What does AMLO's isthmus trade corridor entail?

The development plan for the Tehuantepec isthmus region that Mexican President Andrés Manuel López Obrador (AMLO) unveiled on Sunday in Salina Cruz port, Oaxaca state, entails various infrastructure components.

For next year, the investment already earmarked for the plan amounts to over 8bn pesos (US$401mn), AMLO said.

The plan is aimed at more efficiently linking Salina Cruz, on the country's Pacific coast, to Coatzacoalcos, a major port in the Gulf state of Veracruz. As part of this effort, the government will upgrade the railway and highway connecting the two cities, while also enhancing the ports.

Airport infrastructure in the area will also be modernized, while fiber optic will be installed. A gas pipeline is also set to be built in the region and the refineries located in Salina Cruz and Minatitlán, west of Coatzacoalcos, will also be upgraded.

The infrastructure components of the trade corridor are expected to be completed in 2020. The idea is that the improved infrastructure will serve to boost the economic potential of the region to attract private sector investment and benefit the local population. Once the infrastructure projects are complete, the national government is planning to cut VAT by half and reduce the income tax (ISR) in the area in order to create a free economic zone.

Rafael Marín Mollinedo is the person responsible for the development of the isthmus project. The former Morena party leader for Quintana Roo state will also be officially appointed as the new head of the federal authority for the development of special economic zones.

RAILWAY

The Ferrocarril del Istmo de Tehuatepec (FIT) freight service is the one that will be modernized. The 200km railway will be improved so that trains can run at higher speeds, which is expected to reduce transport costs. Railways will also be built on those sections of the route where there are currently none. In 2019, some 645mn pesos will be invested as part of this effort.

PORTS

At the ceremony, AMLO noted that a 3bn-peso trust fund already exists to expand and modernize the ports of Salina Cruz and Coatzacoalcos. The national government will spend 1.5bn pesos next year as part of these modernization efforts.

ROADS

A section of the Salina Cruz-Coatzacoalcos highway Acayucan to Matías Romero will be expanded, requiring 250mn pesos in investments. This investment will be made next year. Another 120mn pesos will be invested in maintenance efforts.

The total road investment expected for this project during AMLO's six-year term will amount to 7bn pesos.

SOCIAL INFRASTRUCTURE

Efforts aimed at boosting social development in the poverty-stricken isthmus region are also expected to be made as part of the plan, including improving potable water and electricity services, as well as building housing and local roads.

DOMESTIC INVESTMENT ONLY

According to AMLO, due to the area's strategic location and in an attempt to protect the nation's sovereignty, the investment is expected for this project will be domestic only.

"For this project, as opposed to the other ones, we won't see foreign investment, only domestic investment. I call on Mexico's businesspeople to make combined public, and national investments for the Tehuantepec isthmus region," the president said.

Pictured: AMLO (Center) visits Salina Cruz port in Oaxaca to present the plan on December 23. CREDIT: Gobierno de México.