Mexico's In-Bond (Maquila) program was established in 1965 and its primary aim at inception was to encourage foreign corporations to build factories along the U.S.-Mexico border 181 Currently, In-Bond Corporations (Maquiladoras) may engage in a wide variety of business activities, but their common characteristic is that they all operate under the Maquila regulations.182 These regulations allow for, among other things, temporary deferral and/or exemption of customs duties and VAT pending certain restrictions.183
In 2004, there were on average 2,810 Maquiladora plants established throughout Mexico that employed an average total of 1,115,230 individuals. During the same year, these plants generated approximately MXN 217 billion (approximately CAD $22 billion) in value add for Mexico.184
There appears to be no formal restriction on the geographical area in which a foreign corporation may establish a Maquiladora. Therefore, we believe that most of the descriptive factors in this section are equally applicable to all such plants. Accordingly, the continued discussion below shall not focus on a specific Maquiladora plant unless the factual circumstances require otherwise.
Due to a change in the legal framework during 1992, the electricity generation market is currently open for private participation. However, the government-owned Comision Federal de Electricidad (CFE) was responsible for approximately two thirds of the Mexican electricity generation during 2005. In addition, CFE holds a monopoly on electricity transmission outside the Mexico City urban area and a few other municipalities. Most of Mexico's electricity generation comes from conventional thermal sources and in 2006 Mexico used approximately 735 trillion barrels Btu of natural gas.185
The national transmission grid in Mexico is comprised of 43,000 Kilometres of high voltage lines, 45,000 kilometres of medium voltage lines and 595,000 kilometres of low voltage distribution lines.186
Deloitte could not locate reliable public information on the development status of Mexico's telecommunications infrastructure. However, during 2004 Mexico had a low telephone density of approximately 17 percent. During that year Mexico had approximately 18,000 fixed telephone lines and 117,000 Kilometres of fiber optic networks.187
During 2004, Mexico had a total of 352,072 kilometres of roads, out of which approximately 34 percent were paved and the rest coated or rural.188
Mexico has in excess of 100 maritime ports with a total of 36,000 meters of docking facilities.189
During 2004, there was a total of approximately 26,662 kilometers of railway in Mexico, including 77.6 percent of main railway.190
Mexico had 85 airports in 2004, which included 56 international airports and 29 domestic terminals.191
Corporations that operated within the Maquila program during 2007 had access to a network of 26 commercial banks, including a number of major international banks and local banks. As at December 2007, BBVA Bancomer had the highest market share of approximately 25 percent.192
Deloitte did not obtain recent reliable data for the business sectors that utilize the Maquila program, but Table 12 below shows the share of value add by major industrial sectors relative to total value add during 1988. In addition, Table 13 below shows the FDI in Mexico by economic sector in 2004.
|Electric and electronic goods||41.3|
|Textiles and apperel||5.5|
|Wood and metal furniture||5.4|
|Equipment and tools||0.2|
|Transportation and communications||7.7|
The main incentives associated with operations within the Maquila program are noted below.
In addition to the incentives specifically applicable to the Maquila program, the Government of Mexico offers numerous other incentive schemes that are designed to boost export sales and attract and retain foreign business. These schemes, however, will not be discussed further in this report.
Raw materials for use by a Maquiladora plant may be imported without customs duties, Import Tax and VAT. Mexico is the world's largest silver producer and in 2003 its oil reserves were estimated at approximately 61,800 billion barrels.197
Mexico's workforce was comprised of approximately 74 million individuals in 2005. These individuals were mostly male and employed in the services industry.198
The Mexican Maquiladora plants are owned primarily by corporations in the U.S., but other geographical regions also have a presence including Japan, France, Canada and Korea.199