Alejandro Murat Hinojosa developed a new model of government to create and build the foundations that make Oaxaca a territory for doing business. What’s next in the medium and long term? Growing up
Oaxaca has it all. This phrase has accompanied each of the actions undertaken by the Government of Oaxaca in the last four years.
“It is an open invitation to local communities, businessmen, investors and national and international strategic allies who want to contribute to achieving our objectives, ” says Alejandro Murat Hinojosa, Governor of the State of Oaxaca, who spoke with Forbes Report from the capital of an entity which is on the road to growth.
Q&A Forbes Report. Oaxaca is distinguished by its cultural richness, ethnic diversity, and active social participation through customs and traditions. How can you become a national and international benchmark by turning those characteristics into advantages that benefit the entity?
Alejandro Murat Hinojosa. We are already a national and international benchmark. We are the most diverse state in intercultural matters. What defines Mexico and Oaxaca are our original peoples. And diversity is the best-added value to innovate and generate productivity. What defines Oaxaca in a word is its intercultural diversity, which adds to its biodiversity. That is what makes us great, and it is also our greatest strength looking forward.
FR. What are the main challenges for Oaxaca and what is the strategy to overcome them?
AM H. The most important challenge that Oaxaca has is to turn all its intercultural wealth, in natural resources, geography, and biodiversity into its development lever. Today, for the first time in the modern history of Oaxaca and Mexico, we are faced with this great opportunity. On the one hand, we are consolidating our logistical advantage, the Isthmus Interoceanic Multimodal Corridor, which will allow us to be part of the international concert of economic development and which will undoubtedly be a trigger for the development of Oaxaca and Veracruz or even the southeast of the country; if not from Mexico and worldwide.
While the reactivation of the construction of the Barranca Larga – Ventanilla and Mitla – Tehuantepec highway will give the state another development engine the size of what Cancún and Quintana Roo became in the Caribbean. Because we are the only beach area – but now in the Pacific – that resembles it in tourist experiences. However, in addition to having beautiful beaches –Huatulco, Puerto Escondido, Mazunte, San Agustinillo, Puerto Ángel or Zipolite–, Oaxaca offers religious tourism – in Juquila -, pre-Hispanic and colonial, as well as gastronomic in the mezcal zone – starting with Matatlán -. In Oaxaca, we are called, in these two specific areas –generating connectivity through the construction of highways and the promotion of the tourism industry–, to have the two most important engines of development in the modern era of Mexico.
FR. Oaxaca is the state of the country that registered the highest participation of new capital in its Foreign Direct Investment (FDI) in 2019: 96.5% of 56 million dollars, that is, 54.1 million dollars. How to conquer not only capital, but the confidence of investors in Oaxaca?
AM H. The definition of competitiveness is creating an atmosphere conducive to doing business. And that is what my government has done from day one. Everything that Oaxaca is generating today is not fortuitous. It has to do with a plan that began by stating that together we would build the change that today has resulted in creating, building, and growing.
The first plan proposed that there be governance and security in Oaxaca. Today, there is an atmosphere of political stability in the state and, on the other hand, we are one of the safest entities in the country. Once we achieved that, the next step was to start promoting the competitive and comparative advantages that Oaxaca has.
First of all, quick or short-term victories. This meant consolidating the renewable energy sector. The first message we sent was the inauguration of Energía Eólica del Sur in the municipality of Juchitán de Zaragoza in May 2019. It is the largest wind power generator park in Latin America, a project led by Mitsubishi and Banobras, with an investment of 1,200 million dollars and 132 wind turbines with the capacity to generate 396 Mega Watts.
This project, which was on hold for six years, is today considered by the Federal Electricity Commission (CFE) as the main source of energy in the country and benefits 700 families. Now we are starting the second wind energy season, which has the opportunity to consolidate more than 2,000 million dollars in investments from Siemens and Electricidad de France, as we still have 70% development capacity in the wind energy sector. On the other hand, Cementera Cruz Azul, which is another company established in Oaxaca, increased its investment by more than 800 million dollars, generating two new construction lines. But here the most relevant part, beyond the investment, is that we contrast with the past: a new government that sent the message that business can be done in Oaxaca.
