Monday, July 21, 2008

Morocco To Benefit From Spains Slowdown?

Slowing European Union economies could damage the exports Morocco needs to offset a soaring fuel import bill, but the north African country sees opportunities as well as risks, a government minister said on Monday.

Companies based in Morocco's main trading partners Spain and France are having to focus harder on costs and investor-friendly reforms have made Morocco a cheap and convenient base for growth, said External Trade Minister Abdellatif Maazouz.

"For France and Spain, Morocco remains traditionally the country they work with most," Maazouz told Reuters in an interview. "This crisis can be a factor for the redeployment of certain investments on to the Moroccan market."

Morocco has sought to counter perceptions it is a difficult and unpredictable business environment in an attempt to reverse decades of under-investment that has fuelled widespread poverty.

The government has launched road, port and rail projects and business parks and is trying to draw foreign companies by fast-tracking cumbersome bureaucracy and offering cheap land and fiscal incentives.

It hopes the measures will stop its share of world manufacturing exports shrinking and offer work to an army of unemployed graduates in new call centres and offshore services.

Morocco scored a major win last year when French carmaker Renault unveiled a $1 billion plan to build its biggest factory in Africa near Tangier.

Maazouz said a group of Spanish firms now planned to move into an industrial zone on 300 hectares near Settat south of the economic capital Casablanca, focusing on textiles and electronic components for cars, aircraft and household appliances.

The scale was similar to the Renault project in terms of potential revenue and more companies were likely to follow in their wake, he said.

"If we see the beginnings of crisis in Spain, we cannot be indifferent -- it will surely have an effect on the Moroccan economy," said Maazouz.

"But it could also be an opportunity for the Moroccan economy in that our proximity allows us to take a position in niche products that are suffering less from the crisis."


Morocco's government has said it is aiming for $4 billion of foreign direct investment this year, up from $3 billion in 2006 and as little as $500 million a decade ago.

Unlike many other countries that gradually improved their investment climate but allowed the private sector to choose which industries worked best, Morocco's government has pinpointed a limited number of sectors to actively promote.

Among those are textiles, a sector that has faced fierce competition from Asian manufacturers in its main EU markets but has sought to adapt by shortening production cycles and lead times to make the most of Morocco's proximity to Europe.

"It's not a question of relocations -- that is not what is being discussed," said Maazouz. "Morocco is offering solutions for companies with growing pains."

He said Moroccan exporters were already taking advantage of a recent free trade accord with the United States.

Moroccan exports to the U.S. saw average growth of 3 percent between 2003 and 2006 but surged 23 percent in 2006-2007, trade ministry figures showed. Exports to the EU grew 9 percent and 6 percent respectively in the same periods.

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