Doing business: A look at the local commercial environment

Against a backdrop of global economic uncertainty, the Moroccan government is making every effort to attract investors to the country. The government’s domestic investment spending increased 2.5% in 2012 to Dh48.5bn (€4.3bn), according to the Ministry of Economy and Finance, despite a deepening budgetary deficit. However, a great emphasis is being placed on attracting foreign direct investment (FDI), particularly as capital inflows into the North Africa region slowed in 2012, following upheavals in Tunisia, Libya and Egypt. A partnership with the EU is helping the government identify and remedy bottlenecks, with systems in place to monitor progress. But in sectors like mining, reforms have led to investors adopting a wait-and-see attitude.

DOING BUSINESS: Morocco dropped three places, to 97 out of 185, in the World Bank’s 2012 “Doing Business” report after going up 21 places in 2011. It scored low on dealing with construction permits, and the number and time of procedures. These bureaucratic obstacles foster corruption to which smaller companies are particularly exposed, said Abdessamad Saddouq, general secretary of Transparency Maroc. “Bureaucracy and corruption become the same thing,” Saddouq said. In 2011, however, Morocco had earned a special mention in the report as the country that made the most progress that year, showing its will to change the status quo. Speed is an issue as well, as court judgements can take over a year to be delivered. In this context, arbitration courts offer a much-needed alternative. The International Court of Arbitration, which received 796 claims in 2011 and delivered 508 sentences, shows the growing importance of arbitration.

GOVERNMENT RESPONSE: The government formed the National Committee for the Business Environment (Commission Nationale de l’Environnement des Affaires, CNEA) in 2009. After consulting with partners such as the General Confederation of Moroccan Enterprises, the World Bank and the EU to identify obstacles, CNEA put forth a series of laws meant to fast-track business operations. It identified 12 problem areas and 32 ways to remedy these. CNEA also lobbies for legislative change, and reforms that the body pushes have typically have generally been approved more quickly.

CNEA is also charged with the responsibility of following up on the implementation of these laws after adoption, and is currently working to determine indicators with the help of the World Bank. Among the 32 points of action advocated by CNEA are ones targeting the three factors that penalised Morocco in the “Doing Business” report: difficulty in paying taxes, property rights and bureaucracy. For example, CNEA is now issuing companies a single identification number that will streamline procedures and prevent overlap. It also spearheaded a website for reporting corruption. In a similar vein, the Competition Council was created as an antitrust body and is expected to have greater powers to carry out its regulatory office. “We will have more autonomy, but this requires a text of application,” said Abdelali Benamour, president of the council, speaking about regulating market competition. “We are in favour of the firms, but we want fair play and there needs to be sanctions on those who do not play by the rules.”

FINANCING: According to the Investment Charter, the government provides financial or material support for investments above Dh200m (€17.8m), those that create at least 250 jobs, those in provinces targeted for development, and those that promote businesses that transfers technology and contribute to the environment. For such projects, the government can contribute 20% of the total cost of land or training of Moroccan staff, as well as 5% of the infrastructure cost.

ADVANTAGES: Morocco has a young and relatively well-educated labour force, with many having studied abroad or at one of the 14 national universities or specialised schools. Business owners are allowed 100% ownership of firms. The country has three main taxes regimes: personal income, corporate and value-added tax. The government offers attractive tax incentives, particularly to businesses that operate in one of the sectors targeted by the National Emergence Plan.