Morocco Reform, growth and a sophisticated investment environment

Supportive investment environment

Morocco has an appropriate legal framework for investment, under which investors are granted tax breaks, along with other concessions granted under agreements or contracts concluded with the state. The incentives include the state's contribution to some investment expenditures through the Investment Promotion Fund and the Hassan II Fund for Economic and Social Development which targets modern industrial and technological sectors.

The Investment Promotion Fund grants projects in target areas of more than $ 20 million which provide some 250 jobs and contribute to technology transfer the following concessions:

- Real estate support by covering 20% of the expenses of the land required for the project.
- Contribution to up to 5% of the expenses of external infrastructure.

- Contribution to up to 20% of the expenses of vocational training.

- Additional allocations of up to 10% of the investment costs when setting up the project outside the urban areas or when investing in the spinning and weaving sector.

The Hassan II Fund for Economic and Social Development also provides support to quality industries, such as the automotive, aerospace and electronics industries, amounting to 15% of the total value of the investment, but not exceeding MAD 30 million.

 

Reform progress

Morocco is moving forward with its fiscal reform program, which supports the resilience of the economy to external shocks and the volatility of agricultural production, and contributes to higher and more inclusive growth for the different segments of the population. Growth is expected to rise to 4.8% in 2017, while the current account deficit is to shrink together with a rise in the total international reserves.

The reforms focus on boosting revenues, containing public spending through fiscal reform, reducing public debt to 60% of GDP by 2021, and moving towards a more equitable tax system. These efforts are crucial to expanding the financial realm needed to reduce poverty and create employment opportunities, particularly through investment and social programs targeting the neediest segments of society, thereby contributing to reducing inequality.

Morocco is moving towards gradual liberalization of the national currency to make it more flexible starting the second half of 2017, which will allow the Moroccan economy to better absorb external shocks and will enhance competitiveness in the future.

 

Investment-friendly sectors

The following figure shows the evolution of investment projects that attracted direct foreign investments during 2012-2016, based on the top 10 sectors. The renewable energy sector is at the forefront, followed by real estate, the automotive industry and business services.

The figure below shows that France, China and the UAE were among the top investors in Morocco during the period 2012-2016.

 

Evolution of investment projects according to the top 10 sectors between 2012- 2016 (US$m)

 

Source: Fdi markets

 

Major countries investing in Morocco, 2012-2016

Ibid

 

Issues that need attention

Morocco still has a lot to do to complete the reform aimed at improving the business environment, strengthening governance, combating corruption, cutting unemployment, especially among young people, reducing regional and social disparities, and reforming education to produce a more skilled workforce.

The following figure shows Morocco's ranking in the 2017 Doing Business Indicators of the World Bank among 190 countries, where it is scoring well in a number of elements, while others need to be further developed.

 

Morocco's ranking in the World Bank indicators for ease of doing business for 2017 among 190 countries

 

Source: World Bank Doing Business 2017