SPONSORED SECTION MÉXICO CITY

México City
The City of Hope
Enjoys a Fresh
New Rhythm

I t is hard to avoid superlatives when talking about Mexico

City. Within its Metropolitan area is one of the world's largest

cities, with 20 million inhabitants concentrated in a space roughly
75 miles long and 50 miles across.

Indeed, the economy of this mega-metropolitan region is larger than

that of whole countries such as Portugal or Chile.

As Alejandro Encinas Rodriguez, Mayor of the Federal District, points out,

"It generates more than a quarter of the country's total GDP and in recent
years has attracted 55 per cent of all foreign investment into Mexico- and
that is excluding the sale of two major banks headquartered in the city,
Banamex and Bancomer, to Citigroup and Spain's BBVA." This
concentration of economic activity, he says, gives Mexico City "an
unrivaled dynamism, bringing together the greatest developments in
technology and the highest levels of investment in Latin America.

A cleaner, more prosperous future

Alejandro Encinas took over as mayor when his predecessor, Andrés

Manuel López Obrador, stepped down to contest this year's close-run- and
hotly contested-presidential election. Being in charge of such a huge city
means that he is in the office by 6 am preparing for his daily press
conference at 6.30, before tackling the myriad of issues that come before
him. He does without bodyguards, preferring to keep in close contact with
the people. And gradually he is steering Mexico City towards a cleaner,
more prosperous future, based.

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 Sponsored section
Around the service and technology sectors rather than Tackling the problems of air pollution required some
the old heavy industries. drastic solutions. Previously the city was home to much
But getting to where it is today has not been and easy heavy industry but it was decided to close down or
ride for México City. It has suffered terrible natural relocate all auto-assembly plants cement factories, the
disasters. At least 20,000 of its citizens died as a result country largest refinery, cellulose producers Steel mills
of the devastating earthquakes of 1985, after which and other heavily polluting industries. “it severely
the badly affected downtown area became half- affected the city economy” says mayor Encinas, “but it
derelict as people and businesses migrated to was necessary solutions if were to succeed in reducing
suburban areas with lower seismic risk. atmospheric pollution as far as possible. Now we only
have problems with ozone levels, “but back then the
It has also had to deal with massive ground subsidence,
as entire areas of the historic center built over what presence of Sulphur and lead was very high”
was once a lake are sinking by up to 8 centimeters. Vehicle emissions verification programs, and improving
However, according to Ana Lilia Cedepa De León, the
traffic movement through the city´s crowded streets. Both
Director of the Fideicomiso Del Centro histórico De
public and build up models of how best to ease traffic
México City has cleverly engineered ways to preserve
chokepoints. A key element was building the second deck of
monuments and buildings from perishing. “México has
great engineers because we have a history of the elevate periphery highway that crosses some of the city
experience. most congested areas. Architect Ramon Perez de Villa,
project manager at Group Indi, one of the ten largest
In fact, engineer Enrique Santino won the contest to construction firms in Mexico, says that although the
symbolize the Tower of Pisa with the same method company has worked on bridges, docks, tunnels and
developed in México to stabilize the Cathedral. “the
numerous hotels, he considers the city's elevated highway
cathedral Metropolitan is the largest cathedral in all
to be "our most important project, a magnificent feat in the
the Americas.
development of Mexico City in terms of reducing traffic flow
Up to the challenge and pollution." "Nowadays," says Mayor Encinas, "the city
basically consumes natural gas, which creates fewer
Not all of the superlatives associated with México city
have been positive: Megan-cities suffer mega- emissions. But in moving heavy industry out we lost a very
problems, and at various points over the past 20 years important productive base and the city had to move to
it has been single out as having the worst atmospheric another profile of economic development." That meant
pollution and some of the highest crime rates of any developing its service industries
city in the world.
Long-term, international investment

"All the major banks have their headquarters in Mexico City,"

says Arturo Herrera Gutiérrez, Secretary of Finance. "And if
you look at the levels of activity in our bond and equity
markets, at the number of investment-grade stocks, this is by
far the most important Latin American economy. “Moreover,
foreign ownership of large Mexican banks such as Bancomer
and Banamex is turning Mexico City into a far more
international financial

