OBG talks to José Calzada Rovirosa, Governor of Querétaro

Interview: José Calzada Rovirosa

How intense is competition between states in attracting large-scale investments?

JOSE CALZADA ROVIROSA: All states in the Mexican federation are interested in attracting foreign and domestic investment, and investors are well aware of this. Each state follows a different strategy depending on its strengths or background. Our strategy in Querétaro has been to follow a policy of non-fiscal incentives.

Most taxes paid in this country, such as value-added tax or income tax, are paid to the federal government and not to the state. This means that the power to grant fiscal incentives is not always in our hands. As a state we can, however, offer incentives in areas such as education, infrastructure and connectivity, training centres, technology, innovation, quality of life and safety. We are also able to offer good working relationships.

More companies prefer to invest in regions with these kinds of incentives than in locations that are only offering fiscal benefits. Companies face strong competition these days in the automotive and aeronautics industries, and in electronics, textiles and food. So long as regional vocations do not predetermine where to install companies, the competition for investment, especially in high-value sectors, will continue.

What challenges has the state’s high population growth created for social and civil infrastructure?

CALZADA: Prosperity and economic growth in our state have generated a migratory pull effect. By our calculations, every day 40 new families come to Queré- taro to live. Such a figure in a small state like ours has brought challenges that we are still fighting today. We have had to modify many urban laws and spread the growth across the state, thus reducing population pressure on urban areas and developing new regions.

The state invests almost 16% of its budget in public infrastructure, which is much higher than the national average. We have faced an impending necessity to invest in very basic services and utilities, universities, hospitals and roads. We also have an important social programme to spread water and electricity services to the entire population. A steady pace in this matter is essential if we are to minimise the gap between developed and marginalised regions.

How will the country benefit from the Querétaro high-speed passenger train?

CALZADA: The National Infrastructure Plan released by the federal government last year included a high-speed Querétaro–Mexico City rail service at an estimated cost of $40bn. The road between Querétaro and the capital is one of the busiest in the country. This makes the rail link a strategic project and certainly one the most important for the country in many years. The project should go to tender in 2014, with construction beginning in 2015 and the first train running by 2018. This line could be the first step towards a national passenger railway system, and has generated great international interest; players from China, Spain and Canada all sent delegations to inquire about the project.

What steps has the state taken to reduce the informal portion of the economy?

CALZADA: Querétaro has the second lowest informal sector rate of any state, according to data from the national statistics agency. At the end of 2013, the level, as a percentage of the economically active population, was 19.7% – just above that of Chihuahua state. The creation of formal jobs helped reduce the informal sector significantly. According to the federal agency for social insurance, our state has had the highest growth in formal employment in the past four years, with an average annual growth of 6%.

Retail and services are the areas with the highest percentage of informality. We work directly with the informal sector to try to persuade them to join the official system, as is the case with tianguistas (street market vendors). We are also restructuring and re-engineering the public transport system, and granting its employees entitlement to social insurance and benefits.