When he announced that he would be disbanding Mexico’s foreign investment agency, ProMéxico, earlier this month, Mexican president Andrés Manuel López Obrador claimed the entity only served to dole out “scholarships so those close to high civil servants could go abroad”  and alleged that the budget allotted for promoting tourism was being used to pay for “favours” in the media.

Formed in 2007 under the government of Felipe Calderón from the centre-right Partido Acción Nacional, ProMéxico has offices in 31 countries and is currently headed by Paulo Carreño King, a former executive of Grupo Financiero Banamex (Mexico’s second largest bank) and a former undersecretary for North America at Mexico’s ministry of foreign affairs.

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The decision has been met with dismay by some in Mexico’s business community. Reactions range from a confectionary company from the central state of Zacatecas, Dulces Mara, saying ProMéxico’s closure would force it to cancel its participation in international trade fairs, to the executive director of the US-border based Desarrollo Económico e Industrial de Tijuana, and investment body mourning the loss of “an ally to facilitate strategies we had already developed”.

In office since December 2018, Mr López Obrador – a former mayor of Mexico City who is generally referred to by the acronym AMLO – came to power at the head of an amorphous political coalition, the Movimiento Regeneración Nacional, and has long had a reputation for a shoot-from-the-hip style that ensuing months have done little to change. Days after he announced his desire to do away with ProMéxico, Mr López Obrador announced he would be nullifying by decree several educational reforms put forth by his predecessor, Enrique Peña Nieto. In a press conference the same month, the president told assembled reporters that “if you cross the line, you know what happens” – widely viewed as incautious comments in a nation where journalists are murdered on a near-monthly basis.

Despite promoting himself as an anti-corruption crusader (a term that has seem to become a catch-all for many of the administration’s actions), Mr López Obrador’s connections to some veteran Mexican political operators of dubious reputation, and the lack of movement following high-profile allegations of corruption such as those against former Petróleos Mexicanos (Pemex) head Emilio Lozoya, have led some to question his commitment.

Though few believe ProMéxico’s demise will mean a death blow for foreign investment in Mexico, many are questioning the efficacy of the move. “I think the largest impact will be how efficiently foreign investment in Mexico is allocated,” said Jonathan Terluk, an economic policy and trade analyst at Mexico City-based Emerging Markets Political Risk Analysis. “ProMéxico had a very good sense of how to match foreign investors with projects and companies in Mexico. Without the institution being present, foreign investment won’t dry up – but it might not be as efficient.”