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“Emergence” Programme For a go-ahead, targeted industrial policy working towards expansion in the national economy. Summary document. MOROCCO ON THE MOVE. The choice of movement and openness – a clear-cut acceleration over the past 3 years

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“Emergence” ProgrammeFor a go-ahead, targeted industrial policy working towards expansionin the national economy

Summary document

morocco on the move
MOROCCO ON THE MOVE
  • The choice of movement and openness – a clear-cut acceleration over the past 3 years
    • A new generation of political and business leaders intent on implementing the necessary fundamental reforms – both economic and social
    • Reforms clearly speeding up, consistent with the choices of economic openness acknowledged as one of the most advanced on the southern edge of the Mediterranean
      • Privatisation and systematic deregulation
      • Free Exchange agreements and dismantling of customs red tape (US, Europe, South-South)
  • A market growing solidly and regularly, based on healthy balance
    • Healthy macroeconomic balance based on budgetary and monetary discipline firmly embedded since the 1980s
    • Growth of 5-6%, with developments gaining increasing speed in the mainspring sectors – particularly in infrastructure, housing, distribution, telecommunications, etc.
    • Overall modernisation underway, both in the way the State operates and in the economic fabric of the country
  • Go-ahead policies aimed at sustainable growth –
  • 3 additional main lines for a balance growth profile:
  • Major investment programmes (>10 billion € over 5 years) in Infrastructure (transport, energy/utilities, etc.), Major Projects (new towns, Tanger Med, etc.) and Housing
  • Go-ahead sector-based policies targeted at the 7 mainspring sectors for growth and exports (Azur Plan, Emergence Programme)
  • A responsible and ambitious policy of human development (INDH Programme)
  • 7 export growth mainsprings
  • identified and targeted
the major lines of development at a glance
THE MAJOR LINES OF DEVELOPMENT - at a glance

Infrastructure:

Strengthening of

and deregulation

  • Roads & Motorways: (1000 km of Motorway, 15 000 km of country roads)
  • Ports / “Tanger Med”: Launch of a new port of international proportions
  • Energy: new power stations and deregulation
  • Utilities: major investments in cleaning up; management granted
  • New Towns (e.g. SABR) and Social Housing programme (200,000 dwellings)

Azur Plan: Tourism Centrepiece – clear objectives: 10 million tourists

  • Traditional centrepiece based on certain strengths (proximity, climate, history, culture, etc.)
  • 5-part AzurPlan (image, accommodation, air links, development, training)
  • Development of a range of 5 seaside resorts with almost 200,000 beds

Emergence: Sector-based targeting strategy aimed at exports(6 sectors)

  • Aggressive targeting at growth mainsprings:
    • Offshoring
    • Industrial subcontracting/ “Mediterranean Maquiladoras*”a/ Cars

b/ Electronics,

c/ Aviation

    • Agro-industry
    • Processing of products from the sea
    • Textiles
    • Crafts

Human development and closeness to the people

  • INDH: National Initiative for Human Development: extensive territorial programme
  • Revamping of the education and training system
  • Also, numerous social and political reforms (e.g. new family code giving Moroccan women more rights)
  • Opportunities focused on Morocco’s sector-based development priorities
  • * Special industrial subcontracting zones
tourism

S1

TOURISM
  • The Azur Plan is already largely underway: objective of 10 million tourists by 2010

Drafted in 1999, the Azur Plan is based on a coherent sector-based view taken over a 10-year period, with a clear objective

by 2010:

to go from 2.5 million to 10 million tourists, while still abiding by the distinctive and harmonious character of Morocco as a

destination. Beyond the traditional bastions (imperial towns, culture) of tourism in Morocco, The Azur plan repositions

Morocco in new high-demand segments (particularly “intelligent seaside”), as well as certain “coming” niches areas, such as

ecotourism or residential tourism (e.g. for retirees).

This plan is already substantially underway, with positive achievements that in part explain why tourism has taken off in

Morocco on a number of fronts. Today, Morocco hosts almost 4 million tourists (including ~1 million French) and as a

destination, Morocco has many practical projects in motion based on 5 main lines (capacity, development, air travel,

training, distribution /promotion), including in particular:

    • a very strong increase in hotel capacity (150,000 beds) based mainly around 5 new integrated seaside resorts (3 are already being constructed with substantial investors)
    • radical reforms aimed at the total deregulation of air transport in order to meet the colossal requirements (~100 “Airbus equivalents” by 2010)
  • Major opportunities across the whole value chain (development, hotels, tour operators, air travel, etc.)

Europe remains the main source market for people going to Morocco (by a long way). But development prospects are

Even greater: forecast growth exceeds ~2 million additional European tourists. This market will be the subject of an all

out effort to consolidate Morocco’s position as a preferred destination for Europeans going to the Mediterranean.

