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Friday, 03 December 2010 10:48

Morocco and Perspectives for Economic Cooperation with India

*Mohammed SLAOUI & Dr. Suresh Kumar

*First Minister of Trade and Commerce, Embassy of Morocco, New Delhi.

Introduction

There have been high economic growth rates recently and the improvement is due to the important macroeconomic reforms that have been implemented by most African countries. Morocco located to the north west of the African continent having total surface of 710,850 km2 touching Atlantic to the west with 2934 km of coastline and the Mediterranean to the north with 512 km.

The geographical advantage makes Morocco a strategic platform from an economic standpoint. Morocco under global market economy is a significant market opportunity for foreign and Indian companies and investors. Infect, Morocco has implemented numerous economic reforms since 1980 to bolster the country’s microeconomic balance and accelerate its integration into the world marketplace. The measures are boosting per capita income, lowering fiscal and current account deficits and are credited with subduing the country’s rate of inflation to a modest 2.2 percent.

 

 

These reforms have repealed the Moroccan law (a measure that imposed rigid hiring practices and other restraints on foreign-held businesses), revised laws that regulate corporations, relaxed foreign trade and exchange systems, protected intellectual property rights, established commercial law courts and opened all economic sectors to foreign investment.

Many of these reforms were implemented to enable Morocco to qualify for trade agreements with the European Union (EU) and the United States. Most notably, Morocco’s newly signed EU association agreement offers the country tariff-free access to European markets. Moreover, Moroccan-US free trade agreement offers Indian exporters greater access to markets in Morocco and an extension to EU. Morocco also maintains a number of trade agreements with other African and Arab countries, providing a ready platform for Indian companies for penetrating markets throughout the region.

Emerging Markets Forum, a NGO organized international Conference under the theme of The Emerging Markets in Africa held In Rabat, Morocco from 7 To 9 April 2008. Three major topics were addressed covering Trade and Finance, Infrastructure and Climate Change, Direct Impact on Economic and Social Development in Africa. The king of Morocco addressed the conference and highlights that ‘the important contribution made by some major Asian countries (including India) which increased their trade with Africa in primary commodities plays a significant role in achieving positive results. He observed that Africa has managed to benefit from its own efforts as well as from international co-operation and appreciated the several initiatives such as trade facilitation measures, debt reduction and increased official development assistance. He exerted further efforts with respect to debt reduction and above all, to help bring the Doha round on international trade to a conclusive end. He also invited foreign private businesses to invest more in Africa as the continent rich in human and natural resources.’ Further, the king noted with satisfaction that business relations between Africa and morocco in particular are thriving in various sectors such as banking, agriculture, aeronautics, mining and energy, water resources, health and telecommunications and that morocco has also been training thousands of African nationals in its universities. He furthermore recalled the cancellation of the debts owed to morocco by the least developed African countries, while continuing to support programs designed to alleviate poverty in a number of African nations. The latest such initiative is the announcement, made last month in Dakar, of the creation of the Alaouite Foundation for Sustainable Human Development, dealing sustainable human development in African nations. Touching on the Moroccan situation the king mentioned that the successful political, economic and social reforms which are consolidating morocco’s position as a stable nation and as a development hub in the region.

Echoing the Indian expert, honorary governor of banquet de France and former intentional monetary fund director-general, M. Michel Camdessus mentioned that Morocco has made, over the past fifteen years, sustained efforts aiming to consolidate macroeconomic balances, production structures, irrigation and agricultural development, which have enabled morocco to face the oil price hike on international markets. Commending the Moroccan experience in this field as “very typical”, he underlined that “Morocco faces a shock which would have been difficult to overcome had these works not been achieved.” In this respect, the international expert voiced his confidence in the measures taken by the Moroccan government to face the soaring prices of food products.

Morocco Economic Perspective

The engine of Morocco’s steady economic growth under market economy has been underway for more than two decades and this period accelerated privatization of the commercial acquisition and nearly114 public enterprises merged into it. Morocco has also opened its increasingly market-oriented economy to investment in telecommunications, water distribution, energy production, textiles, information technology and road construction with the consultation of World Bank. The state acts only as a regulator and supervisor of the national economy and the private sector play its prime role in leading the engine of the economy. The growth of Morocco’s real GDP was at 8.1% in 2006 that persuaded its economy for mutual cooperation with India in different fields of mutual benefit such as:

1. Agriculture Sector

Agriculture is the Morocco’s strongest economic sector shares wheat, barley, citrus fruit, vegetables, olives, Fish and livestock. Morocco’s agricultural output makes it one of the best ranking countries in the world. Moroccan farmers have lately carved a large niche in Europe’s booming organic foods market. The country is missing out on a significant opportunity exporting agricultural produce without processing as it is not getting real value from European market. India as the second largest producer of fruits and vegetables knows to deal this issue effectively and Indian investors are more than welcome in this very field.

