(Bloomberg) -- Businesses leaders are becoming more outspoken about policy shifts by Mexican President Andres Manuel Lopez Obrador, saying the uncertainty makes them less willing to invest in the country.
Private equity giant Carlyle Group Inc. is the latest to publicly express concerns, saying investors need more clarity and consistency, and that as things stand it’s unwilling to put money into the sector. There’s a “night and day” change in the business climate from the previous administration, said Ferris Hussein, Carlyle’s managing director for energy and power infrastructure.
“Our hope is that there is an investment opportunity in Mexico,” Hussein said at an oil conference in Mexico City on Tuesday. “I would say there isn’t today, unfortunately.”
Earlier this month, Claudia Janez, president for Latin America at DuPont de Nemours Inc., said that rule changes and anti-business rhetoric from the government are souring the business climate. Carlos Salazar, an ally of the president who heads Mexico’s biggest business lobby group, CCE, also warned the government to stop putting out messages that hinder long-term investment decisions in the country.
Read More: Big Companies to Mexico’s President: Stop Changing Rules
The recent criticism from business leaders contrasts with the conciliatory tone they initially adopted when seeking a working relationship with Lopez Obrador, who took office at the end of 2018. It also signals some of them have given up trying to get the president’s ear.
Some of Lopez Obrador’s biggest policy shifts have affected the energy sector, including a hiatus on the country’s competitive oil and gas auctions. He also granted state-owned Petroleos Mexicanos a five-year extension on a clean fuel requirement that has enabled it to continue to sell polluting diesel in parts of the country.
The uncertainty contributed to the stagnation of Mexico’s economy last year, which is likely to have been its weakest performance since 2009.
Mexico’s Chief of Staff, Alfonso Romo, told Radio Formula on Wednesday that the country has to offer legal certainty to private investors in order to stimulate economic growth.
Asked about investor concerns, Octavio Romero, chief executive officer of Pemex, said at a press conference Wednesday that there will be plenty of opportunities for private investment in service contracts as the company drills more wells than in previous administrations.
Read More: AMLO Chips Away at Mexico Energy Reforms as Investors Stay WaryEd Morse, the head of commodities research at Citigroup, speaking on the sidelines of the oil conference where Carlyle’s Hussein gave his presentation, said that Mexico’s oil and gas sector is an “unknown.”
“There is a question about whether the moratorium on future auctions is going to be permanent,” Morse said. “Eventually Mexico will have to look again at how attractive it is for foreign investment.”
(Updates with Carlyle quote in 2nd paragraph, quote from chief of staff in 8th paragraph)
To contact the reporters on this story: Amy Stillman in Mexico City at firstname.lastname@example.org;Nacha Cattan in Mexico City at email@example.com
To contact the editors responsible for this story: Juan Pablo Spinetto at firstname.lastname@example.org, Matthew Bristow, Walter Brandimarte
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