Enrique Nuñez-Escudero | Shirebrook Commodities

Transcript

Mexico has experienced a number of political and financial changes in recent months. Discussing the impact that these are having on the wider economic environment is Enrique Nuñez-Escudero, Chairman of Shirebrook Commmodities, a Mexico-based financial services company.

World Finance: Since we last spoke to you, Mexico has elected Enrique Pena Nieto as its President, what impact has this had on the Mexican economy?

Enrique Nuñez-Escudero: We have a new President indeed, he was elected in the Summer of last year and he came into power in December. He won by a wide margin, so that has allowed him to have great political credibility. All political actors have respect for him and he’s been able to make some difficult decisions, touching some issues and some people and matters that were considered sacred before. So I think that the country is little by little turning its way towards the right path. Our currency is getting stronger, it’s maybe 10 percent stronger since he has taken power, and there is more direct foreign investment coming into Mexico for industry, to make factories for real businesses, as non-speculative investment. So I think the country has taken very well that President Pena Nieto has come into power, he has everyone’s respect and I think he finally was able to take the position parties and pretty much all the political actors and converge them all into one single direction in the favour of the country.

“Organised crime is the main challenge for the President”

World Finance: You’ve mentioned in the past that certain laws need to be reformed, particularly education and labour, do you think the new president will address these issues?

Enrique Nuñez-Escudero: Well, they’ve already been addressed. Since the end of last year, with President Calderon coming into good political terms with President Pena Nieto, the labour reform was approved last year. This year President Pena Nieto was able to pull every single party to go in the same direction in favour of the country, and there has been an education reform and a telecommunications reform, which will allow the country to be more competitive and have better infrastructure. Now we are on the way for approval for a tax reform, for an energy reform, and for a financial reform which will allow small and medium entrepreneurs to access credit for longer term and at cheaper rates.

World Finance:So, liberalising the economy is one of the challenges, what other challenges do you think there are that the political party faces?

Enrique Nuñez-Escudero: More than the reforms which I think will be approved this year, there is a big challenge for the President which I think is the war on organised crime. Organised crime has been gaining territories since last President Calderon started a huge war against drug cartels and organised crime. Organised crime is quite powerful down there, and they are asking many entrepreneurs for protection fees, monthly fees, which are very very bad. That’s the main challenge which President Pena Nieto has to overcome.

“We as consultants will have more work to do”

World Finance: Now, growth in Mexico slowed dramatically in the last quarter, how do you explain this?

Enrique Nuñez-Escudero: The world’s economy has been slower to begin with, so that of course affects us. But there is also like a technical miscalculation, there is a problem in the calculation of the first-quarter GDP because of the holy week for Easter, which has a big impact. You pretty much shut the country down for a couple of weeks. Last year we had it in the second quarter, this year we had it in the first quarter- so that has an impact there. But hopefully with these new reforms that will be approved this year, we’ll reach the target that everyone has of 3 percent in growth of GDP for 2013.

World Finance: So how has Shirebrook Commodities been affected by the change of President and the subsequent reforms in the country?

Enrique Nuñez-Escudero: Well, I think we’re doing good. We’ve been getting new RFPs from customers, for work we had not been getting for many years- the outlook is positive. And now that all financial entities will be regulated in Mexico we as consultants will have more work to do.

“We are the first country in the world to be fully-compliant with Basel III regulations”

World Finance: And finally, what new projects and developments do you have on the horizon at Shirebrook?

Enrique Nuñez-Escudero: We are the first country in the world to be fully-compliant with Basel III regulations. Our regulators are really proud of that. Our financial system is not very happy with that, because our regulators are probably one of the toughest in the world. But I think all these new regulations, this new environment, is favourable for business and eventually I think it will materialise and this great outlook will be very good for us.

Enrique, thank you.

Thank you very much.