MEXICO OVERVIEW. April 2018

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1 MEXICO OVERVIEW April

2 MEXICO What makes it a good opportunity? LOCATION bounded by Pacific Ocean and Gulf of Mexico (GOM), the United States, and Central America The shortest distance between the Pacific and GOM is through the Isthmus of Tehuantepec from Coatzacoalcos to Salina Cruz, the rail distance is 310km. Mexico economy growing, projected rate 2% for 2018* Monetary Policy* independent, responsible, and reliable Exports are growing* total goods rose 10% in 2017 from Jan to Oct Foreign Direct Investment is growing Inflows up by 9% in H1 of 2017 over same period in 2016 Reforms are working - Full implementation of structural reforms could add as much as 1% to Mexican economy growth rate* Telecommunications mobile broadband prices fell by 75%; subscribers jumped by 50M from 2012 to 2016 Energy Reform 2014 law decentralized energy and electricity market Exploration & Production, Energy Auctions, and the established Clean Energy targets resulting in private investment reaching 80B dollars US Labor nearly 3M jobs created Education merit and transparency drivers for education system s management *Source: The Organization for Economic Co-operation and Development (OECD)

3 MEXICO Global business partner One of the top 10 destinations from FDI Extensive network of Free Trade Agreements* 10 FTAs with 45 countries 32 Reciprocal Investment Promotion and Protection Agreements (RIPPAs) with 33 countries 9 trade agreements (Economic Complementation and Partial Scope Agreements) within the framework of the Latin American Integration Association (ALADI) Member of Trans-Pacific Partnership Agreement (TPPA) Active member of: World Trade Organization (WTO) Asia Pacific Economic Cooperation (APEC) Organization from Economic Cooperation and Development (OECD) First Latin American country to become a member country of the International Energy Association (IEA) *Source: ProMexico.gob.mx

4 MEXICO Energy Reform 2014 Energy Reform ended 75 year monopoly of by PEMEX (Oil & Gas) and CFE (electricity) Goals Attract domestic and foreign investment into the energy sector Harness substantial resources solar, wind, geothermal, and deep-water oil Spark building of modern energy infrastructure Proved oil and gas reserves estimated to be 9.16 billion BOE Clean energy targets among the most aggressive in the world By 2050, 50% of power generation from renewable energy By 2022, 13.8% of power consumption by major power users from clean energy sources Mexico is the 15th largest economy in the world, the 12th largest oil producer and has some of the best renewable energy resources in the world. The IEA family will benefit greatly from Mexico's contribution in the discussion on the world's energy challenges. The Agency is delighted to continue supporting the implementation of the energy reform in Mexico with technical expertise and further intensifying the fruitful bilateral dialogue on the exchange of best energy policy practices. IEA Press Release, Feb 2018

5 Investments With the energy reform, Mexico is poised to receive $400B USD in new investments E&P Petrochemicals Refining Gathering and Processing Storage Electricity Special Economic Zone investments to date include $6B commitment in manufacturing sector, others in development

6 SPECIAL ECONOMIC ZONES Geographical areas rich in resources and ripe for economic development, the Special Economic Zones of Mexico are designed to attract national and foreign investment, generate and strengthen local value chains, promote exports and increase productivity, all with the aim of improving the well-being of the population in the region. SEZ Locations Hidalgo Yucatán Puebla Coatzacoalcos Campeche Lázaro Cárdenas Fisrt stage Istm o de Tehua nte p e c Tab asco Second stage Third stage Salina Cruz Puerto Chiapas

7 Special Economic Zone Fiscal Incentives 7

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9 Salina Cruz Advantage* SALINA CRUZ LOCATION & INFRASTRUCTURE LINKS GOM TO THE PACIFIC OCEAN PEMEX S LARGEST REFINERY IN MEXICO *Source: State of Oaxaca Presentation, Gov. Murat

10 GPI Leading the Way GPI is poised to lead the way to for new growth in Mexico s gateway to the Pacific, Salina Cruz. GPI s projects are of critical importance to the economic development of not only Salina Cruz, but also to Mexico. GPI is positioning several of its projects in the Special Economic Zones of Salina Cruz, Coatzacoalcos, and Puebla. To learn more, contact us at info@gfint.com.