Emergence Programme For a goahead, targeted industrial policy working towards expansion in the natio

1
Emergence Programme For a go-ahead, targeted
industrial policy working towards expansionin
the national economy
Summary document
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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 (gt10 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
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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 Azur Plan (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 Moroccos sector-based
development priorities
Special industrial subcontracting zones
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TOURISM
S1

• 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 Moroccos 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

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FRENCH-LANGUAGE OFFSHORING (Call
Centers, Administrative or IT BPO )
S2
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 Bac2, 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)

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INDUSTRIAL SUBCONTRACTING (1/2)
(Automotive equipment, specialist/on-board
electronics, aviation)
S3
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.
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INDUSTRIAL SUBCONTRACTING (2/2)
(Automotive equipment, specialist/on-board
electronics, aviation)
S3
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 Moroccos
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, Bac2), 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.
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AGRO-INDUSTRY AND PROCESSING OF PRODUCTS FROM
THE SEA
S4
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.
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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
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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.).