New Update for 2010 to be posted Dec.2011

(Produced by the Economic Section, Embassy of the United States in Rabat)




The Moroccan government actively encourages foreign investment and has made a number of regulatory changes designed to improve the investment climate in recent years. Morocco welcomes foreign participation in its privatization program, and does not pre-screen or select foreign investment projects.

The October 1995 investment code applies equally to foreign and Moroccan investors, with the exception of foreign exchange provisions, which favor foreign investors. The Ministry of Economy and Finance has created an investment promotion office and, in compliance with the investment code, is studying measures to reduce the paperwork associated with investment. A special ministerial committee on investments presided by the Prime Minister was created in the beginning of 1999 to activate and ease implementation of investment projects. So far, this committee has examined 21 investment projects totaling $800 million.

The investment code also codifies the existing foreign exchange regulations providing essentially free repatriation of foreign exchange related to foreign investment. The code does not apply to agriculture. Foreign investment is now permitted in all sectors except agricultural land. Other sectors such as phosphate mining and tobacco marketing are reserved for the state and are closed to foreign and domestic private investment, although the tobacco sector is now under consideration for privatization.


A.2. Conversion and Transfer Policies

The Moroccan dirham is convertible for all current transactions and for some capital transactions, notably capital repatriation by foreign investors if the original investment is registered with the foreign exchange office. Foreign exchange regulations now allow ex-patriot employees to repatriate 100% of their salaries.

Foreign exchange is routinely available through the commercial banks on presentation of documents for the repatriation of dividends and capital by foreign investors, for remittances by foreign residents, and for payments for foreign technical assistance, royalties and licenses. No prior government approval is required.

The Central Bank sets the exchange rate for the dirham against a basket of currencies of its principal trading partners. The rate against the basket has been steady since a nine percent devaluation in May 1990, with changes in the rates of individual currencies reflecting changes in cross rates.

In early 1996 the government promulgated regulations aimed at allowing the creation of an interbank market for foreign exchange, including foreign exchange futures contracts.

In general, Moroccans cannot obtain foreign exchange for investments abroad and the government does not offer incentives to invest in other developing countries. In recent years, however, several large Moroccan companies, notably the holding company ONA, the phosphate mining company OCP, and BMCE bank have made large investments abroad. According to Moroccan balance of payments statistics, Moroccan investment abroad has averaged around $20 - $30 million over the last few years.

A. 3. Expropriation and Compensation

There have been no significant expropriations in Morocco since the early 1970s. The Embassy is not aware of any recent instances of private property being expropriated for other than public purposes, or being expropriated in a manner that is discriminatory or not in accordance with established principles of international law.

A. 4. Dispute Settlement

The Embassy is not aware of any U.S. companies currently involved in investment disputes with the Moroccan government. Minor disputes are generally resolved with the relevant government agency. Disputes can be taken to the courts, although this rarely occurs due to inadequacies in the Moroccan judicial system. There is a consensus among Moroccan business leaders that the recent establishment of a network of commercial courts has improved commercial law operations. There are now six commercial courts and three appeals courts located in the six largest cities. Morocco is a member of the International Center for the Settlement of Investment Disputes (ICSID) and a party to the 1958 Convention on the Recognition and Enforcement of Foreign Arbitral Awards (with reservations) and the 1965 Convention on the Settlement of Investment Disputes Between States and Nationals of Other States.

A. 5. Performance Requirements/Incentives

There are no foreign investor performance requirements or requirements regarding local value added, local equity, substitution of imports or employment of Moroccan workers. Incentives for foreign investors have been created under the Free Trade Zone laws.

American citizens may enter Morocco for a period of three months without a visa. A residence permit is required to remain in Morocco for more than three months. Resident foreigners who wish to travel outside the country and return to Morocco must apply for a return visa that is valid for one year. Some expatriate business people have complained of procedural delays in the issuance of return visas.

A. 6. Right to Private Ownership and Establishment

Private ownership is permitted in all but a few sectors that are specifically reserved for the state including phosphate mining. Apart from these few exceptions, private entities may freely establish, acquire, and dispose of interests in business enterprises.

Morocco's privatization program allows the government to divest itself of state-owned entities. A May 1999 law allows the government to sell fourteen companies and six hotels via tender, direct negotiation or the stock exchange. In the last six years, the government sold 34 firms and 22 hotels, raising more than $1.7 billion. While the government generally welcomes foreign participation in the privatization program, it has limited foreign participation in some instances.

A. 7. Protection of Property Rights

Morocco has a non-discriminatory legal system that is accessible to foreign investors. However, many judges are not trained in commercial law. The commercial courts, established in 1998, have begun to mitigate the weakness in commercial proceedings. A system of commercial arbitration was also created in April 1998, but it is too soon to judge its effectiveness.

