Life goes beyond business Why Queretaro? Mexico. Land4,513 miles 2 State Population1,690,042 inhab. Metropolitan Population 979,436 inhab. Geographical.

Life goes beyond business

Why Queretaro?

Mexico

Land 4,513 miles2

State Population 1,690,042 inhab.

Metropolitan Population

979,436 inhab.

Geographical Division 18 counties

Weather 50 – 80 ºF

Altitude 1,820 masl

General Overview

“Queretaro state has a

privileged geographical location

in the Central Mexico region,

providing a wide influence

range”.

More than 45 million of

inhabitants in a 135 miles ratio.

Economic Indicators

GDP MUSD $14,406

Per Capita Income US $ 9,719

Growth Manufacturing Industry

6.4%

Per Capita Growth

14% 19%

33% 34%

Manufacturing Industry - 34%

Trade, Restaurants and Hotels- 19%

Financial Services - 14%

Others - 33%

GDP Distribution

Manufacturing Industry Distribution

16.4%

32.9%

16.1%

34.6%

Metal Mechanic andAutoparts - 34.6%

Food and Beverage -32.9%

Chemical, Rubber andPlastic - 16.4%

Others - 16.1%

8,455

8,143

7,210

5,868

5,334

5,397

5,6615,177

4,576

4,051

3,8743,271

2,869

4,3454,230

3,864

4,702

5,064

5,587

6,2016,699

6,326

6,143

6,754

8,618

9,270

9,719

3,355

4,7124,464

0

1,000

2,000

3,000

4,000

5,000

6,000

7,000

8,000

9,000

10,000

1993

1994

1995

1996

1997

1998

1999

20002001

2002

2003

2004

2005

2006

2007

National

Queretaro

5.75.4

4.0

6.8

5.2

4.2

2.8

4.8

3.32.8

0

2

4

6

8

10

2004 2005 2006 2007 2008

Querétaro Nacional

GDP growth (%)

National

Demographic Profile

State Population1,690,042

inhab.

Economic Active Population

682,031

(40.35%)

State Population Growth 1.8%

Metropolitan Area Population Growth

2.3%

Average State Age 26.5 years

* National Unemployment Rate

3.9%

* State Unemployment Rate

4.1%

* January- March 2008

49%51%

Men Women

Unions

• Considered as Pro-Business

• More than 90% of the workers are unionized

• The Queretaro State Government guarantees the feasibility to choose the Union• Feasibility to adapt to the needs of the companies

• Main Unions: CTM, FTEQ, CROC

Labor Profile

Wages

Minimum Wage (C Zone) $49.50

IMSS Average Wage (Social Security Institute)

$249.15

*Mexican Pesos

Daily salaries, without benefits

Jobs Creation Growth

0

50,000

100,000

150,000

200,000

250,000

300,000

350,000

400,000

2003 2004 2005 2006 2007

1.7% 5.7%6.1% 10.5%

8.1%

4,129 14,15115,941

29,29724,849

Industrial Sector Wages

Worker without Experience

$118.35

Worker with one year of Experience

$145.58

Worker with 2 or more years of Experience

$175.02

Specialized Technicians $250.99

Wages

Government made the investment in infrastructure as well as an adequate urban development a priority for the development of the State

• Acueducto II• New road infrastructure• City of Arts project

Queretaro is considered the 3rd safest state of all Mexico

Weather 50º- 80°F – 10° -27°C, no need to cool or heat industrial facilities.

Excellent balance between an industrial city and a city considered Cultural Heritage of Humanity

As a result of its intensive manufacturing industry, Queretaro has an Extensive Foreign Community.

Queretaro has International Schools including all grades.

Queretaro has a great variety of recreational facilities and residential areas, including: 12 Country Clubs and 7 Golf Courses

