Tehuantepec isthmus corridor only open to Mexican investment

Contracts to build a trade corridor on Mexico's Tehuantepec isthmus will only be open to domestic investors, according to President Andrés Manuel López Obrador (AMLO).

Reaffirming what he announced in December, AMLO (pictured) told a press conference on Tuesday that the decision to exclude international investors was a matter of national sovereignty.

He also said that a mixed enterprise, which will involve the participation of isthmus residents, the government and the local private sector, will be in charge of developing the project.

"The inter-oceanic trade corridor will be a comprehensive program ... Those who know the history of the isthmus know why control of the area must remain in the hands of Mexicans," AMLO said.

According to the president, the corridor is one of the most strategic projects of his administration given that it will be a cheaper and faster option than the Panama Canal for transporting certain goods between Asia and the east coast of the United Sates.

As the project is expected to create many jobs, it will also help contain migration to the US, AMLO added.

The corridor will improve links between Salina Cruz, on the Pacific coast of Oaxaca state, and Coatzacoalcos, a major port in the Gulf state of Veracruz in southern Mexico. The project involves upgrading a railway and a highway and improving the ports.

Airport infrastructure in the area will also be modernized, and fiber optic lines installed. A gas pipeline will be built in the region and the oil refineries in Salina Cruz and Minatitlán, west of Coatzacoalcos, will also receive an upgrade.

The improved infrastructure will boost the economic potential of the region, attracting private sector investment. Once the infrastructure is complete, the government is planning to cut VAT by half and reduce income tax in the area to create a "free economic zone."

According to press reports, a presidential decree to create a state-run entity to manage the port and rail projects has already been submitted to the federal regulatory commission for review.

Investment earmarked for the plan this year amounts to over 8bn pesos (US$421mn).