Japan Bank for International Cooperation (JBIC) has signed an untied loan agreement totaling US$250mn with Nacional Financiera (Nafin) to make available funds to small- and medium-sized enterprises in <
The loan will enable Nafin to re-lend funds to small and medium-sized enterprises (SMEs) in Mexico for their financial requirements such as capital investment, via Mexican private financial institutions. It will contribute to one of the top priority projects of the Mexican government, the development of SMEs. It will benefit Japanese-affiliated firms in Mexico by assisting them to secure low-cost parts supplies necessary to maintain their competitive edge. This loan is provided together with the Multisectorial Credit Program II credit amounting to US$300mn, signed between the Inter-American Development Bank (IADB) and Nafin.
Mexico has overcome the economic crisis which arose in 1994 and is often called the “Tequila Shock”, and has improved its economic condition by implementing an economic stabilisation policy. For Mexico to maintain stable economic growth in the years to come, it is essential to activate the business of SMEs and boost employment of SMEs, which account for 99.9% of the total number of the private firms and 78.5% of the combined work force in the private sector. President Fox has thus designated the development of and assistance to SMEs as one of the top priorities of his government.
In addition, as the private sector has difficultly in obtaining medium and long-term financing, this loan is expected by the Mexican government to provide medium and long-term financing to the investment projects implemented by SMEs to sustain their growth.
Over 300 Japanese firms have entered in Mexico to establish their production bases, and quite a few of them expected the benefit from the Maquiladora in exporting to North, Central and South America. This was a tax privilege applied to imports of raw and processed materials from outside of Mexico when such materials are manufactured or assembled into products for export.
However, in 2001 the system was partially abolished, and it is anticipated that Japanese firms may lose their competitiveness against firms of Europe and the US, which have signed the Free Trade Agreement with Mexico.
Hence stable procurement of low-cost parts from the supporting industry in Mexico is essential for most Japanese firms. Upon request for support from Japanese firms in Mexico, JBIC decided to provide this loan to meet their needs as well Mexican needs.