Queretaro, Quality of Life

Superior Education, Research and Development

Number of students

School Year 2007-2008

Engineering 9,446 registered students

Superior Technicians

4,455 registered students

Educational Institutions

Universities 37

Graduate Programs 18

Technical Universities 6

R & D Centers 39

Training Centers 46 1 34

6

25State 1

CONACYT 3

Private 4

Federal 6

Superior Education 25

Research Areas

• Industrial Processes

• Advanced Materials

• Information Technologies

• Electric and Automatization

• Machinery and Production

Research and Development Centers

International Trade

Free Trade Agreements Network

North America South America Asia European Union

Canada Bolivia Japan Austria Belgium Bulgaria

USA Chile Middle East Cyprus Czech Republic Denmark

Central America Colombia Israel Estonia Finland France

Costa Rica Uruguay FTEA Germany Greece Hungary

El Salvador * ACE’s Iceland Ireland Italy Latvia

Guatemala Argentina Liechtenstein Lithuania Luxembourg Malta

Honduras Brazil Norway Netherlands Poland Portugal

Nicaragua Peru Switzerland Romania Slovakian Republic Slovenia

- Cuba - Spain Sweden United Kingdom

* ACE: Economic Complementation Agreements

Concept Main Products

ExportsAuto parts, turbines, polymers, food preparations, wire, conductors.

ImportsMetal, aluminum, hydrocarbons, turbines, cotton, circuits.

Free Trade Agreements Network

• 44 Countries in 3 Continents

• More than 900 million of potential consumers

Total Exports 2007 MUSD $4,607

Total Imports 2007 MUSD $4,486

Foreign Direct Investment

Country Companies Participation

USA 273 47.5%

Spain 58 10.1%

Germany 45 7.8%

Korea 26 4.5%

Canada 24 4.2%

Italy 21 3.7%

France 18 3.1%

Netherlands 16 2.8%

Japan 13 2.3%

Others 81 14.00%

Total 575 100.00%

Exporting Companies 546

International Airport

• Cargo and Passenger flights• National and International Flights

Interior Custom house

• Multimodal Terminal• Fiscal Enclosure

Highways

•Nafta Highway, 57 Highway•3,246 kms of Highways• Availability of logistic and transportation companies

Railroads

• 512.2 kms of Rail lines• Availability of the 2 main railroad companies (Kansas City Southern Mexico, Ferromex)

Industrial Parks

•18 Industrial Parks & 1 Aerospace Industrial Park

Infrastructure

Capital City

Destiny KmTime (hrs)

Mexico City 220 2:30

Borders

Destiny KmTime (hrs)

Nuevo Laredo 914 8:56

Cd. Juarez 1,514 18:00

Mexicali 2,443 24:00

Ports

Destiny KmTime (hrs)

Altamira 631 7:09

Lazaro Cardenas

536 6:42

Manzanillo 650 7:36

Veracruz 631 7:05

Infrastructure – Industrial Parks

19 Industrial Parks & Zones in the State

Services:

• Electric Energy

• Water

• Natural Gas

• Wastewater Treatment Plant

• Private Security

• Firefighting Infrastructure

• Rail Spur

• Availability of Qualified

• Labor Force

Infrastructure – Industrial Parks

Autoparts and Home Appliances Clusters

Potential Market of 45 million consumers in a 217 miles ratio

Examples from the Main Sectors

Food and Beverages Home Appliances

Automotive Aerospace

Automotive Industrial Sector

4 Assembly Plants

57 TR 1 Suppliers

100 TR2 Suppliers

More than 30,000 workers

Aerospace Industrial Sector

10 Manufacturing or Supplier Companies

3 MRO Companies

2 R&D Centers

1 Design and Engineering Center

More than 3,600 workers

Main Aerospace Cluster in Mexico

Aerospace Industrial Park

An Industrial Park dedicated to the Aerospace Sector.

Benefits: Preferential lease rates, no hook up fees for electric energy,

inside the International Airport of Queretaro.

National Aeronautic University in Queretaro

UNAQ

Will provide specialized education for the Aerospace Industry, with

technical, engineering and graduate programs, at the International Airport of

Queretaro.

Courses:•Electric Assembly•Structural Assembly•Machining•Sheet Metal•Superior Technician in Avionics•Aeronautic Manufacture Engineer

Industrial Sector Home Appliances

4 Assembly Companies

More than 20 Direct Suppliers

More than 7,000 workers

1 R & D Centers

Industrial Sector Software - IT

With the Software Cluster and

Queretaro’s Technological Information

Specialized Services consolidation in

InteQsoft, the State becomes a new

prototype of regional economical

success.

More than 60 Companies

3,800 Workers in Software Development, 6,200 in Call Centers

Telecommunications Software

Automotive Industry Software

ERP Software

Data Center Level 4

Call Centers

Information Technologies Cluster

Objective:

To become the leader State in Mexico in

the production of Embedded Software and

Contact Centers.

