April 5, 2016 / 2:22 AM / 3 years ago

Mexican state government eyes deal with Kia to end plant dispute

A sign of Kia Motors is seen at the manufacturing plant in Pesqueria, on the outskirts of Monterrey, Mexico, April 3, 2016. REUTERS/Daniel Becerril - RTSDEER

MEXICO CITY (Reuters) - A Mexican state government said on Monday it could reach a deal with Kia Motors in “the coming days” in a dispute over the terms surrounding the opening of the South Korean carmaker’s first plant in the country.

The government in the northern state of Nuevo Leon, led by independent Jaime Rodriguez, has been demanding that Kia renegotiate some of the incentives pledged in an accord struck in 2014 under the previous state administration.

South Korean President Park Geun-hye was visiting Mexico on Monday and the Nuevo Leon government said state officials held a productive meeting with members of the South Korean delegation to seek a resolution to the impasse.

“There’s been a big advance, neither side is negatively predisposed, there are efforts that each (side) has to make for the other (side), but we’re open,” Rodriguez said in a statement that asserted a deal could be reached in “the coming days.”

No comment was immediately available from the South Korean delegation.

Nuevo Leon said the 2014 accord violated state law by offering what it had called “excessive” incentives, such as waiving Kia’s obligation to pay state income taxes for 20 years and agreeing to fund a party to inaugurate the plant.

“Our government is being completely open, but we can’t waive their (taxes) for 20 years if they’re going to put me in prison for allowing it,” said Rodriguez, who took office in October.

Nuevo Leon’s government said it hoped it would have a response from Kia in a week about what had been proposed on Monday. It did not give details on the substance of the talks.

The $1 billion Kia project aims to build a plant with a production capacity of 300,000 vehicles a year. It will cater to demand from North America and South America.

Writing by Dave Graham; Editing by Peter Cooney

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