New investments FDI to Mexico fell 2.8% in 1Q21
Mexico captured “new investments”, a component of Foreign Direct Investment (FDI), for a total of 2,209.4 million dollars, a decrease of 2.8% year-on-year, according to data from the Ministry of the Economy.
For this comparison, the Ministry of Economy uses the FDI made and notified between January 1 and March 31 of each year.
With regard to disaggregated FDI, three sections are taken into account according to their sources of financing: new investments, reinvestment of profits and accounts between companies.
During the same period, Mexico received 7,025.2 million dollars from reinvestment of profits, a decrease of 10.7% annually.
Finally, Mexico captured 2,629.4 million dollars through intercompany accounts, an increase of 1,233% year-on-year.
New investments
This concept refers to FDI movements associated with:
Initial investments made by foreign individuals or legal entities upon settling in Mexico.
Contribution to the capital stock of Mexican companies (initial or increases) by foreign investors.
Transfer of shares by Mexican investors to foreign investors.
Initial amount of the consideration in the trusts that grant rights over the FDI.
Reinvestment of Profits
For its part, this subdivision is the part of the profits that is not distributed as dividends and that is considered FDI because it represents an increase in the capital resources owned by the foreign investor.
Accounts between companies
In this case, they are transactions originated by debts between Mexican companies with FDI in their capital stock and other related companies residing abroad.
According to the OECD, related companies are those that belong to the same corporate group.
In accordance with article 2, section II of the LIE, “foreign investment” is understood to be:
The participation of foreign investors, in any proportion, in the capital stock of Mexican companies.
The one carried out by Mexican companies with a majority of foreign capital.
Finally, the participation of foreign investors in the activities and acts contemplated by the Foreign Investment Law.
