Interview by Peter Hulm
Q As the national trade promotion and
investment agency for external trade, by all accounts Bancomext has
been a great success in providing a service to Mexican exporters.
What do you think are the ingredients that made it so
successful?
A At one point Mexico had a TPO (trade
promotion organization) and a separate financial institution. The
TPO was criticized, like so many others, as being inefficient,
ineffective and expensive. In 1986 the Government decided to
establish one institution and have trade financing, trade insurance
and trade promotion activities under one roof. This "Mexican model"
worked very well at that specific point in time. It has worked well
because in 1986 Mexico also joined the General Agreement on Tariffs
and Trade.
Basically, for the past 15 years, despite the fact that Mexico's
financial institutions were not considered very efficient (in 1984
they got deeply into trouble in the financial crisis), Bancomext
was very successful, at least for the last ten years on the
financial side of the business. We were able to make a lot of
profit, hundreds of millions of US dollars, and our only
stockholder - the Mexican Government - decided not to take out
those profits, but to keep the money inside the bank and pay the
TPO activities from those profits. In that sense, for the last 12
years we have been self-sufficient financially and we have not cost
the Mexican taxpayer a single cent. Today, Mexico is the world's
eighth exporter, exporting more than US$ 170 billion in goods and
services. We have the North American Free Trade Agreement, we have
a free trade agreement with the European Union and in general we
have 31 countries as our partners with free trade agreements.
Q It's been a terrific formula, but very few
developing countries have taken it on board. Why do you think that
is?
A It all depends on the type of government that
you have and on the type of private sector you have. I would
suggest to all our friends who might be thinking of the Mexican
experience, that if we had done this five years ago, it probably
would not have worked. It worked in 1986 because in that year the
conditions in Mexico were, I think, very favourable for a project
like this. I also have to say that 15 years later we are reviewing
this model, because now we have a very open economy, an economy
that is part of the global environment. We have a lot of free trade
agreements, we are completely in partnership with the United States
and Canada, and we are finding that our private banks - both
Mexican and foreign banks - are efficient; they have funds and they
are willing to enter the private sector again.
Q Do you think they have been educated by the
way that Bancomext has operated?
A Definitely. I would say that is part of what
a development bank or a government institution should do. Sometimes
a government has to intervene in the economy to give an example or
to lead on a specific strategy, and once it has achieved that goal,
it should retire. We have been thinking of various scenarios.
Within the next 15 to 20 years, perhaps Bancomext as an institution
will go out of the business of trade finance and become only a TPO.
Who knows? Right now, what the free economy shows us is that on the
financial side there are a lot of competitors and a lot of players
that could be equally efficient at providing funds to Mexican
exporters. But as long as there is a niche for Bancomext to finance
small and medium-sized enterprises (SMEs), we will continue doing
so.
Q What do you do as a TPO in Bancomext?
A On the financial side, we provide working
capital, we provide funds for investment projects and we finance
sales and exports of goods; we also have risk capital. With regard
to trade promotion activities, we have 43 offices all over the
world, we have information services, counselling, training and a
design centre. We provide funds for quality and ISO 9000
certification. Every year we help more than 2,000 SMEs to
participate in the best international events and trade fairs all
over the world. A one-stop front desk or a single window for an SME
that wants to export - Bancomext has it all.
Q What is the financial structure?
A We charge for some of our services - not the
full cost. But about five years ago we started charging for
everything else that we provide: photocopies, market studies, etc.
It has helped us to try to run our TPO as a business. It has also
helped our private sector to ask us for higher quality and better
service. Our annual budget is around US$ 60 million. This year we
will probably receive about US$ 4 million for the products and
services we provide. We have a goal that in six years we should
recover about US$ 10 million for products and services, around 15%
of our total budget. That also puts pressure or provides incentives
for our people to provide better quality and service.
Q Many participants in ITC's Executive Forum
talked about the advantages of running a TPO as a business.
Bancomext doesn't require its TPO activities to recover all their
costs or turn a profit. Do you reject the business model?
A Overall our institution is run as a business
because we compete with other commercial banks in Mexico. For the
last ten years, the TPO within Bancomext has been very aggressive
about running its whole operation in a businesslike way - to have
measurement of all results - and I think it can be done. It is just
a matter of trying to establish your mission, your vision and your
strategic objectives very precisely. You must definitely decide on
quantitative and qualitative targets and be able to measure them.
What is sometimes frustrating is that everyone wants the
organization or the TPO to be run as a business, but since you are
a government agency, they also ask for a lot of reports, a lot of
paperwork to be done. You have to cope with that and balance the
results against the other activities you have to carry out.
For more information about Bancomext, contact Raul Arguelles
(rarguell@bancomext.gob.mx)
or visit Bancomext's web site (http://www.bancomext.com).