Mexico City brings together the greatest

developments in technology and the highest
levels of investment in Latin America

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Investor

Alejandro Encinas Rodríguez Mayor of México City

 Photo Daniel Augusto

Culture meets city life in Central México DF

center. "Foreign investors", says Herrera, "are increasingly That advantage starts with having the highest school attendance
looking to Mexico City as a link to the rest of Latin in the country, with pupils staying on average 12 years. But it is
America rather than, as previously, focusing on Miami. in higher education that Mexico City stands apart. "We have the
Some major corporates are beginning to base their leading educational institutes in the country, both private and
research departments here. In this I see the beginnings of public", declares Mayor Encinas, "including the National
a long-term trend in which foreign investors will run their Autonomous University of Mexico and the National Polytechnic
Latin American operations from Mexico City rather than Institute. Between them, these conduct nearly 90 per cent of
New York or Miami." research done in the country." Medical and technology sciences
are both strongly represented, providing a large skills pool for hi-
Hi-tech industries were another obvious area to target,
tech enterprises.
both because of their low environmental impact and
because there are many in Mexico City with the right Everything for the tourist
skills set. New technology parks have in created and fiscal
incentives like lower property taxes are drawing in more Developing tourism, which last year generated us $4 billion and
companies. And in terms of its educational and cultural employed 600,000 people directly and indirectly, is another
facilities, Mexico City enjoys a powerful advantage. priority. "Most people think that Acapulco and Cancun are
Mexico's main tourist destinations “says Mayor Encinas, "but in
reality it is Mexico City. We receive more than 12 million visitors
The ambitious second deck of the periphery
a year." Carlos Mackinlay, Director of the Mexico City Tourism
highway has reduced traffic flow and pollution
Promotion Institute, adds that the majority are from other parts
of Mexico, though "last year we received 3 million foreign
visitors of which more than half came from the US, a quarter
from Europe, and the remainder from Latin America and Asia.
“There were just over 1.5 million business visitors, with
holidaymakers coming for Mexico City's rich cultural and
architectural heritage, its gastronomy, theaters and other
attractions.
Photo Anonymous
And there is plenty to enjoy. The National Museum of
Archaeology is a treasure trove that has

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 often been rated amongst the best in the world There are pre-
Columbian pyramids within the City, the Temple Mayor, and from the
more recent past the murals and artworks of Diego Rivera and other
Mexican artists working between the 1920s and 50s. The entire Historic
Center and Xochimilco Lake have been declared UNESCO World Heritage
sites. And with over 130 museums, Mexico City has more than any other
city on earth.

Although Mackinlay is acutely aware that Mexico City has suffered an

The Azul stadium and plaza México both image problem in the past because of a reputation for crime and
host national and international events pollution, he argues that things have changed substantially in recent
years. "We had to change our ways", he says, "and we've done that. As a
result of closing down heavy industries "this has been the fourth
consecutive year without any pollution problems. While in terms of
security, we have increased police numbers on the streets and created
the Tourist Police as a special force, so that now the tourist areas are the
most secure parts of the city.

Investment incentives

Tourism corridors' have been created with fiscal incentives for building
hotels or other facilities. Some 50 new hotels have opened over the last
six years, including the Sheraton, Crown Plaza, Holiday Inn Express,
Fiesta Inn and the luxury W Hotel Convention and conference business is
growing with the opening of a major convention center.
México´s heritage is never too far
from day-to-day life "In order to convince private companies, including the new Sheraton
Hotel, to invest in the area, we offered fiscal incentives, such as lowering
property taxes for a number of years,"admits Herrera. "All this was very
expensive for us, but for every peso we put in we have 20 pesos from
private investments." The result, he says, "is that not only business but
more residents are moving back"

Cinematic prowess

Another testimony to the rapidly changing face of Mexico City is the

increasing number of film producers who are drawn to the capital. At a
time when Mexican cinema is enjoying increased international acclaim,
local and foreign directors are discovering the aesthetic and artistic
appeal of DF. As Mackinlay points out: "We have a catalog of shooting
locations, and are receiving all kinds of interest from film studios. We
New recruits at the graduation can offer producers almost anything they want in terms of location:
ceremony swell police ranks countryside, dramatic mountain and volcanic landscapes, different fauna
and flora, historic or colonial places, and urban sites. And in Mexico City
we offer all
We had to change our ways and
a result this has been the fourth
consecutive year without any
pollution problems A Special International Report prepared by The Intelligent
Investor
 The decorative gondolas bring life to the
city’s waterways