Aerospace Industry Software

Strategic Programs

Productive Chain Link

• Link of Anchor Companies with potential

suppliers;

• Link of Suppliers with Buyers.

Commercialization

• Suppliers Development Program

• Participation in National and

International Exhibitions

• Business Support Programs Proexport

and Disexport.

Quality and Continuous Improvement

State Quality Award, considered as a

support to improve the competitiveness

through quality systems.

Queretaro Industrial Expo

Yearly exhibition organized by the

state Government, focused on the

creation of opportunities for local

companies with the most important

companies in Mexico, while creating a

permanent platform to develop a

strong goods and services market.

Certified Manufacturing Industry

Sector Companies

Metal Mechanics and Autoparts

115

Chemical, Rubber and Plastic 53

Services to the Industry 33

Electric and Electronic 17

Paper, Print and Editing Houses

15

Food and Beverage 11

Non Metallic Minerals 3

Textil 1

Total 248

Micro, Small and Mid Sized Companies with Quality Certifications

More than 400

Companies with

Quality

Certifications:

• ISO 9000

• ISO 14000

• ISO/TS 16949

• NADCAP

• AS 9100

Rankings and Awards

National Competitiveness

Place Source Concept

1º Inversionista Best City to Live: Metropolitan Zone of Queretaro, 2007

2º KPMG and AMECE Economic Growth Expectations for the next 3 years, 2007

2º Aregional State GDP Growth: 5.7%, 2007

3º Reforma Newspaper Quality of Life Survey 2007: Metropolitan Zone of Queretaro

3º World Bank Doing Business in Mexico 2007: Where is easier to open a company?

International Competitiveness

Grade Source Concept

mxAA

Solid economic base that keeps attracting Foreign Direct Investment

GDP per capita above national average

Solid financial performance

Trend to increase the investment amount

AA

Solid credit quality compared to other entities or issuers in the country

Henceforth, the positive credit prospectives (PCP) indicate that the

grading could increase in a one to two year period.

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Satisfactory fiscal performance

Decreasing current debt of the State

Increasing economic strength as a productive, commercial and services center.

Counseling for Government Procedures and Regulations

Approval for the establishment of a new company (Application Form).

Overseeing of the incentives and permits approval.

Outlining Work Schedules

Work schedules and on-site land, industrial facilities and park visits with the

necessary arrangements for executives.

Networking Program

With services providers such as attorneys, contractors, head hunters,

accountants, etc. Support services regarding industrial costs, human resources,

migratory affairs, investment requisites, legal and taxing aspects, as well as

assistance while getting settled in Queretaro State.

State’s support

Public Property and Commerce Registration

State tax equivalent to 0.6% over the value of the property plus 25% brand new

companies that start construction or acquire operating facilities could get an exception

or refund up to 100%. Companies already established in the State that purchase real

estate as part of their patrimony, will only cause 50% of the corresponding tax.

Real State Transfer Tax

Municipal tax equivalent to the 2% over the value of the property plus 25%. New

companies that begin construction or acquire facilities, as well as the established

companies that acquire facilities and thus generate or maintain jobs, may obtain

reductions of up to 80%. Each municipality will determine the application of this

reduction.

State’s support

Accelerated Depreciation of Fixed Assets

Examples:

•Desk personal computer, equipment and laptops, servers, printers, optical scanners,

graphics units, bar-code readers, digitizers, external storage units and concentrators

of computing networks:

Normal Depreciation: 30% / Accelerated Depreciation: 88%

•Manufacture of motor vehicles and their parts, manufacture of metal products:

Normal Depreciation: 8% / Accelerated Depreciation: 69%

•Equipment for research of new products or development of technology:

Normal Depreciation: 35% / Accelerated Depreciation: 89%

State’s support

Training Programs

BECATE

Job training program for the unemployed people that grants 1 up to 3 minimum wages

during a period of 1 up to 3 months. The requesting company is committed to hire a set

percentage (80%) of the trained workers.

State’s support

Secretariat of Sustainable Development

Blvd. Bernardo Quintana No. 204 Col. Carretas, Queretaro, Qro. 76050

Tel. +52 (442) 211 68 00

www.queretaro.gob.mx/sedesu