OBG talks to Ahmed Fassi-Fihri, Investment Promotion Manager, Moroccan Investment Development Agency

Interview: Ahmed Fassi-Fihri

Given the focus on low labour costs, how can the country maintain its competitive edge?

AHMED FASSI-FIHRI: In staying competitive, Morocco does not want to rely only on labour costs, but also on other factors and comparative advantages that distinguish it from its competitors. For example, our position as a crossroads for global trade as well as our openness thanks to our many free trade agreements (FTAs), which makes our country an ideal platform for accessing markets totalling over 1bn consumers. Other advantages include exemptions from Customs duties, the quality of our human resources, and the level of expertise we have cultivated in high-level and value-added technological sectors. In this respect, we are seeking to attract “export-driven” investors as they encourage technology transfers and bring useful know-how. At the same time, these investors contribute to Morocco’s export capacity, thereby helping to improve the country’s balance of trade. Typically, this involves investments in sectors such as aeronautics, automobiles, electronics, offshoring, agribusiness and pharmaceuticals. As a result, Morocco is no longer just a low-cost destination, and is now making itself known as a competitive “best cost” destination that is open to the world.

How do you assess the impact of FTAs on the development of export industries?

FASSI-FIHRI: As expected, FTAs have had a direct impact in leading to net growth in trade, imports and exports. However, our trade deficit is growing because imports are increasing faster than exports. Still, the evolution of our exports is positive, even if falling short of potential, and our country’s expectations in that respect. Some sectors are doing better than others and are fully benefitting from new treaty provisions, examples being the automotive and aeronautics sectors. However, other sectors need more support, especially when it comes to exports to more traditional trading partners such as the US. For these sectors, long-term strategies are being developed in cooperation with the private sector and should be implemented as soon as possible, in line with existing sectoral strategies.

To what extent does a lack of legal certainty pose a challenge to the business environment?

FASSI-FIHRI: The kingdom has been working for several years on structural reforms. These developments have already been recognised by the World Bank, which, in its “Doing Business 2012” report, ranked Morocco among the best reformers of the year. With respect to our business regulations, Morocco has a legal framework that meets international standards and covers all areas in business law – commerce, competition law, investments, public procurement and public-private partnerships. So one cannot say there is uncertainty or opacity in this regard, quite the contrary. Where further efforts are needed is in the area of enforcement, and a wide-ranging judicial system reform project is being undertaken to this end. The national dialogue on reforming the judicial system has mainly focused on rebuilding from the ground up so as to meet the expectation of citizens, economic agents and the country’s international partners.

How can Morocco diversify its sources for foreign investment given economic slowdown in Europe?

FASSI-FIHRI: Morocco has not been spared the effects of the recession on its main trade partners, in particular those in the eurozone, which are responsible for the bulk of its trade. This crisis has had a direct impact on foreign direct investment (FDI). Of course, the solution lies in diversifying our FDI sources, but we also need to find new ways to achieve synergies with our European partners, for instance by mutually beneficial co-location resulting in shared competitiveness. In terms of diversification, we are concentrating our efforts on the US, with which we have launched a partnership for strategic dialogue, and Canada, with which we are negotiating a new FTA, as well as Japan, South Korea, China and the Gulf countries.