We have a catalog of shooting

locations, and receiving all kinds of "We feel that we should give back something to
interest from studios Mexico and its people," says Achar, "so now we
support around 130 projects to help society.
the post-production facilities with the highest level of With the support of other businessmen, I started
professionalism that you will find anywhere in the the ProEmpleo Productivo Foundation, which
country. Mayor Encinas is a huge film fanatic and he helps the unemployed to start their own micro-
has made big changes in the administration regarding businesses through an so-hour training program.
film production. Last year, around 50 major films So far we have helped nearly 20,000 people with
were made in the country- of those, 50 per cent were a 45 per cent success rate Also, we can't forget
filmed in Mexico City and another 10 per cent were that 20 million of our people throughout the
partially filmed here, while 80-90 per cent of the country are still living in poor settlements, so we
films' postproduction was done in the capital." give them the opportunity to buy a concrete
Giving something back house with water and electricity for only US
$800. Comex donates the paint, other
"Mexico City", says Mayor Encinas, “is the country’s companies the cement and wiring, while other
most important market by far, its inhabitants having donations are used to build classrooms and
an average income nearly three-and-a-half times medical services."
higher than the national average." In addition to
which, it enjoys a higher standard of education. Government efforts
Mostly this is government funded, though help is also Such private-sector initiatives are highly effective
provided by socially responsible businessmen like in targeted areas. However, it is the government
Alfredo Achar Tussie, Executive President of Comex, that must take the lead, and pay for, major
who built up his small family paint business into programs and given the size of Mexico City, that
Mexico’s largest paint producer and, following the adds up to many billions of dollars.
acquisition of the US company PPI two years ago, the A Special International Report prepared by The Intelligent
fifth largest in North America
Investor
behind the State of California" Running the citys subway system
costs above US $1 billion a year, although that includes the high
costs of purchasing rolling stock that, like Paris's Metro, run on
rubber rather than steel wheels. And as might be expected in so
s is huge
populous a city, the health budget

Two areas have been given top priority for new private investment:
tourism within carefully designated zones, and the establishment
of high-technology parks, and for such projects there are GOVERNMENT OF MEXICO CITY
streamlined planning procedures and exemptions from all local
GOVERNMENT OF MEXICO CITY
taxes.
www.df.gob.mx
"We are working together with a mission from the World Bank to SECRETARY OF FINACE
improve the overall business environment," says Herrera. "One
www.finanzas.df.gob.mx
goal is to reduce the number of days it takes to open a business in
SECRETARY OF ECONOMIC DEVELOPMENT
Mexico City - currently 58 days - down to 21 days. Similarly, the
number of days it takes to register a property, to enforce a contract www.sedeca.df.gob.mx

in the courts, or to obtain a construction license." Fiscal incentives SOCIAL DEVELOPMENT FUND

are being used to encourage businesses with a low environmental www.fondeso.df.gob.mx

impact. "The only thing we ask," says Mayor Encinas, “is that the SECRETARY OF TOURISM
business fulfils five fundamental conditions: That it does not cause www.mexicocity.gob.mx
air pollution or consume large volumes of water, that it is energy-
www.defiestaeneldf.com
efficient and does not generate high levels of solid waste. Finally,
GENERAL DEPARTMENT OF SOCIAL COMMUNICATION
the business should create well-paid jobs for qualified people."
www.comsoc.df.gob.mx

Greener future Instead, the focus is now on improving traffic flows to help curb
pollution, increasing clean water supplies, and reforestation of
The high priority given to welcoming environmentally
areas such as Chapultepec to create an ecological park.
friendly enterprises might be a reaction to the disasters of
the past. But it is also part of planning a greener future Further reforestation projects are going ahead around Iztapalapa,
together with laying new pipelines to increase supplies of
As Herrera points out: "Most people tend to think of Mexico
drinking water. "That is why we are encouraging industries that
DF as a purely urban environment, although in reality two
have a low impact on the environment, like techno-industries
thirds of the area is still a forest.
that will not place strains on our water supply," says Herrera. For
Mexico City has emerged from past traumas as a cleaner, greener
metropolis, its future based around technological and service
The city government industries. As Mayor Encinas puts it: "Globalization will not be
Works hard to make just between countries, but between regions and metropolitan
México DF as nature areas.
friendly as possible
Today, Mexico City is modernizing, is more competitive and more
integrated into the international economy." Mayor Encinas left
office on December 5 2006 after one year and five months of
running Mexico’s capital city. Thanks to his hard work and vision
he can look back with confidence, as today, one of the world’s
largest cities is moving to a new rhythm.

The Intelligent Investor

Directors: Rachel Foyer David Woodward
A Special International Report prepared by The Intelligent
Investor Regional manager: Alexandra Pereira

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