Sergio Vargas Téllez, Secretary of Economic Development, State of Hidalgo: Interview

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Sergio Vargas Téllez, Secretary of Economic Development, State of Hidalgo

Interview: Sergio Vargas Téllez

In what ways is the government seeking to strengthen Hidalgo’s economic competitiveness?

SERGIO VARGAS: The strategy of the government is in line with the World Bank’s ease-of-doing-business metrics: facilitating the right conditions for companies to become globally competitive, and focusing on providing access to quality, value-added services such as energy and telecoms networks, financial and human capital, as well as regulatory improvement. Furthermore, Hidalgo continues to attract investments in five of the most globally competitive economic sectors: sustainable transport; chemical-pharmaceutical; agro-industry; energy; and services. The worldwide market value of these sectors amounts to $30trn and holds substantial growth potential for the future.

Energy and telecoms are key to the country’s development. Currently, the value of Hidalgo’s energy project portfolio amounts to $1bn, which guarantees energy provision for the private sector at competitive costs. Two projects represent this great leap forward: Atlas’ solar farm and Juandhó’s combined-cycle plant. Put together, these investments represent 65% of the total investment in energy projects in the state, at around $654m, with a capacity to generate enough power to provide all of Hidalgo’s households with electricity.

What steps have been taken to allow the public and private sectors to develop industrial parks?

VARGAS: Hidalgo has 12 industrial parks covering 1900 ha, which are responsible for 23,000 direct jobs in strategic sectors such as logistics, metallurgical, automotive, food and beverages, textiles and pharmaceuticals. These projects have been boosted by the government through the establishment of a series of strong relationships with the main international and local actors in the real estate, industry and logistics sectors. This partnership between local authorities and private developers is represented by significant investments. To give you an idea, 27 out of the 50 investments attracted and signed during the mandate of the current administration have been allocated to the development or operation of industrial parks in Hidalgo.

In addition to this, the state of Hidalgo has been implementing different initiatives to foster industrial activity, such as developing infrastructure, providing more reliable access to affordable electricity, and improving security and transport. As a consequence, in Tepeji two industrial parks have been recently approved. Tepeji Park is already operating, and the other one, Puerta Tepeji, will enter its construction phase in late 2019. Considering that the municipality of Tepeji is just 70 km away from Mexico City, the location is very strategic for companies that seek connectivity and access to effective infrastructure.

How is the government strengthening the regulatory framework in order to improve legal certainty for infrastructure development projects?

VARGAS: In order to strengthen Hidalgo’s legal certainty, the government issued the Law of Productive Alliances for Investment, which contains over 10 different public-private partnership models. This regulation not only reinforces the role of conciliation to solve issues between stakeholders, but it also allows developing an investment portfolio for projects lasting up to 40 years, opening the door to bigger infrastructure projects.

Aside from this, a federal regulatory improvement framework – the System for Quick Business Start-up – was put in place to simplify over-administrative procedures so that states could become an easier place to do business in. As a consequence of this, and according to the National Observatory for Regulatory Improvement, the state of Hidalgo ranked as the best in this domain in Latin America in 2017.

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The Report: Mexico 2019

Hidalgo chapter from The Report: Mexico 2019

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