In the tourism industry, we began to consolidate, in quick victories, greater connectivity. Before the pandemic, we opened 36 flights in three years of my government. In addition, there are investment projects in the three most important airports in the state: 948 million pesos at the Oaxaca Airport to increase its commercial platform from six to 11 positions, as well as expand the terminal building from 7,100 to 21,000 m2; 600 million pesos at the Huatulco Airport; 327 million pesos at the Puerto Escondido Airport, the fastest growing in the country.
To better measure, the progress made in connectivity, the growth of the international average of an airport is around 8%. Before the pandemic, the Oaxaca Airport had a rate of 67%, something unprecedented, which also allows you to infer that in quick victories we began to create that favorable environment to do business.
We are not only focused on the short term, but we start from understanding where the strengths of the state lie in order to move forward in the medium and long term. For this reason, I also made a strategy of certain anchors that I considered fundamental, starting with the Multimodal Interoceanic Corridor of the Isthmus.
Likewise, consolidate the Barranca Larga – Ventanilla and Mitla – Tehuantepec highways and the Acayucan – La Ventosa highways, which will connect the Pacific with the Atlantic. But not only that, the plan includes other important anchors that start this year, such as the Álvaro Carrillo Cultural Center, in order to have a new tourist development pole in addition to Santo Domingo de Guzmán.
This project was submitted to competition and won by three Mexican architects: Tatiana Bilbao, Alberto Kalach, and Mauricio Rocha. For her part, Kalach is in charge of the new Puerto Escondido Airport, and this year the Huatulco Congress Center project begins, with Enrique Norten at the helm. We are also doing the Gastronomic Center, which is the first intervention in the Historic Center of Oaxaca since Santo Domingo, and it will be a work of the Portuguese architect – who we already adopted as Oaxacan – Joao Boto.
And we have just recovered the Alhóndiga, where we will make a museum of the history of Oaxaca with wax figures. All the emblematic works that I am promoting are in charge of Mexican architects. With these projects we will increase our offer of architectural tourism, so that it joins the pre-Hispanic part –with Monte Albán and Mitla, mainly–, colonial and now a modern stage. In addition, we are consolidating business tourism with the Oaxaca Cultural and Convention Center, which was built during my administration and which is a complete cultural, recreational, sports, business, and public service complex.
It also houses the Historical Archive of the State of Oaxaca, the most important after the General Archive of the Nation.
All of this is part of an atmosphere where we have generated new inertia to generate business. This is how we promote tourism in the state, including the different segments: business, leisure, gastronomic –with the construction of the new Gastronomic Center–, architecture and extreme sports –in the Sierra Norte, for example, we have one of the most important worldwide for mountain biking, mountaineering, and hiking.
These actions taken together have allowed us to begin to generate an inertia that is consolidating in the short term. Although in the medium and long term it will give the state economic strength and the necessary development levers to continue being a pole of attraction at the tourist and industrial level.
FR. In what way will the Government of Oaxaca promote not only the construction of the main infrastructure works but how will it activate and connect them to the economy to add to the growth and development of the state?
AM H. First, I want to acknowledge the great coordination we have had with the Federal Government, starting with Rafael Marín Mollinedo, who is in charge of the Interoceanic Multimodal Corridor. Now, there are two essential elements to consider: on the one hand, the infrastructure part, which is the most important thing to have the correct fundamentals for attracting business.
This means that there will be several stages: the first has to do with the rehabilitation of the train tracks – with an investment of 3,160 million pesos – to reach a speed of 80 kilometers per hour, which is the average for moving containers of this type of trains.
Regarding the container plates, we have the first ready, which was already inaugurated by the President of the Republic in the Port of Salina Cruz. There will be a new breakwater, with a wider area, which I will no longer have to open. And the 10 welfare zones, which are basically 10 territorial zones that will have fiscal, regulatory benefits and that will be focused on primary, secondary, and tertiary sectors, under public, private, or public-private schemes.
