Recently I read about the new Immigration law that Mexico President Felipe Calderon signed just last month May 2011, regarding foreigners living in Mexico. This new law is important for those Americans and Canadians that already live in Mexico and equally as important to those who are thinking about moving or spending a significant amount of time in Mexico.
The law reduces the time a foreigner has to have a temporary permit to reside in Mexico thus providing a shorter path to residency on a full time basis. One of the main advantages of this is only having to endure the annual renewal of the temporary permit which, although only once a year, it is time consuming and costly. As those of us that have been in the temporary permit process for up to 7 years to gain residency know, reducing this time period makes it a lot more attractive to want to be here in Mexico.
OWN REAL ESTATE WITH NO BANK TRUST!
So, what are the other advantages of becoming a resident much quicker? A resident has the same ownership rights as a Mexican citizen as to holding title to property in the restricted zone (as you may know, foreigners can only acquire property under a land trust within this zone that encompasses area of roughly 100 miles from the US border and 60 mile inland from any coast). Also, like Mexican citizens, foreign residents are exempt to capital gains on residential property sales that met the conditions of Hacienda (the Mexican IRS or Revenue Canada). Since one of the main considerations in moving to Mexico for a foreigner to own property there, this is a big plus to early residency.
IF YOU MARRY A MEXICAN NATIONAL YOU BECOME A RESIDENT IN TWO YEARS
For me, in really examining the new law, another underlying theme in the changes to quicker and easier residency for foreigners comes to light. As mentioned about the time period for temporary permits has been significantly reduced but another of the changes warrants a look also. The new law states that a foreigner that marries a Mexican citizen and lives in Mexico together for a two year period can acquire residency.
I find this interesting, especially since I married my Mexican wife 12 years ago at which time it made no difference and I had to go through the entire temporary permit process. This change is significant in that it promotes intercultural relationships as a means to enhance the probability of a couple to stay together and in Mexico.
It was not that long ago those Mexican citizens, especially women, were marrying US citizens to gain citizenship in the US in a pre-arranged agreement that was using financially based without any intention of longevity of the relationship. It is especially amusing to me that these trends have reversed themselves in this day and age and even more why.
Let´s first look at why the Mexican wanted to go to the US and become citizens and why there were willing to take this path to achieve it. Most were looking for the opportunity to have a better lifestyle using the money they made get it. Now why is it, the foreigners are coming to Mexico? Most are looking for a better lifestyle using the money that they have to get it. The reasons are not so different and the results are even more similar.
The Mexican government knows that while the US is making it harder for illegal persons to enter and stay in the US, extending a welcoming hand to the foreigners that are escaping the over burdened and lack luster economic situation in the US is a plus for the Mexican economy. In the 90´s the second largest contributor to the Gross National Profit (GNP) in Mexico was the money being sent to Mexico from the Mexican citizens in the US. As the US economy has continued to tumble down, a large number of these citizens are returning to Mexico. The lost revenue from those who are returning can be replaced with revenue from the millions of foreigners that will relocate south of the border over the next ten years.
HIGH FINANCE FACTS
In reviewing the economics of the 1.5 million or so foreigners that currently reside or spend most of their time in Mexico, we see some amazing financial statistics. On average, the foreigners bring approximately $150,000 – $250,000 cash to buy property and spend around $2500 per month on living expenses. As the expression goes, you do the math. This equals about $225,000,000,000 to $375,000,000,000 in cash revenue and $3,750,000,000 a month in recurring revenue. Staggering isn´t it?
Even better look at the future of estimates of 5-6 million foreigners jumping the border south and the numbers blow your mind. Let´s see if my calculator will go that high. Taking the low end of the cash income scale we are looking at $750,000,000,000 at $150,000 coming with each of the 5 million welcome residents to be for Mexico. On a monthly basis, the income is a whopping $12,500,000,000 A MONTH!
CARL SAGAN MATH CLASS “BILLIONS AND BILLIONS”
A bit of history on the GNP picture for the US and Mexico is all telling as to why the trend is favoring the south. According to NationMaster.com the GNP for the US in 2000 was $10,533,000,000,000 and grew to $11,628,000,000,000 in 2010. Correspondingly, this site lists the GNP for Mexico at $578,000,000,000 in 2000 and at $1,014,514,000,000 in 2010. This is a 10.4% increase in the US GNP and a 75.4% increase in the Mexico GNP over 10 years. I actually checked these numbers 5 times as they seem unreasonable and wrong so feel free to surf the site and see for yourself.
Now let´s put the foreign investment into Mexico in perspective a bit. Assuming that 25% of the cash revenue came in during the 10 year period from 2000 to 2010 the contribution to the GNP increase is $75,000,000,000 of the $436,000,000,000 or 17.2%. At an annual GNP of $1,014,524,000,000 the $150,000,000,000 in annual income ($12,500,000,000 a month times 12 months) amounts to 14.8% contribution each year.
The estimates of 5 million new foreigners bringing $750,000,000,000 in cash to Mexico over the next 10 years will boost the GNP by 73.9% alone with the $1,500,000,000,000 in annual recurring revenue causing the GNP to grow 147.9%. Keep in mind this only an estimate but based on the impact that the national debt crisis is having on reducing spending and its potential affect on programs like Social Security and Medicare, my guess is that many of the 88 million or so ¨Baby Boomers¨ may not wait to see how they are affected.
Okay enough with the big numbers and one can argue that my estimates are high for the 5 million coming with an average of $150,000 each and spending $2500 per month (you are probably right here as a percentage of them only stay part of the year). So to be conservative, cut all this by 50% and you get an approximate 37% bump in GNP over 10 years from the cash being brought in and a 74% growth due to the annual recurring income from living expenses. Whatever the numbers are that you would believe it is easy to see the rationale behind making it easier and quicker to capture the foreigners, entice them to invest more (due to the absence of capital gains on resale’s) and keep them here longer by marrying them into the local culture.
IF I ONLY WOULD HAVE DONE IT BACK THEN! SOUND FAMILIAR
The intent of all this is to say that the Mexican government, people and economy are focused on growth, expansion and positive motion targeting a pent up market that is hungry for a better lifestyle in a more relaxed atmosphere at a much more affordable cost. Those of you that are fence sitting on whether you should come down to Paradise in Mexico do and need even more of a push than all this information should be aware that the US government has been trying to pass a bill for many years that will heavily tax your assets and wealth just prior to leaving the Good Ole US to try an block this outflow of money which has been coined as ¨Capital Flight¨. Even though this bill has been put on hold there is a move afoot to revive it and get it signed into law quietly so you will only know about it when it is too late.
So continue to sit on that fence and stare southward while we are here reaping the real benefits of a better lifestyle or jump down and take action. Either way, the shift in the trend on which way to migrate for many of you will go on with or without you. It seems that US government is doing all they can do to aggravate the situation while the Mexico is being progressive in providing a solution. In conclusion; the Mexican government, the Mexican people and the Mexican economy welcome you with open arms and a desire to help you but they can only do so much and the rest is up to you.
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About the Author Frank Jackson; is an American, married to a Mexican citizen, resident of Mexico for over 13 years, and he is a prominent business owner in Mexico. Frank is a contributing writer for Escapeartist Mexico and a member of the Escapeartist Mexico Business Development Team.