By Lee Kap-soo

The Federation of Middle Market Enterprises of Korea (FOMEK) delivered a total of 12 recommendations to the Mexican government on Nov. 13, including strengthening new investment incentives and improving administrative procedures.

Through the 'Recommendation to Resolve Difficulties for Midsize Enterprises in Mexico', the FOMEK said that in the context of deteriorating investment conditions in Mexico, such as the 30% corporate tax rate, the second highest among OECD countries, a 20% increase in the minimum wage in 2023, and a strong peso, bold institutional support to ease initial burdens is needed to drive midsize enterprises into the country. 

To ensure the sustainability of local businesses, the FOMEK pointed out that administrative procedures such as delays in VAT refunds and complex land export customs clearance need to be improved.  

"Mexico has a high VAT refund rate of 16%, but the process takes an average of two years, making it difficult for small and medium-sized enterprises to secure liquidity," said an official from the FOMEK, adding that they hope that measures can be taken to improve tax administration.

According to the 'Basic Statistics on SMEs in 2021', Mexico is the largest trading partner in Latin America with 124 (6.1%) of the 2,036 exporting SMEs. It was the third largest source country for new SMEs in 2021. 

In 2022, Korea ranked 7th among major investors in Mexico, with cumulative investments totaling $8.734 billion from 1999 to 2022. 

 At a meeting held by FOMEK in August, Mexican Ambassador to Korea Carlos Peñafiel Soto said, "The Mexican government's top priority is to support the successful settlement of overseas small and medium-sized enterprises," and said that he would actively seek ways to resolve the difficulties of Korean small and medium-sized enterprises in Mexico.

"The demand for mid-sized automotive, machinery, and equipment manufacturing companies to enter Mexico is increasing due to the acceleration of near-shoring policies in the U.S. and the announcement of large-scale investments by global companies such as Tesla and BMW," said Lee Ho-jun, senior vice chairman of the federation. "We will do our best to create a legal and institutional environment that will support the stable settlement of mid-sized companies in Mexico and the smooth conduct of business through close communication with relevant ministries such as the Ministry of Trade, Industry, and Energy."