HomeNewsBriefCrime Costing Mexico Companies $5.8 Bn a Year
BRIEF

Crime Costing Mexico Companies $5.8 Bn a Year

EXTORTION / 3 JUN 2014 BY KYRA GURNEY EN

The head of Mexico’s employers’ association reported that crime and insecurity cost the country’s businesses $5.8 billion annually, underscoring the enormous financial impact of criminal activity in the country. 

Juan Pablo Castañon, the leader of employers’ association Coparmex, said 37 percent of Mexican companies had been victims of crimes including extortion, corruption, robbery of merchandise or kidnapping, reported Latin American Herald Tribune.  

According to Castañon, business in the states of Tamaulipas, Michoacan and Guerrero have been the most impacted by organized criminal activity. 

Castañon suggested the government coordinate federal and state forces under one command structure to combat criminal activity, an approach he said had worked in the cities of Tijuana and Juarez on the US-Mexico border.   

InSight Crime Analysis

Although criminal organizations in Mexico use a variety of methods to take money from companies, extortion is particularly common and on the rise. According to a report issued by Mexico’s National Citizen Observatory (pdf), overall extortion in the country increased by 818 percent between 1997 and 2013, with 8,042 cases reported last year. 

As InSight Crime has reported, the growing popularity of extortion among criminal groups is likely in part a result of the fragmentation of cartels and proliferation of smaller criminal groups, which have had to diversify revenue streams to make up for lost drug profits. 

SEE ALSO: Mexico News and Profiles

Insecurity in Mexico has also affected the tourism industry, which was the country’s third-largest source of foreign income in 2013. The number of cruise ship passengers stopping in Mexico dropped by three percent in 2012 and the number of tourists visiting the border region fell by 5.3 percent in the same year. 

Despite these threats, Mexican businesses don’t spend a larger percentage of their operating budget on security than their regional counterparts, according to a survey conducted by the American Chamber of Commerce of Mexico (pdf). Mexican businesses spent an average of four percent of their operating budget on security in 2012, which is consistent with what other companies in Latin America spend and less than the seven percent spent on average by US businesses. 

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