With 53.6 percent of the votes, yesterday Andrés Manuel López Obrador (AMLO), candidate of the Juntos Haremos Historia (Together We Will Make History) coalition, won the presidential elections in Mexico. Both of the strongest opposing candidates, Ricardo Anaya and José Antonio Meade, recognized and congratulated the new President-Elect, paving the way for what appears to be a smooth power transition.

Much like in US President Donald Trump’s campaign, AMLO based his campaign on what is seen by the business community as largely populist rhetoric. He talked about favoring the Mexican industry and closing the country to foreign investment and “corrupt” alliances. The most controversial topics were the Energy Reform and the construction of the New Mexico International Airport (NAIM). However, unlike Trump, AMLO measured his rhetoric as the campaign advanced, leaving many unsure about his true intentions and policies.

To try and clear the air on what his plan as President would entail, in May AMLO published a basic outline of his economic program in a small document he called Pejenomics (alluding to his nickname Peje).

Promoting the National Market

According to Pejenomics, AMLO’s administration will not be against globalization. During his campaign, the President-Elect said he was not opposed to NAFTA and that he was open to continue with its negotiation once he entered office. However, AMLO sees great potential in the domestic market, particularly in sectors such as agrobusiness, which is why one of the objectives outlined in Pejenomics is to increase and diversify exports. “Instability in the world’s economy forces us to rethink our economic politics in the hope of strengthening the domestic market. A strong national economy can offer greater stability and mitigate the effects of global volatility,” the document says. Overall, AMLO’s objective is to boost national production in key sectors without resorting to protectionism.

No Risk of Expropriation

One of the main concerns from the private sector is that AMLO would reject the advances the country has made regarding industrial development and openness to investment. However, during his first speech as President-Elect, AMLO said the new government will prioritize financing and fiscal discipline. “We will acknowledge the commitments to companies, national banks and foreigners,” he said. “We will not act randomly; there will be no confiscation or expropriation of assets. The transformation will be to unearth corruption in our country.”

Addressing Corruption and Insecurity

Corruption was a key element of AMLO’s campaign. The President-Elect said this, along with insecurity, was part of what was wrong in the current and previous administration, referring to what he called Mafia del Poder (Power Mafia). In Pejenomics, AMLO says his objective to improve the national economy is to guarantee fair conditions for competition, while eliminating the roots of investment uncertainty: corruption and insecurity. AMLO appears to be on track with this proposal, considering that in Mexico Automotive Review (MAR)’s 2017 survey, 29.3 percent of automotive industry leaders interviewed mentioned security concerns as the main internal obstacle for the national industry.

Advancing Technology

MAR’s survey also highlighted talent development (17.9 percent) and R&D development (15.7 percent) as key obstacles for the industry. Pejenomics also covers those elements in AMLO’s plan for innovation. Among his proposals, the new President-Elect wants to delve into new sectors such as 3D manufacturing and nanotechnology, while incentivizing investment oriented to research. He also moves to create new innovation centers and boost development of high-technology sectors, including programming and robotics. During his campaign, AMLO’s advisor Luisa María Alcalde said in an interview with El Universal that AMLO’s administration would grant MX$108 billion (US$5.4 billion) in scholarships to 2.3 million students through resources that would come from budget cuts in government expenses and a general reduction in public sector salaries.

Tackling the Salary Discrepancy

Salaries were also a hot topic during AMLO’s campaign since at some point they were considered as a leverage factor in the negotiations for a new NAFTA. AMLO was open to considering this as part of the negotiation. “Wages are too low for Mexican workers,” he said in April. “They are one of the lowest in the world and there cannot be a commercial agreement where salaries in the US are 10 times higher.” Alcalde said the new administration would implement a plan to raise the minimum wage to approximately MX$176.72 (US$8.8) by 2024, carefully planning the process to avoid impacting the national economy. “Everything will be implemented through dialogue, not as an imposition,” she said. “It will not be risky; it will be stabilizing.”

The information used in this article was sourced from El Universal, El Economista, Abre Más Los Ojos and Milenio.

Don’t forget to follow us on twitter at @mexautomotive and @mexautomotriz for the latest industry news.

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