Secured interests in property are recognized and enforced through the "Administration de la Conservation Fonciere." The GOM has also announced plans to create a secondary mortgage market.

Morocco has a relatively complete regulatory and legislative system for the protection of intellectual property. It is a member of the World Intellectual Property Organization (WIPO) and is a party to the Bern Copyright, Paris Industrial Property, and Universal Copyright Conventions; the Brussels Satellite Convention; and the Madrid, Nice, and Hague Agreements for the Protection of Intellectual Property.

While Moroccan laws are generally adequate, enforcement is sometimes lacking. Counterfeiting of clothing, luggage, and other consumer goods, as well as the illegal copying of computer software, is common. Microsoft recently won a court ruling protecting its interests.

A. 8. Transparency of the Regulatory System

Morocco's economic reform program has included improvements in the regulatory environment. In particular, the liberalization of the foreign exchange allocation system, the import regime, and the financial sector have reduced the government's role in the economy. Deficiencies remain in other areas, however, such as the labor law, which limits firms' ability to dismiss workers.

Even in areas where the regulations are favorable on paper, there are often problems in practice. Government procedures are not always transparent, efficient or quick. Routine permits, especially those required by local governments, can be difficult to obtain.

A. 9. Efficient Capital Markets and Portfolio Investment

The Moroccan government has adopted a number of measures to liberalize the banking system in recent years. While these reforms have introduced some additional competition in the banking sector, in practice, banks do not compete on deposit and lending rates.

Credit is allocated on market terms, and foreign investors are able to get credit on the local market. There are some cross-shareholding arrangements, but they are not tailored to exclude foreign investment. The Embassy has not heard of any efforts by the private sector or industry to restrict foreign participation in standard setting organizations or to restrict foreign participation in domestic enterprises. On the contrary, the government has actively sought out the participation of foreign investors for discussions on improving the business climate in Morocco.

Moroccan banks are generally sound, reflecting in part the limited competition within the sector, or from other financial institutions, e.g. a corporate bond market. Moroccan banks are largely in compliance with the Basel standards. Banks are supervised on a consolidated basis and must provide statements audited by certified public accountants.

The Casablanca stock exchange was privatized in 1996. It has experienced significant growth, due to new laws designed to make the exchange more efficient and transparent, and to the government's sale of shares of parastatal companies to the public. It is capitalized at approximately $14 billion.

A. 10. Political Violence

The last instance of mass political violence was the riots in Fez in December 1990, when a number of installations were destroyed. Although similar incidents are impossible to predict at this point in time, Morocco remains generally insulated from the unfavorable political developments affecting other countries in the region.

A. 11. Corruption

Morocco has a rather broad body of laws, regulations and even a special court to combat corruption. Nevertheless, corruption exists and U.S. companies have at times identified it as an obstacle to doing business in Morocco, particularly in connection to customs practices as well as in government procurement.

The current Moroccan government, in place since early 1998, defines transparency, good governance and combating corruption as top priorities, and has promoted open public discussion of corruption issues. It has increased transparency in public sector procurement and is working both to simplify regulations and sensitize government employees at all levels to ethics issues. The government is also working on anti-corruption issues with the World Bank, bilateral donors, and Moroccan civil society.

It is illegal in Morocco to offer or accept bribes. Punishments range from fines to jail sentences. Bribes to a foreign official are not tax deductible. Morocco is not a signatory to the OECD Convention on Combating Bribery.


B. Bilateral Investment Agreements

A bilateral investment treaty between the United States and Morocco took effect on May 29, 1991. The treaty stipulates that U.S. investors will be accorded status no less favorable than any other nationality; expropriation claims shall be handled promptly; and disputes may be referred to international arbitration. Morocco has similar agreements with 29 countries. \


C. OPIC and other Investment Insurance Programs

Morocco has had an Overseas Private Investment Corporation (OPIC) agreement since 1961, which was most recently updated in March 1995. Similar agreements are in effect with the agencies of France, Sweden, the United Kingdom, and Switzerland. Morocco is also a member of the Multilateral Investment Guarantee Agency (MIGA) and the Kuwait-based Arab Investment Guarantee Organization (OAGI).


D. Labor

Unskilled labor is generally plentiful and inexpensive. Employers are free to negotiate wages and salaries, subject to the minimum wage law. The industrial minimum wage as of July 1999 is dh 10 (about $1.05) an hour. There are, however, shortages of certain skilled workers.

The Moroccan constitution gives workers the right to organize, bargain collectively and strike, although the conditions under which workers can strike have yet to be defined. The new government in Morocco has created a tri-partite council of labor, business and government to reduce labor discord and increase economic efficiency.


