Baja California – Foreign investment & Vicente Fox’s honeymoon

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I sit here, at mid year, reflecting over my consulting practice that primarily serves gringo investors: property seekers and foreign owned Mexican corporations. The results, year to date, are positive. We are delighted with an increase in new real estate investment clients. However we have seen a decrease in manufacturing, primarily due to a “cooling off” in the maquiladora sector – foreign owned assembly operations.

Maquiladora's WorkerMaquiladoras are losing their allure because of new import tariffs on production machinery manufactured outside of North America , high employee turnover and Mexico ‘s very unattractive labor laws. Tijuana ‘s maquiladora sector suffers especially from high employee turnover. Folks come from the interior, work for a while and then cross the border into gringoland.

The slowdown in the U.S. economy is also hurting my manufacturing clients, here at the border and throughout Mexico . The saying in Mexico is: “when the U.S. has the sniffles we catch Pneumonia”. A clear example is volkswagen’s “new beatle”, manufactured in Puebla , South of Mexico City. The slowdown in U.S. sales has caused significant layoffs at the Puebla plant and the Daimler Benz plant, in nearby Cuatla, that supplies the Volkswagen cooling system.

The bad news, for my real estate clients, is that most of them come to me “after the fact”. They bought property, paid for it in full and now, are not getting what they were promised: clear title, subdivision services (roads, sewers, water, electricity). All of the things we could have prevented by setting up an escrow – just the same as the good ole U.S. A..

Yes, Virgina real estate title transfer laws and protections are firmly in place here. You can check for title and encumbrances in the public record. You can assure that property lines are secure. You can own it, as a foreigner, in a living trust that extends to your heirs – in perpetuity. Most important, you can protect your investment by not completing payment for the swimming pool, tennis court or waste treatment plant the developer promises but, far too often, does not deliver.

The honeymoon of vicente fox is over and foreign investment may sufferr the consequences

Vicente FoxI’m afraid Vicente Fox is suffering from the same kind of prioritzation snafoos that plagued the first hundred days of the Clinton administration. Clinton ‘s overly optimistic efforts, for open acceptance of gays in the military and major health care reform, failed miserably and lost constituents in the process.

Vicente’s efforts to overturn centuries of cultural, political, socioeconomic, racial, tribal, agrarian and religious conflict in Chiapas , during his first months in office, like Clinton , set unrealistic expectations for the nation.

The Fox tax reform plan has been tabled by the politically divided congress until September and support for the plan is not happening. Neither the citizens, nor the opposition parties, support the 15% proposed sales tax on food and medicine. Fox and his revenue disciples are insisting the new taxes are necessary and having a tough time convincing everyone that the increased revenue will benefit the poorest Mexicanos.

I, your humble, foreigner in Mexico and servant, have some suggestions for you Senor Presidente. These are less controversial and are more likely to get multi partisan support.

•  Reform Mexico’s labor laws which pit the employer and the employee in a lose – lose game. All parties agree that Mexico’s labor laws are in deep need of a major overhaul.

EMPLOYER POSITION -“I won’t pay you a decent wage because it costs too dearly if I fire or retire you. The government mandated benefit package is totally inflexible and I cannot afford the ‘percentage of wage” augmentation if I raise your salary.”

EMPLOYEE POSITION – “These paltry wages ($5.00 per day min.) do not justify my working hard. The government medical service system stinks. If I catch my employer breaking labor laws, the law is designed for me to initiate a general strike with my fellow employees so we can get a hefty labor demand settlement”.

Mexico is generally a non-litigious society with the exception of labor demands, they are rampant.

•  Renounce the existing labor unions for what they are: corrupt, unrepresentative of their rank and file and only interested in lining their pockets with member dues and sweetheart contract payoffs from employers. Fox, so far, has been a sell out to labor reform and endorsed labor unions continued use of the voice vote; instead of by secret, written ballots. What happens is that labor “leadership” only permits their supporters to enter the union halls when a major vote is to take place.

•  Keep your promise about removing the military from the drug war. Mr. President, you stated in your campaign, that random drug searches of vehicles was a violation of citizen’s rights, protected by the constitution. To date your citizens and tourists are still subjected to illegal searches by young soldiers who are poorly trained in treating folks with courtesy and respect. It is not their fault but that of uncle Sammy and your bowing down to his demands. Mexicanos are bearing the responsibility for the U.S. drug pandemic,

Why doesn’t the U.S. stop and search their citizens routinely? they are the folks holding the most dope!

•  President Fox, you also promised us, in the campaign, that you would go after “dead beat dads”. The number one obstacle to Mexico’s success, in my opinion, is MACHISMO. The most glaring examples are the deprived children of these machos. They are a non-represented, underclass and their numbers are staggering and on the increase. Both Mexicano women and men are to be blamed for this cultural defect.

The majority of my Mexican female friends are divorced with two or more children and receiving no support from the fathers of those children. Ego centered pride “I don’t need the S.O.B.” stops them from filing for child support. The ex husbands? They have typically started new families and have forgotten those left behind. Emotional and economic Alzheimer’s is what these “sinverguenzas” (sp.shameless ones) suffer from. Vicente you said you would do something to help these kids being exploited by their parent’s egos and acceptance of machismo. Put up or shup up.

In fairness to the new president, he has a tough row to how. He is taking over from a seventy year autocracy. He must, while addressing serious challenges, establish a brand new political infrastructure. His party has never held the highest office in the land. The same difficulties of governing occurred when the PAN party won the nation’s first opposition party governorship here in Baja California in 1989. The political infrastructure had to be developed from scratch and it took some time for a new generation of politicians to put the political machinery in motion.

New political professionals are learning the game without a political conscensus. The congress is incredibIy divided as is the electorate. We should be patient but ever critical. True democracy is being tested for the first time in Mexico. Before this century, true democracy was not even a consideration.

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