz Lovatón stated that “The modernization of the national Customs Authority has been essential to convert the Dominican Republic into the main logistics hub in the region.”

He said that the expeditious approval of Customs Law 168-21 demonstrates the country’s ability to adapt to modern demands in a globalized world. This is true especially at present with a technological review of cargo that went from 60% to 96%. This increase strengthens the security of the logistics hub and facilitates the attraction of further international investments.

He concluded that the country has the only highly connected port-airport in the hemisphere, which positions it as a critical Latin American logistics hub that connects the Dominican Republic with more than 55 countries and 170 international destinations.

The Dominican Republic was highlighted as a pivotal Latin American logistics hub during the Dominican Republic Logistics Summit 2024. With superior maritime connectivity and a strategic location at the crossroads of major shipping routes, the country serves as a vital link for trade between North and South America, Europe, and beyond. With world-class ports and eight international airports experiencing significant growth, the Dominican Republic boasts extensive air and sea connectivity, positioning it as a key player in global supply chains. The collaborative efforts of public and private sectors aim to further enhance the country’s logistics capabilities, with pending legislation and ongoing customs modernization initiatives reinforcing its status as a prominent Latin American logistics hub.

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Data centers in Latin America are a great opportunity for economic growth

Data centers in Latin America are a great opportunity for economic growth

by | Apr 14, 2024 | FDI Latin America

Data centers in Latin America have become one of the region’s fastest-growing sectors. Governments of different countries, companies, universities, and organizations in various areas are the leading groups in Latin America that demand these services.

According to data from the consulting firm Research and Markets, the market for Latin American data centers is experiencing considerable growth. Brazil is by far the country that continues to lead the way, but some countries, such as Mexico, Colombia, and Chile, are emerging, especially in recent years. Looking to the future, the outlook is more than positive, and investments in data centers in Latin America are expected to amount to $9.11 billion between 2021 and 2027, with a compound annual growth rate (Cagr) of 7.13%.

How many Latin American data centers are there and where are they?

According to data from Statista, Mexico and Brazil have the most data centers (154 and 150, respectively, although numerous new projects are underway).

The digital transformation, the virtualization of information, the need for data, and the rise of large-scale projects in countries with marked growth, such as Mexico, Chile, and Brazil, are encouraging these significant investments.

The current trend promotes the definition of spaces to locate data centers. At the same time, attention is drawn to the regulations that each country must implement in terms of the tax revenue that this can represent and envisions a different panorama in terms of the demand for services such as electricity, connectivity, and water, among others.

In the short term, the data center market in Latin America will witness the following trends:

  • Greater connectivity. 5G networks are beginning to reach these countries. According to Statista, the six leading economies in Latin America (Brazil, Mexico, Argentina, Colombia, Chile, and Peru) will invest about 120 billion dollars in integrating 5G networks. This will lead to intensive use in artificial intelligence and edge computing, requiring lower latencies or the metaverse.
  • Greater market regulation. The urgent need to commit to sustainability and the environment is causing greater concern about the energy consumption of data centers. Vertiv has indicated that Latin American data center operators will be more interested in certifying their operations. Linked to this circumstance, modular and prefabricated solutions will begin to gain ground, which are smaller but have everything necessary, including more sustainable cooling options.
  • Search for green and clean energies. Latin America will have to start betting more fully on alternatives such as green hydrogen and options such as implementing new battery technologies, such as lithium-ion.

Challenges and problems to overcome

One of the biggest problems to be solved is the political instability and economic uncertainty that sometimes affect Latin American countries. The difficulty of predicting IT investments in the coming years will be one of the main challenges to achieving complete consolidation of the growth of data centers in Latin America.

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New data center locator

The year 2023 was marked by the inauguration of data centers in Latin America, mergers, acquisitions, and the implementation of strategic initiatives, among which the creation of the Mexican Association of Data Centers (MEXDC) stands out. These actions aim to strengthen further a sector that continues its expansion driven by the growing demand for data and the ongoing digital transformation.

Brazil has emerged as the leader in the recent opening of new data centers in Latin America, followed by Mexico, Chile, and Colombia. “Brazil stands out with its renewable and clean energy matrix, positioning itself as a fundamental player in the future of sustainability in our sector. The country maintains its relevance at a global level thanks to this energy matrix and its ability to supply energy,” explained Alessandro Lombardi, CEO of Elea Digital.

According to Marcos Siqueira, VP of Operations at Ascenty, studies reveal that in 2023, Brazil led investments in data centers in Latin America, representing 40% of total investments in the region.

“Frost & Sullivan also noted that the annual growth rate between 2019 and 2023 reached approximately 12.9%. At Ascenty, operations also continued to expand. Currently, the company has 24 operational data centers and another ten under construction in Brazil, Colombia, Chile, and Mexico. During 2023, the construction of data centers was driven by 5G, the demands of Artificial Intelligence, and various demands that these new technologies created,” said Siqueira.

For Eduardo Carvalho, Managing Director of Equinix in Latin America, Latin America has been the fastest-growing technology region in the world due to the rapid adoption of mobile devices, an emerging fintech startup environment, and a younger, tech-savvy population.

“Latin America data centers will continue to grow in 2024. At Equinix, we have invested more than USD$1 billion in LATAM, demonstrating that the region is highly attractive to expand our data centers and our digital offering,” said Carvalho.

DCD carried out a market study on data centers in Mexico. According to the study, a direct investment of approximately 7 billion dollars is planned until 2027 in the Mexican data center industry. Of this amount, 3 billion dollars are already in the construction process, while 3.9 billion dollars constitute the planned and/or announced investment.

“Data centers in Latin America have become the nerve center of modern institutions and companies. Mexico has many advantages for more companies to invest in data centers that will strengthen the growth of the digital economy, generating new companies, more jobs and multiplying the opportunities of digital businesses,” said Amet Novillo, president of the Mexican Association of Data Centers.

In conclusion, the burgeoning data center industry in Latin America presents a compelling opportunity for both investors and stakeholders across the region. With Brazil leading the way and countries like Mexico, Chile, and Colombia swiftly emerging as key players, the sector is witnessing substantial growth driven by digital transformation, increased connectivity, and the imperative for sustainability. Despite challenges like political instability and economic uncertainty, the momentum remains strong, bolstered by strategic initiatives, investments, and the establishment of industry associations. As Latin America continues to position itself as a hub for technological innovation and infrastructure development, the outlook for the data center market remains promising, poised for further expansion and integration into the global digital landscape.

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