Bordering San Diego and Imperial counties, Baja California has traditionally been thought of as a tourist destination and a hub for cross-border manufacturing.

New investments, like that of Amazon, and expansion of manufacturing to adjust to supply-chain woes are creating opportunities in Baja. The Mexican state has become much more creative, innovative and committed to higher education and entrepreneurship in recent years. But uncertainty over COVID is still hobbling consumer spending, and many of the benefits of all that innovation and creativity are still exported north.

Kurt Ignacio Honold Morales was named in October to serve a six-year term as the Secretariat of Economy and Innovation for the state of Baja California.

Honold, a successful businessman and former telecommunications executive — he is the president of Baja Studios, an international filming studio in Rosarito, best known for its role in the 1997 film “Titanic” — became mayor of Tijuana in 2007 when then-Mayor Jorge Hank Rhon stepped down to run for governor of Baja California. He has also been a leader in the city’s booming manufacturing industry for decades.

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Honold is known for convening Tijuana’s first binational strategic-planning conference in 2007, which was focused on trade, economic development, infrastructure and efficient border crossings for the region.

As 2022 kicks off, Mexico’s recovery is outperforming other emerging economies — fueled partially by U.S. stimulus checks being sent south in the form of remittances. Honold shared his expectations for Baja.

What can you tell us about the economic projections for Baja California in 2022?

Baja California in 2022 will experience strong growth figures in investment and expansions of its current manufacturing and export-oriented companies, as well as its regional supplier base. Employment will be high and we expect manufacturing, IT, logistics as well as the service sector to be the most active. The supply base crunch, near-shoring [moving manufacturing sources from China and other parts of Asia closer to U.S. markets] as well as the change in the state administration to a more business-friendly vision, will be main factors in Baja’s growth in 2022.

In 2022, we also foresee challenges that are currently [affecting] economies around the world, such as the supply-chain crisis. This is impacting inflation rates and causing material and product price increases that directly affects all of our economic sectors. The ongoing pandemic and its uncertain timeframe and recovery will also be a factor to consider in the coming year.

Might the state bounce back from the pandemic better than in other areas of Mexico because of its proximity to the border?

Being in the border region, Baja was the hardest hit of all the states when the pandemic began, and it also was the first to recover from the pandemic. There are economic recovery programs in place for small and medium companies in this administration.

Can you give us an example of those recovery programs?

Economic recovery programs for small and medium companies in this administration include the “Your Business Idea” program for entrepreneurs [and] the “reactivate and launch” program for existing small businesses. In addition, there are traditional business loans available and the state has “COVID payroll protection,” focused on protecting small business payrolls.

When you look back on the last 30 or 40 years in Baja, not only do we see this enormous exponential growth in exports, but also a diversification of that export economy. That’s to say it’s not just physical goods crossing the border anymore but value added services like engineers, software developers, regional biotech development, etc. What public policies are needed to continue fostering that growth?

First of all, Baja is extending formal assurances that all IP and legal matters are in place for investment as well as development of value-added services. Foreign and local companies can invest with the state government as an ally.

Second, talent development is one of the most important government agendas. Baja, without a doubt, is one of the most important engineering hubs in the border region. New technologies such as electric mobility, digital animation, life science, IT and “the orange economy” [the “creative economy” or bringing together goods, services and activities that have cultural or artistic content] are areas where Baja will invest heavily and generate the transition to the new economy that generates more value for the region as a whole.

Mexicali is sort of “ground zero” in Mexico for a newfound hesitancy in direct foreign investment after the Constellation Brands brewery was scrapped. (With the project under construction, Mexican president Andrés Manuel López Obrador called for a public referendum on whether the project should be allowed to proceed. Mexicali voters rejected it.) Can foreign investors trust that they’ll be able to understand the rules of doing business in Baja California and that those rules won’t change with who comes in and out of office?

Even though Constellation Brands was a hard hit for the country, Mexicali and Baja did not experience a decline in investment. The new administration has put in place safeguards regarding legal certainty for all companies that decide to invest in our state.

Our economic development program guides future investors through the main issues with a straight forward approach of how to do business in our state.

Looking even further ahead at the next five to 10 years in the San Diego/Tijuana region, what do you see as the key strengths and challenges for regional development?

Tijuana and our whole state has a symbiotic relationship with San Diego , we see a more united and stronger region, sharing binational programs that support both communities. Our key strengths are a binational region that acts as a single economy complimenting each other. Challenges are always present such as more agile border crossings, balancing logistics and trade with border security, as some examples.

Source: This post first appeared on sandiegouniontribune.com

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