The Report Company: How have the levels of cooperation between the public and private sectors improved during this sexenio, and what role has CMIC played during this process?

Luis Zarate Rocha: For many years we have been stakeholders in infrastructure issues at the federal, state, and municipal government levels, and we’ve been very invested in and very present not just with the Secretariats but also with Congress, presenting solutions and ideas. There are still some sticking points that we have not been able to resolve, and if the new Congress of the Union which begins in September listens to us, the private sector and to academics, this will move forward better.

We propose four points: first, a comprehensive tax reform that includes universal social security; second, a modern public works law that facilitates investment and eliminates excessive paperwork - we’ve already prepared a draft to present in the first week of September, thinking that the new legislators will be more open. Third, to bring the General Labour Law up to date, as it is still protectionist and hinders workers’ productivity; and finally, to create a competitive, accessible development bank to boost SMEs. If we manage to make progress in these four points, we will be able to grow by 8 per cent in the next six years.

TRC: To what extent do you consider that the goals put in place during this sexenio with regard to infrastructure have been met?

LZR: We have exceeded the expectations of the National Infrastructure Plan. We have completed 75% of the work which is extraordinary, and the remaining 25 per cent that is missing is due to the delay in the law to ease restrictions for public-private partnerships. Now, the mechanisms are being improved, but this should have been done three years ago and it was only at the beginning of this year that this legislation was approved. This delay significantly affected private investment into our sector.

Another important factor that the government should consider is creating a bank of projects so when bids are submitted, they can be authorised without obstacles, because everything has been covered: the technical factor, the financier, all of the permits. But despite all these problems, it has been an excellent sexenio for infrastructure. There is no city – small or medium – without a construction project. New plants and hotels are being built and improvements are being made in the airport sector. We have a country better linked globally.

We’ve also seen success in the health sector; the government has invested a significant portion into hospitals. That said, there’s still a need to boost PPPs, even though it was in this sector where these partnerships began.

In water treatment, we are currently building the biggest plant in the world, the Atotonilco, which treats 35km2 of water per second. It’s a construction which surrounds the Valley of Mexico with a tunnel, the “Tunel Emisor Oriente”, which is up to 150km deep and uses cutting-edge technology. This construction will prevent Mexico City from flooding every rainy season.

TRC: In what segment is there the greatest need for infrastructure growth in terms of technological specialisation?

LZR: Mexico currently has a population of 112 million and within six years it is thought that that figure will reach 116 million, which means that there is infrastructure demand in all sectors, starting with communications. Although great progress has been made, the country needs first to align the arterial roads, such as the Durango-Mazatlan highway, the Pacific route, all of the northern border of Tijuana, Matamoros, which doesn’t have continuity along its whole length. All of these axes must be finished and linked with the longitudinal highways. The modernisation and maintenance of the highways has been ideal for PPP projects, not only with the big companies, but also with the SMEs.

In the water sector, ramping up the construction of treatment plants is essential. There is a study which shows that in medium-sized cities, up to a thousand water treatment plants could be built. There are very big aqueducts in Monterrey, Guadalajara, San Luis Potosi, which transport water to where it’s needed, but more are still needed.

The third sector, without a doubt, is the hospital sector. It’s had a large rate of growth, but this goes hand in hand with education, because all the children that are born in these hospitals will occupy a school place in a few years.

TRC: And speaking of PPPs, in your view, what impact will we see over the next few years following this new law?

LZR: If this law were to come out today, it would mean a growth of between 4 and 8%, adding 1% to GDP because private capital would come in. However, if the project is not well prepared taking into account the rights of way, the permits, the resolution of environmental issues, obviously, there will be delays.

TRC: How can projects be opened to micro, small and medium enterprises? What strategies are needed to strengthen them in different sectors?

LZR: The growth of the micro, small and medium enterprises needs two things. First, they need capacity building on the new issues of contracting, and second, they need to know to strengthen themselves through partnerships. We can train them, touring the country with instructors who give courses, speaking to them about reforms or whatever issue that interests them. For this a competitive development bank must be created. If an MSME doesn’t have access to financing it is difficult for it to grow. Large companies have access to all kinds of capital, but the MSMEs only have access to their local bank.

TRC: You’ve spoken several times about the issue of environmental management; how have you dealt with this issue without compromising the sector’s economic growth?

LZR: As a Chamber we aim to be socially responsible, and we have a particular area which works on all sustainability issues. But it’s the same story; the government has to cut down on all the bureaucracy, so projects can get off the ground with the permits already issued. For example, in a highway project, during construction we encounter an environmental problem in a 2km stretch and because of that, we were delayed for six months. Planning should be done beforehand; if they know that we are going to construct over a biosphere reserve, then from the beginning plans should be made about whether to go round it or make a tunnel.

TRC: It seems as if some people are trying to revive the National Council of Infrastructure as a talking point, why?

LZR: The National Council of Infrastructure was the body dedicated to the planning, and the President of the Republic was on its board, along with entrepreneurs and universities. The CMIC had three seats and at this big table of infrastructure planning could be done, consensus could be reached. If there was a problem between two states of the country, the president would invite the two governors and they’d come to an agreement. The country can’t live without planning. The National Council of Infrastructure was designed for that and it was suspended in the current sexenio and now reactivating it is one of the country’s priorities.

TRC: What possibilities do you see so that Mexican companies can continue to expand in the international market? Not just in Central America, but in other parts of the world.

LZR: There will undoubtedly be opportunities and that is what the Chamber is planning. Currently, there are only five companies working abroad. We require greater professionalization. We need a bank of external trade that supports us, and fundamentally, we need reciprocity. There are Spanish companies who come to work, and that’s great, for that reason we have the FTAs, they are welcome, but they don’t work with reciprocity. They come, finish a project and leave. Partnering with a private company requires an exchange of technology and a minimum percentage of non-negotiable local participation.

TRC: Therefore, if a British company wanted to work in Mexico, they’d have to form a partnership on those terms?

LZR: I think so. When British companies arrive, they talk with the Chamber because we know which segments to go to and which companies give guarantees. British companies have great quality and experience, but if they have a project in Jamaica why not partner with a Mexican firm to work together there? This is what I mean by reciprocity.

TRC: As president of the CMIC, what is your role and what are the challenges ahead?

LZR: I think the perception people have of Mexico is that there is much uncertainty, but we are a great country with a great tradition in construction and with a lot of social consciousness. In short, we are an extraordinary country to invest in. The challenges, I’ve already mentioned: we need to push for laws to boost public-private relationships and infrastructure development, improve worker productivity, regulate foreign participation, support the MSMEs, and we need to remain in the Congress of the Union from September, convincing the legislators of the benefits that can be brought to the country.