All this is accompanied by the energy issue. Why would there be a business attraction in Oaxaca? The first reason is that we will be one of the cheapest energy zones in the world because in the combined cycle we are going to have: renewable energy – we have the most important wind energy zone in the country – we have the only refinery in the world. the Pacific –the one in Salina Cruz– and we are going to have natural gas and liquefied gas –which will be arriving next year–.
On the other hand, the second reason, connectivity. We will connect by land to the Isthmus area through the Mitla – Tehuantepec highway, and also the two oceans –Atlantic and Pacific– through the Acayucan – La Ventosa highway. Both are under construction and together will add more than 2,000 million pesos of investment. The refinery –third reason– is being rehabilitated with an investment of more than 1,000 million pesos. And an additional reason: competitive labor and human capital in intellectual and wage matters.
FR. In June of this year, the gradual reactivation of productive activities began under the new normal. What are the actions that the Government of Oaxaca reinforced and what are the initiatives to reactivate the state’s economy?
AM H. In Oaxaca, we divide the attention to the economic issue into two parts. In the first moment, when we were at a red light, the objective of my government was to maintain employment, that is, to lose as few jobs as possible. For that, we made a financial and fiscal benefits package for 1,200 million pesos.
This first in fiscal benefits of tax forgiveness, especially in the payroll and in the accommodation to support the tourism and industrial sector. Second, direct support through capital injection, either through temporary employment or through BanOaxaca, which is the bank that the state has to provide support through Nafin.
We have given more than 2,000 million pesos in support, but now we cover the entire small industry that directly required support from 5,000 pesos to more than 200,000 pesos. In addition, we made a package for the informal sector and the most marginalized sectors, which consisted of providing food baskets according to the Coneval indexes (National Council for the Evaluation of Social Development Policy).
The second stage has to do with the reactivation of the orange traffic light. To do this, we will use a financial package of 3,500 million pesos focused on carrying out more than 100 works in the state. These construction projects will allow us to quickly impact more than 40 sectors of the economy and generate direct and indirect employment in the short term.
These works include the new Cultural Center, the Congress Center in Huatulco, and the Gastronomic Center. But at the same time, we are supporting basic public service issues such as water, pro-environment projects, and investment, in principle of 300 million pesos, to make the first rehabilitation of the Central de Abasto.
On the other hand, in addition to the reactivation of national and international flights, the most important action in the tourism sector is that Oaxaca was certified as Safe Travels, which is the Global Safety Seal granted by the World Travel and Tourism Council (WTTC). This verifies that we have the standard and protocol in both the hotel and gastronomic sectors to generate health safety conditions for national and international tourists. And, of course, the promotion that starts by generating the elements of confidence in health.
For example, Travel + Leisure recognized Oaxaca as the Best City in the World to Visit in 2020, and the Netflix documentary, Street Food Latin America, has positioned Oaxacan gastronomy in an important way. Another fact to highlight is that the two beach destinations with the lowest number of Covid-19 infections in the country are Huatulco and Puerto Escondido.
FR. From the Government of Oaxaca, what has been the focus and the main task to position Oaxaca in the world?
AM H. We want more of Oaxaca in the world and more of the world in Oaxaca. We must understand that today we are global players and that we must take advantage of the elements that we have at hand, as Thomas Friedman says: “the world has become flat”, above all, through social networks.
That the Oaxaca brand is synonymous with historical greatness, culture and biodiversity is important, because that is part of what defines Oaxaqueños and we celebrate it. However, we want this definition to be expanded to be one of the new business attraction platforms through two development poles: on the one hand, the tourism sector, but more importantly, the industrial sector through this corridor of value-added, the Interoceanic, while understanding that all this is from the bottom up and recognizing that 50% of the economy of Oaxaca is agricultural. We have worked to move from a temporary economy and self-consumption to an agribusiness.
This year Oaxaca is going to inaugurate its first agro park in the Port of Salina Cruz to make this whole model inclusive; if it is not inclusive, there are no benefits for all, and we will not be successful. In Oaxaca, we build an environment conducive to doing business because it is in the facts, every day.
This government seeks to create strategic alliances with the private sector through actions in each of the sectors of interest so that together we generate value: they for their business and we for the people of Oaxaca. Thus, I can say that it is created, built, and grown because Oaxaca has it all.