‘It’s Mexico’s moment’ says Infonavit CEO

Transcript

Mexico’s Institute of the National Housing Fund for Workers (Infonavit) is at the heart of innovation in the country’s mortgage sector, providing its citizens with affordable plans to achieve housing. Since its conception, the institute has become one of the main financial institutions in the world in terms of the size of its portfolio, which stood at $70bn at the end of 2013. World Finance speaks to Alejandro Murat, CEO of Infonavit, to speak more about its success.

World Finance: Well Alejandro, investors are increasingly looking towards Mexico. What are the main reforms being initiated by Mexico’s government?

Alejandro Murat: Clearly it’s Mexico’s moment. Today, President Enrique Peña Nieto has pushed forward more than 11 reforms in less than 18 months. The most important reform is the energy reform. A reform that’s focused on the oil, the electric and gas sectors. By generating a new model of public and private synergies to impact productivity, competitiveness, and clearly generate more opportunities for the underprivileged, and to decrease inequality in Mexico.

Another example can be the competition reform. This reform clearly establishes a stronger legal framework, so that we have a stronger antitrust authority that has the capacity to enforce this type of legislation, and to have the opportunity to establish a level playing field that will impact the consumers in prices and competition. Now we also have the fiscal reform. A reform that’s focused on a progressive tax system to increase the tax collection to focus more on public goods and services. Another important reform is the education reform, that is focused more on human capital expenditure and less on operation expenditure.

Clearly it’s Mexico’s moment. Today, President Enrique Peña Nieto has pushed forward more than 11 reforms in less than 18 months

World Finance: Well, housing is a major sector in Mexico. What strategies are envisaged to better integrate planning and investment for housing and urban development?

Alejandro Murat: This new government understands that urban planning has to have an integral perspective. You have to incorporate housing into urban planning to generate an agenda on competitiveness, productivity, regional development and quality of life. And how can we achieve that? Well, the agenda established in these reforms focus on four big pillars. The first pillar is better inter-institutional relations. Horizontally on the three levels of government, and also vertically on all the federal government. Second, a big agenda on urban planning. In Mexico, we were only focused on housing. Now we need to generate the right infrastructure to generate the right surroundings.

World Finance: What is Infonavit’s approach to sustainability?

Alejandro Murat: By having more efficient use of all the good around us. Second, an impact in the social aspects, generating stronger fundamentals in the social interaction of the people, but also in the opportunity of having more public goods and services. How can we achieve that? By having workshops and more subsidy programs. And the third and most important, an impact in your economy. That is generating a stronger net worth.

World Finance: One of your main value propositions is your green mortgage scheme. What are the main results you’ve seen in this area? 

Alejandro Murat: In the last years we’ve been able to give 1.6m green mortgages. And why is this important and what do we understand by a green mortgage? Well a green mortgage is the capacity to increase your credit possibilities by incorporating in the housing model eco-technologies that give an impact on the workers in their expenditures and their quality of life. In the last year, just in 2013, we were able to generate reductions of more than 250,000 C02, which is basically around 700,000 trees. We are also talking about more than $60m in expenditures, around $17 per household per month, that we were able to generate savings on. And the last element is that we are also concerned, if we compare around 20 million cubic metre of water that we were also able to save with these green mortgages.

[J]ust in 2013, we were able to generate reductions of more than 250,000 C02, which is basically around 700,000 trees

World Finance: What measures are you considering to target workers who are not eligible to acquire Infonavit’s financial solutions?

Alejandro Murat: One of the three pillars in this agenda is to reduce the housing deficit, and we’ve been able to analyse two fundamental aspects. The opportunity to use our platform and other platforms of housing institutions in the public sector and in the private sector to increase this demand. We’re able to serve the municipal and state workers that in the former years we weren’t able to serve. But these workers are in the formal sector, and this is a way to increase demand, we’re talking about maybe 2.5 million workers.

Another scheme that we’re working on is with the Minister of Finance. This is to incorporate the possibility for more people to use the social security benefits, and of course the benefits that Infonovit gives with the housing scheme.

World Finance: Well finally, what other sustainable initiatives are in store for you for 2014?

Alejandro Murat: For the first time in the history of Mexico, we were able to establish a universal insurance coverage for the quantity of the houses. Second, we are also pushing forward an improvement program of the housing units that were constructed already. Out of four people in Mexico, one lives in this type of housing unit. So we’re going to go into these units to have three fundamental aspects. A technical approach, a social approach, and a cultural approach. We’re going to go into the public areas and rehabilitate these areas.

We will go also in house with credit services so that people can improve their houses. In the social aspect, we are generating workshops and also subsidy programs to generate a better and more efficient surroundings. And the cultural aspect is that we’re incorporating, of course, other programs like painting programs, and for the first time, wifi public areas for free so that people can generate more interactivity.

World Finance: Alejandro, thank you.