1. Industrial Sector

There are strong sectors working in mining (phosphates, manganese, lead, silver, and copper), energy, manufacturing (which includes handicrafts), construction, services and tourism plays an important role in the Moroccan economy.

1. Mining

Morocco’s mining sector is growing continuously having large surge in the production and export of phosphates. The domestic consumption of phosphate derivatives (phosphoric acid and fertilizers) jumped up to12 percent in 2004, while raw phosphate exports in the same period climbed over 3 percent. Morocco and Pakistan have just recently agreed to build a $200 million phosphoric acid plant 100 miles inland from Casablanca that will annually export up to 375,000 tons of urea and di-ammonium phosphate to Pakistan started operational in 2006.

India-Morocco mining cooperation in this sector started from joint venture (indo macro phosphors a) between office Moroccan des phosphates (OCP) from Morocco and Chambal fertilizers & Chemicals (CFCL) producing 330.000 tones per annum of phosphoric acid at a total cost of us $ 205 million had been commissioned in Morocco in October 1999. The equity of US$ 65 is held by OCP and CFCL equally. Indian total dependence in agriculture on imported raw materials for production of phosphoric fertilizers, the government encourages Indian companies to establish joint ventures production. The joint venture facilitates the company with buy back arrangement in other countries, which have reserves of rock phosphates (for example: Senegal 1980, Jordan 1997, Morocco 1999).

This sector has tremendous potential of growth working in cooperation with Morocco. Consequently, fertilizer industry in India has adopted a strategy to increase fertilizer production through:

1. The expansion of existing fertilizer plants and

2. Setting up joint venture projects in countries having abundant and cheaper raw material resources.

Morocco, as the world biggest exporter fits here to boost further cooperation with India (the 3rd largest fertilizer producer in the world) as India indigenous rock phosphate supplies meet only 5-10% of total requirement of total production.

2. Energy

Economists predict that Morocco’s energy sector (which includes electricity production) will sustain a growth trend that began in 2002. Electricity output in 2004 rose nearly 9 percent, largely as a result of an ambitious rural electrification program and a significant cut in power prices. Growth in the energy sector is also being propelled by the resumption of operations at the Samir refinery at Mohammedia. While Morocco has a new state-of-the-art power plant serving the urban population, remote areas of the country require expanded service, so the country is actively recruiting suppliers of renewable energy. There is an opportunity for Indian investors dealing in this sector and shares their experiences while working in the different topography of desert, mountain, plains and oceanic.

3. Manufacturing

Morocco deals with food-processing, assembly of electrical and mechanical goods, textile industry, leather industry and other. Morocco has taken steps to revive the textile sector providing the sector with financial and technical resources and attracts US$ 276.5-million worth of investments to compete in world markets. Moreover, the Moroccan government is dedicated to providing support to the labor-intensive manufacturing sector, pledged to reduce electricity tariffs, provide soft credit lines, help in promoting domestic goods abroad and attract foreign investment.

An alliance with potential Indian investors or partners (whether textiles or manufacturing) is vividly sought, as Indian fabrics (curtains, saris and shawls) attracts Moroccan female consumers and are quite popular. Recently, the textile production has experienced a drop in domestic demand for finished wearing apparel due to a flood of duty-free imports from the EU. But it will not block the potential hidden in this sector particularly for the Indian investors. US initiated it and announced plans to relocate all of its Irish spinning, knitting, and dyeing operations to Morocco facilitates assembling underwear, sportswear, and children’s clothing. Moroccan firms are already supplying major American brands such as banana republic and the gap.

4. Construction

The country’s construction industry has lately experienced a boost from major infrastructure improvement projects, including government-financed port facilities and roads, the creation of public housing and the development of several coastal tourism destinations. The government’s earmarking of US$303 million to rebuild the Mediterranean port city of al hoceima (as it was heavily damaged in 2004 earthquake) is encouraging growth in the construction sector. A partnership in the form of joint ventures with India in the field of cement is the logical trade and investment opportunity as Indian companies are ranked among the top producers in the world.