This opens up significant scope for investment and cooperation right across the value chain and in particular on 3 fronts:

    • Development: very significant deals on development, building and public works and clean-up works
    • Hotels: integrated projects (or as JVs) by major tourist operators or by integrated Tour Operators (e.g: Accor, Pierre et vacances, Club Med, TUI/Nouvelles Frontières, FRAM)
    • Transport: opening up the market to Low-Cost operators, Charters operators and/or integrated operators
french language offshoring call centers administrative or it bpo

S2

FRENCH-LANGUAGE OFFSHORING (Call Centers, Administrative or IT BPO )
  • Very significant development in the area of Call Centres – very competitive fundamentals in the French-speaking world
  • This sector is experiencing explosive growth in Morocco, where it already represents over 10,000 jobs and has become a leading destination in the French-speaking world. This development merely reflects the very high level of natural competitiveness in Morocco for this type of business (language proximity, very competitive workforce with Bac+2, competitive infrastructures). It is a question of capitalising on these strengths and speeding up the development of the Call Centre business on the best possible terms for investors, as well as extending it to other offshore business activities with a higher added value.
  • French-language Offshoring (BPO): the benefits of Morocco on a capital market that is the Nº 1 cornerstone of the Emergence Programme
  • The needs of French business in the area of offshore administrative or IT processes (BPO) are becoming increasingly large. Not wishing to replicate the factors of destinations such as India, Morocco has a number of major competitive advantages in certain targeted areas where mastering the language and/or geographic closeness play a particular role. This sphere of opportunity is based on the natural complementarity between the French and Moroccan economies – which explains the growing interest being shown by investors for Morocco as a much more controllable alternative than India in the area of “nearshore”.

Using this as a base, the Moroccan government is undertaking an aggressive development policy for French-language

nearshore activity. It is doing so in order to be able to offer investors the best possible terms for setting up businesses. This

sector-based policy is targeting 10 to 12 priority areas that are suited to the strengths that Morocco has to offer (e.g. back-

office for Banking and Insurance, accounting services, customer services, IT services) – on which it is aligning all of the key

factors (administrative training, system engineer training, property and technical infrastructures, incentive sector).

A number of special zones will be launched shortly, beginning with ”Casablanca Nearshore Park” (or “Casa Shore”), which

will be operational by mid-2007.

  • Very significant opportunities for French-language businesses as the “client” of the destination or as an operator in
  • the area of software and IT services/BPO

Businesses using the French language can develop an attractive strategic base base in Morocco:

    • As a ”client” or by setting up itself: Taking internal departments or service centres offshore for large businesses (banks, insurance, telecoms, other)
    • As an operator / Software & IT services: Setting up an ”Offshore Centre” to serve 3 sub-markets : a) the French-speaking offshoring market; b) the national IT services market; c) the regional French-speaking IT services market (Maghreb, west Africa, ad hoc projects in France)
industrial subcontracting 1 2 automotive equipment specialist on board electronics aviation

S3

INDUSTRIAL SUBCONTRACTING (1/2)(Automotive equipment, specialist/on-board electronics, aviation)
  • Industrial subcontracting (excluding Textiles) is developing very quickly in Morocco
  • Subcontracting sectors have experienced major growth in Morocco in recent years in 3 areas in particular: automotive
  • equipment, aviation and electronic equipment. This development reflects the natural competitiveness of Morocco, with cost
  • factors that are significantly lower than in the immediate proximity in Europe. Against a business background where
  • companies are looking for industrial solutions that are both highly responsive and flexible and with affordable cost factors,
  • Morocco offers a credible alternative to going offshore as far as Asia for certain types of production - either by setting up
  • operations directly or by subcontracting.
  • These basic trends are confirmed by the facts: a) major development in automotive equipment manufacturing (15-20,000
  • jobs, concentrated in the North). b) setting up of flagship projects (e.g. ST Microelectronics), but also the setting up of
  • French SMEs in specialised electronics; c) aviation at Casablanca Nouacer, with an acceleration in the setting up of
  • operation in the last 18 months (SNECMA, Matis, Creuzet, Safran, etc.)
  • Morocco has joined the “Mediterranean Maquiladoras” aimed at bringing its conditions into line to constitute a
  • “low-cost industrial back base” for southern and western Europe
  • The needs of European industry in the area of going offshore or subcontracting its production is growing strongly in a
  • context of constantly growing competitive pressure. Building on its natural strengths, Morocco is looking to develop the
  • “Mediterranean Maquiladoras” around major new infrastructures that put Morocco back at the centre of the East-West
  • supply routes (Tanger Med). In addition to intrinsically attractive cost factors and a unique logistics platform, the
  • Maquiladoras offer conditions for setting up businesses that meet the economic constraints of tomorrow (maximum
  • flexibility, simplified administration, environment full of incentives, training, additional services targeted at key sectors, etc.).
  • In order to provide a truly distinctive value proposal, these Maquiladoras are designed in a targeted manner, focused on the
  • 2-3 most essential sectors so that they can benefit form the “network effects” specific to each sector.
industrial subcontracting 2 2 automotive equipment specialist on board electronics aviation