E. Foreign Trade Zones/Free Ports

There is a free trade zone in Tangier in northwestern Morocco. The zone is open to both Moroccan and foreign companies. The 65 companies located in the zone may import goods duty free and are exempt from other taxes. The only requirement is that all local workers be paid directly in foreign exchange, which they are then obliged to exchange for dirhams at Moroccan commercial banks operating in the zone. Moroccan labor laws apply to the zone, but few, if any, firms are unionized. There is also an offshore banking law covering Tangier. Three banks were established under the offshore banking law, although two have ceased operations.

Foreign Direct Investment Statistics

The Moroccan foreign exchange office maintains balance of payments statistics that include annual forex inflows for private foreign investment.. Historically, these statistics do not correspond exactly to foreign direct investment (e.g., they include portfolio investment). In 1994, the office started to separate portfolio and direct foreign investment. There are no statistics on the stock of foreign investment in Morocco. However, foreign direct investment totaled $4.5 billion from 1967-1998, including portfolio investment until 1994. The following tables are based on the balance of payments statistics.

Foreign direct investment in Morocco

($ millions)

Year Total FDI % of GDP

1992 386.7 1.4%

1993 433.5 1.6%

1994* 213.6 0.7%

1995* 211.1 0.7%

1996* 235.0 0.7%

1997* 800.9 2.5%

1998* 384.6 1.0%

* Does not include portfolio investment

Total Foreign Investment Inflows by Country of Origin

($ millions)

Includes Portfolio Investment

Country 1994 1995 1996 1997

Sweden -- -- -- 366.2

United States 59.9 50.8 35.3 351.2

France 190.6 108.4 111.2 137.7

Japan 1.5 11.1 2.4 81.0

Germany 11.0 11.0 7.3 61.8

Spain 28.3 29.0 18.8 50.1

United Kingdom 140.1 37.2 96.4 32.2

South Korea -- -- -- 29.4

Netherlands 0.4 20.0 24.0 25.7

Libya -- -- 17.3 24.3

Benelux -- -- 17.7 8.5

Saudi Arabia 31.1 18.1 19.8 7.9

Switzerland 35.3 45.1 8.3 7.9

U.A.E. 5.3 16.2 1.4 3.9

Bahrain 1.6 22.8 1.7 --

Ireland 8.2 18.0 1.4 --

Portugal -- -- 73.8 --

Others 41.6 31.0 12.8 17.9

Total 554.9 418.7 449.8 1,205.7



Exchange rate (dh/$) 9.2 8.5 8.7 9.8

GDP ($ billions) 30.3 32.4 36.8 32.5


Foreign Investment Inflows by Sector

($ millions)

Sector 1994 1995 1996 1997

Other Industry 113.9 110.3 154.7 153.1

Banking 97.7 109.3 118.8 211.2

Energy & Mining 3.1 19.0 10.0 654.1

Holding Companies 93.2 51.5 34.6 41.8

Tourism 23.9 9.1 3.7 48.0

Real Estate 18.3 31.0 42.6 28.4

Commerce 53.4 27.1 16.8 18.6

Textiles 7.0 10.9 17.2 9.3

Other Services 2.7 11.8 5.7 2.7

Agriculture 2.2 1.7 1.0 2.2

Transport 1.5 .2 2.4 1.2

Public Works 3.0 3.8 11.8 34.8

Fishing 4.9 11.3 .4 .3

Others 30.1 15.7 30.2 12.5

Total 554.9 418.7 449.8 1205.7



Exchange rate (dh/$) 9.2 8.5 8.7 9.8

GDP ($ billions) 30.3 32.4 36.8 32.5


Major Foreign Investors

United States

-- Goodyear Maroc

parent company: Goodyear

sector: tire production

number of employees: 600


-- Industries Marocaines Modernes

parent company: Procter and Gamble

sector: soaps and toiletries

number of employees: 500


-- Jorf Lasfar Energy Company

parent company: CMS Energy

sector: independent power project

$1.2 billion joint venture with ABB


-- Coca-Cola Export Corporation

parent company: The Coca-Cola Export Corporation

number of employees: 45



-- S.G.S. Thomson

parent company: S.G.S. Thomson (France)

sector: electronic components and semiconductor manufacturing

number of employees: 1,600


-- Pechiney - MMA

parent company: Pechiney (France)

sector: aluminum cookware manufacturing

number of employees: 1,280


-- Bymaro S.A.

parent company: Bouygues S.A. (France)

sector: civil engineering

number of employees: 1,000


-- Renault Maroc

parent company: Renault S.A. (France)

sector: motor vehicle assembly

number of employees: 800


-- C.G.E. Maroc

parent company: C.G.E. (France)

sector: electric cable and transformer manufacturing

number of employees: 675


-- Polymedic

parent company: Hoechst AG (Germany)

sector pharmaceutical manufacturing

number of employees: 350