Return to the main menu for MexicoWith the implementation of the NAFTA, Mexico has allowed privatization within several sectors of the market. Privatization has advanced within the satellite systems, telecommunications and power systems.
The Zedillo administration has continued to move forward with the privatization and deregulation of the economy that was begun under the two previous administrations. Long distance telephone service opened up to vigorous competition since January 1997, on a city-by-city basis.
The role of the public sector in the economy has been declining since the 1980's when the Mexican Government began to sell or otherwise dispose of some 1,155 state-owned enterprises. As of the end of 1996, only 116 enterprises were in the hands of the government. Certain constitutionally-protected monopolies such as the oil sector, run by Petroleos de Mexico (PEMEX), and the Federal Electricity Commission (CFE), will remain in state hands, but the Government is pushing ahead with its privatization and concessioning program (12).
Mexico is in the process of fostering competition in telecommunications, and has granted eight concessions to companies who began offering competing long-distance-telephone service starting on January 1, 1997. U.S. companies are involved in six of the eight consortia. Large investments have been made to improve both fixed networks communication and cellular services. Since 1997, long-distance telecommunications has seen increased competition, due to further liberalization of the market.
It is anticipated that there will be a US$12 billion investment required in order to privatize the sector successfully over the time period, 1996-2000. The total potential market for telecommunications equipment is between US$2.421 and 6.0 billion (13).
Mexican crisis has underscored the imperatives of economic reform that led to NAFTA in the first place. In a move to significantly reduce its current account deficit, Mexico plans to accelerate its privatization efforts in the areas of banks, petrochemicals, ports, railroads, and satellite communications. Not only are these the building blocks for a strong commercial infrastructure for the future, but they will also provide immediate export and investment opportunities for U.S. firms.
Last update: December 18, 1998.
