Mario Laborín Gómez gave a detailed account of where the Mexican economy is headed at UT-Brownsville on Friday.

BROWNSVILLE, March 23 - A top banker and financier in Mexico proposes that the U.S.-Mexico border region have a single police force run jointly by the U.S. and Mexican governments.

Mario Laborín Gómez offered his thoughts in a speech about the state of the Mexican economy at the University of Texas at Brownsville on Friday.

“I think we have to think as a region, not as two regions with a border in the middle. If you could imagine something as simple as having one police force for both regions – it is something I have discussed with the ambassador of the United States,” Laborín Gómez said.

Laborín Gómez is chairman and CEO of ABC Capital, a commercial bank and the largest independent loan servicing company in Mexico. He served in the cabinets of two Mexican presidents: as CEO of Nacional Financiera for President Vicente Fox, and he continued that appointment and also became CEO of Bancomext for President Felipe Calderón.

In the past, Laborín Gómez has served as CEO of Bancomext, Nacional Financiera, Bancomer and Grupo Vector, and chairman of Casa de Bolsa Bancomer. He is a former member of the Harvard University Committee on the World Finance System. He holds a degree in Public Accounting from Instituto Tecnologico de Estudios Superiores de Monterrey (ITESM) and a Masters of Business Administration from the same academic institution. He was born in Hermosillo, Sonora, in 1952.

Laborín Gómez made his comments about a united police effort along the border in response to a question from a member of the audience. He and other panelists were asked how South Texas and northern Tamaulipas can work together to develop the region.

Laborín Gómez said it was a great question. He said it is definitely possible to work together, on a number of issues. He suggested building more factories together and collaborating to ensure commercial traffic does not have to wait three hours on an international bridge.

“We cannot lose three hours going back and forth across the bridge. I think we have to think in another way, lateral thinking. (If we do) we will find incredible opportunities, different to the ones we have conceived so far. (There will be) huge opportunities,” Laborín Gómez.

Asked later by the Guardian what the ambassador to the United States thought about a united police department idea, Laborín Gómez said: “He laughed. He thought it was a good idea. I said why do we not do it through NAFTA so it will not be as politically difficult.”

Asked by the Guardian what other areas existed for collaboration between South Texas and northern Tamaulipas, Laborín Gómez suggested oil and gas exploration and production. “Why not do it together? We have reserves for 100 years. There are great cost savings. It is a win-win. It would be much more efficient.”

In his power-point presentation on the state of the Mexican economy, Laborín Gómez said the structural, regulatory, wage and tax reforms Mexico has introduced over the last 20 years have modernized the country. He pointed out that Mexico is now in the top five for GDP growth among the G20 countries and is slated to become the seventh largest economy in the world. He said this prediction was made by Jim O´Neill, chairman Goldman Sachs Asset Management.

“The U.S. is going to have a partner, rather than a problem, on the other side of the border,” Laborín Gómez said.

Laborín Gómez said that since the advent of NAFTA in 1994, the Mexican economy has been inextricably linked to the U.S. economy, so much so that the last economic downturn was largely caused by the recession in the United States.

Laborín Gómez pointed out that inflation and deprecation are now at historically low levels. He also pointed out that the debt to GDP ratio has been below ten percent for some time. He said the minimum wage has stabilized due to inflation being brought under control.

Laborín Gómez proudly stated that Mexico has more reserves than it does national debt and that interest rates are at historically low levels. He said Mexico’s current account balance is 0.9 percent of GDP, which is a better rate than that of the United States. Of the major economies of the world, only Germany, China and Japan can beat Mexico’s performance, he said.

Laborín Gómez said that despite the financial crisis of 2008, Mexico is viewed as a low risk country for investments. He said its exports to the United States have increased and, in percentage terms, are now at the level they were in 2002.

Laborín Gómez also spoke about the historic pact signed by the PRI, the PAN, and the PRD on Dec. 2, the day after President Enrique Peña Nieto was sworn into office. He said the pact covers 95 policies proposals on subjects as diverse as energy, fiscal matters, labor, health, and human rights.

Laborín Gómez said one major piece of reform has already been implemented covering education. As a result, he said, a top labor leader is now in jail. He said the education reforms are designed to lead to improved quality in elementary schools, and increased number of students in high school and college, and the federal government regaining autonomy of the national education system.  “As a consequence of stricter evaluation of all teachers, the power of the unions should be undermined,” Laborín Gómez said.

There are lobbying efforts going on, Laborín Gómez said, for two more major reforms to be implemented before the end of the summer. One of the reforms coming in, he said, was bringing more competition to the communications industry, including TV, Internet and telephones. He pointed out that America Movil holds up to 70 percent of fixed lines and mobile phones while Televisa has 70 percent of the market share of free-to-air viewers and about 50 percent the pay-to-watch TV market. Such near monopolies mean a loss to the economy of about $25 billion a year due to high prices, Laborín Gómez said.

Among the reforms being considered for the telecommunications industry are blanket permission for total foreign ownership of all telecommunications and satellite TV services, the power to impose stiff penalties on firms that control over half their markets, or even break them up, the implementation of asymmetric connection fees, two new national networks, and allowing foreign investors to hold up to 49 percent of a telecommunication company, forcing content providers to offer all their shows to cable TV firms, and forcing cable TV firms to carry the shows of all content providers.

Fiscal reforms could also be taken up in the second quarter of 2013, Laborín Gómez said. Taxes are comparatively low for Mexican households, he explained, largely because tax revenues from Pemex are used to subsidize them. The tax/GDP ratio in Mexico is 20 percent, while the average among OECD countries is 34 percent. Fiscal reforms could include simplifying the tax system, increasing government revenues, financing extra spending on strategic areas such as education and infrastructures, and, controversially, placing VAT taxes on food and medicines.

On the energy front, Laborín Gómez said Mexico will be facing difficulties in future decades due to current consumption and production levels. He said reforms are likely to include improvements in productivity and production to promote a responsible consumption, being able to have capacity and resources to guaranteed energy supply, and promoting more clean energy policies to reduce the collateral effects on the environment.

Write Steve Taylor

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