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SPECIAL INSIGHT: DOING BUSINESS
Mexico Says ¡Bienvenidos! to Business
Favorable business conditions and admittance to a consumer market unmatched anywhere else make Mexico the crown jewel in Latin America for foreign investors. Being next-door neighbors with the world’s largest econ- omy doesn’t hurt.
Is Mexico the top choice in Latin America for starting a business? Fernando de Ovando certainly thinks so; the Partner at Jones Day, one of the top 10 internation- al law firms in the world, says, “The general require-
ments for setting up a business in Mexico are very easy to meet.”
How so? Companies can incorporate in one week, he ex- plains, and be fully registered in two, including such tasks as establishing the company, registering
it with the tax authorities, and register-
the bottom half of the world’s economies when it comes to Getting Electricity, Paying Taxes, and Registering Property.
STARTUPS WELCOME
When compared to the rest of the world, Mexico’s process for starting a business is streamlined and straightforward relative to other countries in the region. It takes an average of just 8.4 days to start a business, and an average of 7.8
“There are two Mexicos,”
says Luis Berrondo Ávalos, the President and CEO of Mabe, “the good and the bad. The good part is a country that saw the production of automobiles grow by 18 percent last year and electronics by 14 percent;
ing with the statistical bureau. Easy ac- cess to credit and a large customer base with a growing middle class also pave the way. So it’s no surprise that many inves- tors who are looking to build or bolster their Latin American portfolios turn to Mexico to expand existing companies or launch new enterprises.
LAC’S LEADER
In the World Bank Group’s Doing Busi- ness 2017 report, Mexico was 47th out of 190 rated economies, according to the organization’s Ease of Doing Busi- ness ranking. Perhaps more importantly, Mexico is the highest-ranked economy in the Latin America and Caribbean (LAC) region.
Mexico’s scores in nine out of the 10 rating categories exceeded the regional average, and none of those scores was in the bottom two quintiles among the economies measured. Seven of Mexico’s 10 category scores improved or stayed the same from 2016, with a significant gain made in Registering Property (up 7.31 percent).
the sale of new houses is im- pressive. The bad parts are cor- ruption, impunity, lack of states’ rights. Who will win, the good Mexico or the bad Mexico?”
procedures are required to accom- plish this goal. The average cost of starting a business is equal to about 17.8 percent of the per cap- ita income of the nation, and it only takes a single peso of paid-in minimum capital to open a busi- ness, since the minimum capital requirement was eliminated in 2013.
Thanks to reforms made earlier in the decade, many of the proce- dures mandatory for starting a business in Mexico can be com- pleted via the internet. For exam- ple, a potential business owner or entrepreneur can visit a Ministry of Economy web portal to obtain authorization for the company name and typically receive an ap- proval within two days. Drafting articles of incorporation, notariz- ing a company’s charter, and filing the required paperwork with the Public Registry of Commerce gen- erally take between two and three business days and cost a total of around MXN$26,450 (US$1,424).
Among the nation’s notable accomplishments, Mexico ranks second only to Puerto Rico in Resolving Insolvency, with an impressive average recovery rate of 69.1 cents per dollar and insolvency proceedings completed in an average of 1.8 years. Mexico is also third in the LAC region in Ease of Enforcing Contracts, with an average length of enforcement proceedings of less than one year—which is better than the U.S. average of 420 days. Conversely, Mexico is ranked in
The next step is obtaining a tax identification number on- line from the Ministry of Finance and Credit.
CREDIT? APPROVED!
Mexico is especially enticing for companies that are seeking sources of credit to grow or operate their business. Out of the 190 economies surveyed, Doing Business ranked only four nations higher in its Getting Credit category than Mex- ico. The report pointed to the strong legal rights of lenders
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