1. Infrastructure Investment

2. 1.Market Size 2. Challenges 3. Proposals 4. Innovation Index

3. Source: National Institute of Statistics, Geography and Information (INEGI). Public investment Private investment 112.9 Billion dollars (participation percentage) 131.3 143.2 160.0 126.5 142.1 69.5% 71.1% 69.5% 65.7% 59.8% 59.9% 30.5% 28.9%30.5% 34.3%40.2% 40.1% Construction Investment 2000-2010 (Public-Private) 3

4. Billion dollars Infrastructure impulse: investment doubled in six years Source: Mexican Internal Revenue Service (SHCP). 4 Federal Budgetary Physical Investments 2005-2011

5. Billion dollars (Participation by Sectors) 5 Federal Budgetary Physical Investment Conformation 2005-2010 Source: Mexican Internal Revenue Service (SHCP). 26.0 29.2 34.6 38.1 43.4 51.1 53.4

6. Progress in the Implementation of Public Resources for May 2011 Percentage advance (%) Sector Investment budget 2011 Billions of dollars TOTAL53.4 Energy26.7 SENER0.0 PEMEX23.7 CFE2.9 Communications and Transportation6.1 Education2.8 Health1.3 Water and Environment2.8 Tourism0.1 Others13.7 The average advance in May was of 17.7% Bids granted / counter amended budget Public Resources Allocated to Projects of Infrastructure Investment for 2011 Federal Budgetary Physical Investment Conformation 6 Percentage advance (%) Source: Mexican Internal Revenue Service (SHCP).

7. Number 1 as the best position. Number 139 as the worst position. Despite the effort to impulse the Infrastructure Administration, Mexico is loosing competitiveness Despite the effort to impulse the Infrastructure Administration, Mexico is loosing competitiveness Competitiveness in Mexico related to Infrastructure 7 Source: World Economic Forum 2010-2011. Target:

8. 8 Challenges in Infrastructure Projects (I) Bank of Projects Project prioritization and scheduling Project prioritization and scheduling A more efficient allocation of the resources A more efficient allocation of the resources Complete executive projects Complete executive projects Construction companies with an horizon of delimited projects I. Long term strategic planning

9. 9 Challenges in Infrastructure Projects (II) II. More efficient operation Coordination amongst governmental offices and responsible entities. Coordination amongst governmental offices and responsible entities. Reduce procedures and requirements. Reduce procedures and requirements. Investment developer regulations (PPPs). Investment developer regulations (PPPs).

10. 10 Challenges in Infrastructure Projects (III) Challenges in Infrastructure Projects (III) III. Easier access to competitive financing Worldwide competitive interest rates Worldwide competitive interest rates Reduction of requirements Reduction of requirements Reasonable guarantees Reasonable guarantees Emphasize the project, not only the constructor Emphasize the project, not only the constructor

11. 11 Innovation: Proporsals for an infrastructure impulse 1.Modernize the legal and regulatory frameworks 2.Developing long term market debt 3.Specializing institutions towards construction 4.Public/Private Partnerships (PPP’s)

12. The Americas Position …

13. Insfraestructure Situation

14. 14 Competitiveness in infrastructure 1 = Best position 139= Worst position 1 = Best position 139= Worst position Source: Economics and Financing Management with World Economic Forum information. * 12 6 7 8 15 13 8 6 7 9 United States: competitiveness decreased from 12 to 15 Canada: competitiveness increased from 13 to 9 1= Best position 139= Worst position 1= Best position 139= Worst position

15. Baluarte Bridge Durango-Mazatlán Highway The longest braced bridge in America (in construction). The longest braced bridge in America (in construction). Located in the borderline of Durango and Sinaloa Located in the borderline of Durango and Sinaloa Length 3,688 ft, height over the hill 1,293 ft. Length 3,688 ft, height over the hill 1,293 ft. 3. Technologic Innovation in Infrastructure 15

16. Baluarte Bridge 4. Technologic Innovation in Infrastructure 16 Total cost: 210 million dollars.

17. Inversión Física Presupuestaria Federal 2010-2011 (Billion dollars) Source: Mexican Internal Revenue Service (SHCP). Concept 2010 Approved Budget2011 Approved Budget Participation percentage OTHERS 15,402 13,374 100.0 Federal Contributions to States and Municipalities 8,227 9,232 69.0 Economic and Wage Provisions 2,790 2,900 21.7 Economy 952 943 7.1 Security 652 892 6.7 National Council of Science and Technology 404 255 1.9 Navy 232 134 1.0 National Security 250 129 1.0 Justice Department 206 119 0.9 Tourism 223 113 0.8 Congress 202 84 0.6 Social Security 192 72 0.5 Internal Revenue Service 180 71 0.5 Agriculture, Stockbreeding, Rural Development, Fishing and Food Supplies 236 60 0.5 Social Development 284 27 0.2 Federal Electoral Institute 132 26 0.2 Tax and Administrative Court 153 18 0.1 Foreign Affairs 143 9 0.1 National Institute of Statistics, Geography and Information 136 6 0.0 Executive 134 6 0.0 Internal Affairs 144 4 0.0 National Commission of Human Rights 133 4 0.0 Federal Attorney 148 3 0.0 Public Services 132 3 0.0 Agrarian Court 132 2 0.0 Executive’s Law Counsel 132 0 0.0 Agrarian Reform 134 - - Social Security Contributions 157 - - Social Security Contributions of Civil Servants 131 - - Education and Health-1,572-1,739-13.0 17