World Economic Forum Convenes Meet
In Sao Paulo on April 5&6, 2006

Towards Making LatAm
Globally competitive

The World Economic Forum on Latin America will bring together a select group of 250 leaders from business, government and civil society in Sao Paulo, Brazil, on April 5 and 6, 2006, to identify the key regional priorities and to generate the insights necessary to develop pertinent strategic responses.
The last two years marked a vigorous economic recovery for Latin America following the long period of stagnation that began in 1998. However, a number of vulnerabilities remain despite the recent strong growth performance.
Especially worrisome is a potential deterioration in the international scenario over the short term causing a variety of difficulties for the region. Thus, the business community and the policy-makers have to take the necessary steps to make sure that the current positive trend continues.
Under the general theme of Building a Stronger Latin America in the Global Economy, the programme will focus on four core themes: Managing the Impact of Global and Regional Risks, Improving Competitiveness, Continuing the Integration Agenda and Re-evaluating the Investment Framework. The exclusive roundtable will be structured mainly around workshops and group discussions to reinforce interaction, ensuring the emergence of concrete proposals.
The World Economic Forum on Latin America will provide a unique platform to assess the current economic outlook and influence the policy and regulatory environment, which will allow the region to become more competitive on a global scale.
Co-Chairs: Jorge Gerdau Johannpeter, President & CEO, Gerdau, Brazil , Luis A. Moreno, President, Inter-American Development Bank, Washington DC

Wanted: More economic reforms

In an interview ahead of the World Economic Forum on Latin America, Ricardo Salinas Pliego, President of Grupo Salinas, has urged policymakers to recognize their own personal interest in initiating measures that aid the whole of society. Equally important, said, Pliego, is the role that Latin American companies themselves must play in the drive to breakdown domestic monopolies and compete globally to ensure domestic wealth creation. Pliego talked about the changing business climate in Mexico and the wider Latin American region. “There is a need for Latin American policymakers to reform their economies,” Pliego said.

On domestic monopolies

Companies have to look for opportunities to break down domestic monopolies, and create market players that operate efficiently and sell at competitive prices, while creating a satisfied customer base. Successful players in competitive industries will be able to attract domestic and foreign investment, hire, train and engage their own people and keep apace technologically. Once this is fulfilled, companies must think in terms of customer bases that transcend all boundaries, because every product sold overseas can expand the company's scale, which in turn will enhance wealth domestically.

We contribute to this process in several Latin American countries, by effectively competing in the markets in which we operate, and also through microfinancing programs from our financial division. We help make it possible for small entrepreneurs to flourish by obtaining the seed capital they need to purchase and utilize technologies that will ultimately help them produce more for less, creating employment and giving consumers a bargain in the process.
On a broader basis, Latin American companies have the responsibility to set authorities in motion to reduce government regulation and bureaucracy and to strongly encourage deregulation, as well as to develop structural reforms that promote investment and enhance labor productivity.
Structural change must allow for competition wherever it is possible, expanding efficiencies to all economic sectors; build tax systems that promote investment and allow for modern public infrastructure; develop more flexible labor laws, and improve educational standards. With these conditions, more entrepreneurs will be willing to take risks, create companies that compete in Latin America and globally, and bring working opportunities and wealth to our countries.

On promoting competitiveness in Mexico
The set of reforms that will work for Latin America will also naturally work for Mexico and for any other country. But the relevant subject is how we are going to get our policymakers to even begin to take these steps.
Since the mid 1990's, our young democracy has had a pendulum effect on congressional decision-making, swinging from automatic approval of presidential initiatives to prolonged debate and lack of agreement, which has impeded Mexico to proceed with much needed changes.
The solution begins, I believe, by helping policymakers recognize that it is in their own personal interest to agree on measures that boost economic activity, for the betterment of Mexican society, as the improved economy will translate into more opportunities for all Mexicans, including their own families.
There is are a number of measures however such as leaner government structures, a simple tax code, simplification of business dealings with the government and deregulation that don't need congressional approval, and that have to be immediately enhanced to reduce costs and management distraction within corporations.

On large family-owned Latin American firms known as grupos
With time, family members will be selling on the stock markets and more “public” money will be in the “grupos,” but it is unrealistic to expect the grupos to disappear altogether. They are a well-established and fundamental component of Latin American business and culture.
I am particularly proud that Grupo Salinas has an extraordinarily capable team of professionals running the business and participating on its Board of Directors. Like us, other grupos are now bringing in professional managers and, at both a strategic and operational level, they now steer the ship in many instances.

On maximizing technological opportunities in Mexican society
First, we need to identify technology systems that are cost-efficient for our environments, including connectivity to the Internet.
Second, we need to nurse a domestic software industry in order to ensure the kind of applications that are directly responsive to our domestic needs.
Third, we need to encourage more risk and venture capital to push development along, and promote tax incentives for software and connectivity.
Fourth, we need to set up real working relationships between our educational system and our businesses.
Finally, we need to emphasize technology as a top-priority deliverable for microfinance. Not just loans for business start-ups or basic automation to run those businesses, but lending institutions need to provide a broader array of technologies and know how for both business and personal use.