Mexican Makeover

Newland Films

An ambitious new film incentive and a host of problem-free foreign shoots are driving Mexico's once-troubled locations sector to record levels.

Former businessman Pablo Jose Barroso, now a producer, is literally making history with the Mexican period piece Cristiada.

This self-taught film executive, who made his money in the plastic-injection business, has found himself producing the most expensive film ever in Mexican cinema -- Cristiada, a studio-style English-language picture that chronicles Mexico's brutal Cristero War of the 1920s. The Hollywood and Latin America cast features Andy Garcia, Eva Longoria, Peter O'Toole, Ruben Blades and Catalina Sandino Moreno.

The film will not only go down in history as one of the costliest pictures ever produced in Mexico, but also as the first homegrown project to tap into a newly created audiovisual fund for large-scale productions. Spearheaded by state-run trade and investment agency ProMexico and film-financing body Imcine, the so-called ProAv program enables filmmakers to receive tax rebates of 7.5 percent on audiovisual projects that exceed 70 million pesos (about $6 million).

The incentive comes at a time when the Mexican film sector is enjoying one of its most productive eras in decades, churning out roughly 70 features a year, thanks in part to strong government support like ProAv.

Cristiada is one of four films to qualify for the new rebates since July, when the ProAv program took effect. The other three projects, all foreign productions, are the Mel Gibson-produced prison drama How I Spent My Summer Vacation, EuropaCorp's revenge drama Colombiana and Chez Wam's adventure movie Houba! Le Marsupilami et l'orchidee de Chicxulub.

Local insiders see the $20 million annual fund as a game-changer. Many believe that though the 7.5 percent rebate is half the amount that New Zealand is offering, when factoring in favorable exchange rates, low production costs and overall cost-effectiveness, Mexico can give the Kiwis a run for their money.

There are still kinks to work out. ProAv, coupled with a 10 percent VAT exemption, allows foreign producers to save up to 17.5 percent. Since the average Mexican budget runs about $2.5 million and ProAv requires a minimum investment of $6 million, many local producers would like to see modifications to the program to make it more accessible.

Film commissioner Hugo Villa is on the case.

"We're definitely going to make adjustments this year, and we can easily modify the criteria," he says. "One possibility is that a producer's films can be accumulated. For example, if you produced 15 films, but none reached the 70 million peso amount, the amounts could be accumulated."

ProAv was unveiled by President Felipe Calderon in March 2010 at Baja Studios, the former Fox facility built for the filming of James Cameron's Titanic. The program's investor-friendly message aims to counter perceptions from abroad that Mexico's violent war on drugs has spiraled out of control.  

Which begs the question: Is Mexico safe for filmmakers nowadays?

From Cristiada producer Barroso's perspective, the answer is a resounding yes.

"We were in seven states and didn't have any problems," he says. "In fact, that's one of the points we want to make. [The Cristero War] may not be the most beautiful chapter in Mexican history, but we want to show that Mexico is not just a country of drug traffickers."

Film commission coordinator Carla Raygoza agrees.

"Everyone outside the country talks about how dangerous Mexico is," she says. "But once we announced the ProAv filming incentives, we began to get more interest from foreign producers."

Indeed, as Mexico's feature-film output has risen, so too has the number of international co-productions in the country. An attractive financing mechanism for a co-production here is a fiscal stimulus known as Eficine, aka Article 226, which allows private companies or individuals to receive tax credits of as much as $1.7 million based on their contributions made to a film project.

One recent film that reaped the benefits of Eficine was the Warner Bros. Mexico-Rio Negro production No Eres Tu, Soy Yo, Mexico's top box-office grosser last year with receipts close to $11 million. The recipient of tax breaks totaling more than $1 million, it's the Eficine poster child for success.

"The main thing is that [Eficine] helps to recoup your investment," says Rio Negro producer Matthias Ehrenberg. "So it's very good for everyone involved."