Mexico Country Profile

Licences, Infrastructure and Public Utilities

Individual Corruption

According to the Transparencia Mexicana Índice Nacional de Corrupción y Buen Gobierno 2007 (in Spanish), citizens perceive a wide range of public services dealing with licences and permits to be marked by corruption. Accessing and staying connected to public utilities, such as water and electricity, or getting one's garbage collected, may involve demands for bribes.

Business Corruption

Procedures for obtaining permits to open a business are perceived to be characterised by corruption and bribery. According to the Transparencia Mexicana Índice Nacional de Corrupción y Buen Gobierno 2007 (in Spanish), obtaining construction permits is perceived to be influenced by the payment of bribes. In the World Bank & IFC Enterprise Surveys 2006, companies state that they expect to give gifts in order to obtain water connections, construction permits and operating licences. It should be noted that these complaints of corruption and bribery are not necessarily fuelled by a burdensome bureaucracy, as data from the World Bank & IFC Doing Business 2010 reveals that the number of administrative procedures and hours spent on obtaining necessary permits for building a warehouse in Mexico are below the average for OECD countries.

Political Corruption

In a June 2009 article the newspaper México Migrante reported that the Mexican ambassador to China, in a letter to the National Secretary of the PAN, complained about the solicitation of a bribe to obtain a construction permit. The ambassador denounced a municipal employee affiliated with the PAN for reportedly extorting MXN 1 million from one of his family members. In the letter, the ambassador stated his will not to denounce the fact publicly, pending the July 2009 election, and added that the 'party comes first'.

According to CEI Consulting and Research 2005 (in Spanish), a lack of honesty and poor administration has resulted in huge efficiency losses in the development of infrastructure in Mexican states. The study ranks states on an 'Index of Honesty and Efficiency in Developing Public Infrastructure' according to their losses caused by maladministration during the last 30 years. Distrito Federal (Mexico City) is by far the worst performer on the index, as it has spent almost 6 times more on infrastructure projects than the value of what has actually materialised during these years. The best performers are the states of Michoacán, Jalisco, Baja California and Veracruz. The study is an indication of the serious problems of misappropriation of public funds in Mexico, a problem which seriously impedes the development of infrastructure for business operations.

Frequency

The World Bank & IFC: Doing Business 2010:
- Starting a company requires the entrepreneur to go through 8 procedures, taking 13 days at a cost of almost 11.7% of income per capita.

- It takes 12 procedures, 138 days at 113.1% of the income per capita to obtain the necessary licences and permits, notifications and inspections and public utility connections to build a warehouse.

- It takes an average of 1.8 years to close a business at a cost of 18% of the estate.

World Economic Forum: The Global Competitiveness Report 2009-2010:
- Business executives give government administrative requirements (permits, regulations, reporting) in Mexico a score of 2.6 on a 7-point scale (1 being 'extremely burdensome' and 7 'not burdensome at all').

Transparency International: Bribe Payers Index 2008:
- Business executives give the registry and permit services a score of 4.1 on a 5-point scale (1 being 'not at all corrupt' and 5 'extremely corrupt').

KPMG: Encuesta de Fraude y Corrupción en Mexico 2008 (in Spanish):
- 32% of the companies surveyed pay bribes to obtain licences or permits and 47% of the respondents have experienced slower procedures if refusing to pay a bribe.

The World Bank & IFC: Enterprise Surveys 2006:
- 62% of companies expect to give gifts in order to obtain an operating licence.

- 33.9% of the companies surveyed expect to give gifts to get a construction permit.

- The percentage of companies that expect to give gifts to obtain utilities connections is quite low, except in relation to obtaining a water connection, for which nearly 18% expect to give gifts.