5. Tourism

Tourism sector in Morocco generates nearly equal to agriculture and fishing products taken together in terms of hard currency. Although the numbers of tourists have not recovered to levels enjoyed by the Moroccan hospitality industry prior to September 11, 2001 but it continues to be a vital component of the national economy, contributing nearly $3 billion each year to the country's GDP. The year 2007 witnessed speed recovery from decline in tourism (visited 7.5 million tourists) and the revenues rose 12%. Tourism is expected to remain strong in the medium term. ‘Morocco 2010’, an initiative underwritten by the Ministry of Tourism, has poured millions of dollars into the country’s hospitality infrastructure. By 2010, the program is expected to double Morocco’s total number of hotel beds to 230,000. A United Arab Emirate company has decided to invest the colossal amount of more than US$ 9 billion in the Moroccan tourist sector alone, which brings a strong impetus and a sound signal to the feasibility of the 2010 objective.

India is developing an attractive program destined for European sick people and the elderly to find treatment in India for half the price in Europe .It is nevertheless quite imposing on a sick person to handle a 14-16 hour trip to India. Morocco’s proximity to Europe allied with the renowned Indian doctors can generate a fruitful result. The exemplary assistance of Indian organizations such as ASSOCHAM, FICCI, and CII provide us with comprehensive studies based on extensive research on the focused sectors of interest to Morocco. The regular interactions helps in promoting Moroccan bilateral businesses and provide inputs for evolving and shaping our policies in different areas for the mutual benefit of the economic cooperation between two countries.

The Growth Markets in Morocco

There are significant growth prospects for bilateral economic relations between Morocco and Indian entrepreneurs in:

1. Pharmaceuticals And Medical Equipment

India can establish a fruitful hub of exports from Morocco to Africa, Europe and the USA.

2. Food Processing and Food Industry

India is becoming an emerging food giant (the third agro-food producers of the world) with an appetite for new products and there are numerous untapped potentials for cooperation with Morocco a major exporter to Europe in that that field.

3. Electronics

The predominant industry in Morocco is the production of electronic components in the most sophisticated form, i.e., semiconductors. The highly export –oriented sector offers genuine opportunities for investment in sub-contracting activities with St. Microsystems that already successfully employing more than 4,500 people. Morocco has demonstrated its cost-effective capabilities as a regional base for electronic activities. This capability allows both countries for mutual cooperation.

4. Call Centers & IT

The information technology is of outstanding importance to Morocco. It is the creator of wealth and figures among the priority options of the government. It accounts for more than 10% of the investment budget. Dell computer has established its French-language call center in Morocco. French-owned firms with a list of more than 100 American firms operating in France, and the Call Centers & IT has potential in it. The Indian experience and desire for expansion, allied with widespread practice of foreign languages (mainly French) and competitive operating costs allow us to consider realistically a reediting, even partly, of the Indian miracle in Morocco.

5. Fish/Fish Processing

Morocco is a major exporter of fish to Europe and Asia and it is presently looking for opportunities to add value through the processing of fish oil for the export market. In order to enhance cold storage capacity both stationary and mobile, Morocco can take advantage of the integrated cold chain knowledge. Besides, Moroccan canned fish with olive oil or tomato sauce not exceeding 15 Indian rupees can become a popular dish in India. A joint venture in this field happens to be a significant opportunity for increasing the value of raw fish, a sector that employs already 400,000 Moroccans with an annual turnover of US$ 1 billion.

6. Motion Picture Industry

Morocco’s exotic scenery has appeared in many famous films. This industry invests in the construction of major sound stages in Ouarzazate and the country is ready to move into more sophisticated fields. The cooperation with Bollywood industry is possible as the city of Marrakech organizes annual movie festival attracts more and more Indian superstars. The popularity of Indian cinema, added to the labor cost in Morocco, the natural light and the similarity of Moroccan cultural heritage; all this can constitute a field for shooting parts of Indian movies in Morocco.

7. Stone and Cut Industry

Morocco presently exports large volumes of unprocessed marble as there is an opportunity to increase value added through processing in the country. India’s stone industry may initiate it and opt it as a viable option for mutual benefits.

8. Telecommunications and Insurance

This sector predicts to see near-term growth as the role of privatization crates opportunities and government incentives.