S3

INDUSTRIAL SUBCONTRACTING (2/2)(Automotive equipment, specialist/on-board electronics, aviation)
  • Automotive equipment: an attractive strategic alternative for 2nd and 3rd-rank equipment manufacturers
  • in specific categories

Morocco has a very significant potential in original equipment for assembly plants in southern Europe with a competitive geographic

position, located less than 3 days by truck from 27 assembly plants in Europe (representing an accessible market of 6-7 million vehicles

per year). Morocco has become established over time as very competitive in 250-300 categories of specific equipment for which the

production and logistics factors are suited. The “Automotive Maquiladoras” will only strengthen this state of affairs. Also, longer-term

prospects are enhanced by Morocco’s capacity to develop automotive assembly for the national and regional market (South/South) or in

certain specialist areas.

So Morocco represents a strategically attractive back base for business in the sector – either by setting up operations directly or by

subcontracting. These possibilities are the case both for leading major equipment manufacturers, as well as for the fabric of 2nd and 3rd-

ranked equipment manufacturers.

  • Specialist or on-board electronics: a back base that might be of interest to a broad range of French companies

Unlike mass-market electronics, where the movement offshore is already largely committed to Asia,

specialist electronics (on-board, industrial, etc.) offers numerous niches where short and medium production runs do not justify

such movements. Faced with the increase in competitive pressure and taking account of the extent to which the manufacturing fabric

is dispersed (97% of SMEs), Morocco represents an attractive back base that offers an interesting solution from the point of view of

the factors involved, but in particular because it is manageable from the point of view of geographic proximity and linguistic closeness.

The “Electronics Maquiladoras” are enhancing the terms on which outsiders are welcomed in order to provide satisfaction over the

lifetime of the specific requirements of the industry, including for SMEs (direct setting up of business or subcontracting). The target

potentially interested by this alternative is extremely large – particularly with 5000 companies in France.

  • Aviation equipment: growing attractiveness of setting up businesses directly around Casablanca Nouacer

The major success of the aviation industry at Casablanca Nouacer has not only to do with its intrinsically very attractive factors in terms

of competitiveness (engineers, Bac+2), but also with the “network effect” specific to this sector (e.g. training). Businesses that

enjoy success breed others – guaranteeing set-up terms for new investors that are even more attractive. In a sector where

subcontracting is developing very rapidly, over time this particular area represents a highly complementary back base to the regional

industry areas that exist in France. It also provides a proximity based on a cooperative model that has already been tried and tested.

agro industry and processing of products from the sea

S4

AGRO-INDUSTRY AND PROCESSING OF PRODUCTS FROM THE SEA
  • Two major industrial main lines that are not yet sufficiently well developed given the strengths that Morocco has to offer in
  • certain other areas
  • Agro-industry and the processing of products from the sea are areas that are traditionally important to Moroccan industry. They have
  • been developed in conjunction with the availability and quality of primary resources (fishing and agriculture: olives, citrus fruit,
  • market gardening). The development potential in the coming years in this area is very significant given the assets on hand: the
  • availability of quality rare resources, attractive processing facilities (cost of factors, logistics), major outlets into 3 sub-markets:
  • the national market (30 million consumers, development of modern distribution), regional and South/South market, exports to
  • Europe. On this point, they benefit as part of the new industrial policy from positive, practical programmes - both from the point of
  • view of industrial processing per se, but also in terms of access to the resource upstream in the agricultural process (e.g.
  • privatisation of agricultural land for integrated agro-industrial projects, relaunch of the olive oil growing plan) and also upstream in the
  • Fishing process (modernisation of the fleet and infrastructures, facilitation of imports, etc.)
  • Agro-industry: Morocco as a production and exporting platform to 3 sub-markets (national, regional or South/South,
  • exports to Europe)

The upturn in the sector is based on a development plan targeting 8 to 10 food-processing areas: a) existing industry (fruit/

vegetables), b) new industries (organic, ready-made food); c) key industries requiring the results of a recovery upstream (olive

oil, citrus). The plan is to have this deployment of integrated projects take place round dedicated regional poles of excellence in

agriculture (Agadir, Gharb, Meknès).

In these agro-industrial areas, the Moroccan market offers interesting prospects for French companies in the industry – either as a

competitive processor for quality products, or as an outlet to the fast-growing markets of the South. The target fabric potentially

interested by this alternative is extremely large – flagship players, but also SMEs from the agro-industry of the main producing areas.

Processing of products from the sea: a strategic position midway between the extraction areas and the consumer

In addition to its natural assets, Morocco already has other assets and commercial/industrial savoir-faire that are already very solid

(canning factories). Development potential is focused in 2 main areas: a) the accelerated development of channels linked to

sardines and their derivatives; b) the positioning of Morocco, or more specifically of Agadir, as a regional “processing hub”, both to

consolidate its position on canned goods and food with a limited shelf-life, as well as for ready-meal channels (“heat and eat”), or for

marketing top-of-the-range fresh produce. This opens up attractive opportunities for the players in the industry regarding Agadir:

operator businesses (canners, packers, ready meals, etc.) aimed at export (Europe) and/or institutional partnerships between

the regions / areas of excellence in order to play the Complementarity card.

slide9

S5

TEXTILE

  • Main sector of the Moroccan industrial fabric
  • Representing almost €1 billion and 50% of manufacturing jobs, this is a fundamental component for the success of the
  • Emergence plan. Its centre of gravity is around the downstream aspect/ production of new stock, with some first positions
  • Upstream.
    • A new channel logic: targeted integration based on export platforms
    • Upgrading the fabric has already been extensively begun (consolidation of the parties involved, quality, etc.). The new measures are aimed at developing 1) a better capacity for investment and operating capital 2) Upgrading the range and technical component 3) exploration of new markets
    • Introduction of a very beneficial incentive system for investment in the production sector and upstream in particular (up to 20% of the investment). These “Integration platforms” round the EIG enable full partnerships with international donors.
    • A new offering in terms of the ambitions and developments of the sector
  • For the purpose of meeting strategic issues, this new offering is based on:
  • 1) Simplifying the interfaces and better service responsiveness with i) a new regulatory measure governing the providers
  • of the export platforms, ii) tariff reforms and a new customs tax system, iii) customs-related facilitations (generalisation of
  • personalised management, introduction of supply platforms and export platforms, etc.); iv) privileged access to input:
  • Offering of raw materials and input at competitive prices, and v) enhanced logistics
  • 2) Framework conditions strengthening competitiveness and adjustment of the offering:A complete set on all the
  • aspects, including attractive finance terms, lower taxes on the first jobs, appropriate training and uptake, more aggressive
  • promotion with the strengthening of the institutional capabilities of Amith and the promotion fund for the sector.
  • Opportunities for international players
    • 1) Targeted implantation of units (Upstream and Production) in order to provide better resistance against advances from Asia
    • 2) Strategic and/or capitalistic partnerships with the Moroccan “integration platforms” (new stock, development of common ranges)
    • 3) Regional promotion contacts
slide10

S6

CRAFT INDUSTRY

    • A sector with high export potential as yet under-exploited in terms of its content and potential for international interaction
    • The study on the crafts sector focused on crafts with a high cultural content (as opposed to consumer craft or craft for utility use) which presents a major potential based mainly on the accelerated growth of exports over a period of 3-5 years. The potentials identified are located mainly on the level of the 2 main markets for this sector:
    • 1) export market: the development of export markets across all channels (mainly: decoration; furniture; jewellery and clothing/accessories) and across all sales channels through the creation of sizeable players and a network of dynamic SMEs;
    • 2) local market (tourists and Moroccans): potential linked to the growth in tourism and the improvement of distribution through targeted campaigns to modernise traditional circuits and the development of new channels (e.g. "hotel showrooms").
    • The estimated impact of this potential is 3 billion DH of additional GDP and would translate to the creation of 20,000 new direct jobs (excluding multiplier effects) by 2013.
  • This clearly under-exploited potential for growth, particularly for export, necessitates a major discontinuity in terms of the type of player involved (size/ professionalisation, product design, production equipment, marketing)
    • A strategy focused round structured players:
    • The implementation of a go-ahead aggressive policy for developing the sector is based on having structured players of major size that are able to meet the requirements of markets targeted for export (including mass distribution), especially in terms of production (range of products, quality, consistency, etc.). Based on a product/channel approach (development of ranges) spread across a wider diversity of channels (including agro-ethnic), a strategy focused on the players has been implemented with clear-cut and specific lines of development for each category of player:
    • 1) Focusing by the State on the emergence of 1-3 major player for each channel/potential: new type of player of a larger size (turnover of 200-300 million DH), aimed strongly at exports, and significant capabilities for production, detecting trends and marketing product;
    • 2) Development of a nursery of 200-300 dynamic and competitive SMEs with a particular effort being made to migrate businesses with strong potential to the status of becoming national ‘champions’;
    • 3) Introduction of various measures in terms of the fabric of single-craftsmen: incentives to enable the migration of single-craftsmen towards a more formal sector, as well as remedial; social measures to stabilise the fabric.
    • A certain number of horizontal worksites should also be implemented to back-up the development of these players, in particular in terms of promotion / labelling, the modernisation of distribution and the surrounding conditions (training, funding, etc.).
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