Morocco- India Cooperation strengthening Sub-Saharan Africa

Morocco is a North African country fully integrated to the continent and spares no efforts in perfect coordination with the sub-Saharan African nations developing a multifaceted bilateral cooperation with the countries of our promising continent and opening up to broader perspectives for our common action. The brotherly peoples of the African continent attracts towards education as .the number of African students (more than 15,000) in Moroccan universities is a shining example of our   exemplary  sub- Saharan African commitment. The scope of this bilateral cooperation with sub-Saharan African nations is so dense and wide-ranging covering varied fields such as investments, cooperation and technical assistance in building & civil engineering works, civil protection, air traffic and development of airline companies, telecommunication (the Moroccan telecommunication company has huge stakes in many African countries), potable water, electrification, infrastructure, banking (many Moroccan banks have branches in Africa), etc. Morocco and respective African nations notably Senegal, Cote d' Ivoire, Burkina Faso, Guinea Bissau, Mauritania, Gabon and others are example of this cooperation. The eminent role played by a Moroccan national M. Omar kabbaj (former chairman of African Development Bank) supporting Moroccan government to salvage the bank on the one hand and working for the benefit of the development of Africa.

Now Morocco is embarked on a more ambitious project for Africa as the country wants to share modest experience in human development and examine means to expand it to other African countries. In fact, Morocco launched the indh "national initiative for human development" in 2005, which is designed to alleviate poverty, vulnerability, marginalization and social exclusion by providing basic infrastructure to millions of people from adequate housing and drinking water to health care and education. It stresses the importance of the large-scale anti-poverty program in the construction of modern Morocco, in addition to the consolidation of the rule of the law, women's rights promotion and economy development. The indh meant to consolidate the efforts in human development, and this initiative is in line with the objectives of the millennium development goals. The indh program encompasses all development aspects, including generalizing access to basic facilities, reinforcing human capital and setting up income-generating activities.

Morocco has launched officially the foundation for sustainable human development in the friendly and brotherly African countries on the occasion of the 11th summit of the Organization of the Islamic Conference (OIC), which took place in Dakar, Senegal recently. This initiative is part and parcel of the solidarity values between Morocco and the friendly African countries.

Within this framework, the king of Morocco, present at the summit laid the foundation stone of an ophthalmology clinic in the outskirts of Dakar, which will offer free medical care for the Senegalese and other African people. The clinic is the first project of this foundation, which will touch on various sectors of sustainable human development in Africa. It focuses on the human element touches the fields of health, social development, education, environment, agriculture, and human resources exploitation.

Morocco wishes to develop a vibrant economy that is part and parcel of the global economy on the economic front as well as the broad spectrum of social front (human and social development, women promotion, rural areas development, human rights and good governance). It makes the most of the opportunities afforded by globalization and that is capable of attracting high value-added activities.  These projects develop our friends and foreign partners including our African neighbours gearing towards the achievement of these goals.

The growth rate in Morocco stood at 8.1% in 2006, a rate comparable to the Indian growth rate of 9 % last year ,which qualifies us to cooperate fruitfully with India  in many fields for our common benefit of course but also for the benefit of the whole African continent .Morocco appreciated  the Indian initiative to host the first Africa India summit that adopted real plan of action for the mutual benefit between two continents. Morocco is already thriving cooperation of more than 25 billion dollars in 2007, more than fivefold the figure of 2002 that hardly reached 5 billion dollars then.

To sum up, India-Morocco cooperation specifically announces the bilateral relations have reached the billion dollars last year and that many Indian conglomerates have already expressed interest in investing in Morocco such as Birla Aditya, Bharat Heavy Electrical Ltd., Tata motors, Bharat Earth Movers Ltd (BEML) and Tata consultancy. BEML aims to open a branch in Morocco in the framework of a joint venture. The Tata motor, India’s largest automobile company, is already working on the construction of buses in partnership with Morocco and Spain in Casablanca. .Birla Aditya is planning to open carbon black (for tire production) unit in Morocco. The information technology company, Tata consultancy services, has already signed a memorandum of understanding with Morocco. Morocco forms a huge customer market with its different partnerships and free trade agreements. Morocco and India should take up together the same challenges of fighting poverty, illiteracy, training, energy, agriculture, epidemics, etc. and these achievements are moving towards ‘sustainable development’.