Morocco

Trade in Services

Multinational Trade Agreements

Active

1. Morocco-United States: The FTA between Morocco and the United States came into force in January 2006. The United States is a significant trading partner, purchasing 4.7% of exports and supplying 7.9% of imports in 2018. The FTA has resulted in Morocco reducing its tariffs on imports from the United States.


2. European Union (EU)-Morocco: The association agreement came into force in March 2000. The EU is Morocco's largest trading partner, accounting for nearly 60% of its trade in 2018. The EU's imports from Morocco are dominated by machinery and transport equipment, agricultural products, and textiles and clothing. The EU's exports to Morocco are dominated by machinery and transport equipment, followed by fuels, metals and minerals, textiles and clothing, and agricultural products. Negotiations for a Deep and Comprehensive Free Trade Area (DCFTA) between the EU and Morocco were launched on March 1, 2013. Four negotiating rounds have taken place so far, with the most recent in April 2014. The overall goal of the negotiations is to create new trade and investment opportunities and to ensure a better integration of Morocco's economy into the EU single market. The DCFTA also aims at supporting ongoing economic reforms in Morocco and at bringing the Moroccan legislation closer to that of the EU in trade-related areas.


3. Agadir Agreement: The FTA between Egypt, Jordan, Morocco and Tunisia came into force in March 2007. While none of these countries are within the top five exporting or importing partners of Morocco, this agreement serves to encourage inter-regional trade in the Middle East and North Africa region. The Agadir Agreement is open to further membership by all Arab countries that are members of the Arab League and the Greater Arab Free Trade Area and is linked to the EU through an association agreement.


4. Morocco-Turkey: The FTA agreement came into force in January 2006 and serves to encourage greater inter-regional trade.


5. European Free Trade Association (FTA)-Morocco: The FTA came into force in December 1999 and includes Iceland, Liechtenstein, Norway, Switzerland and Morocco.


6. Global System of Trade Preferences among Developing Countries (GSTP): The partial scope agreement came into force in April 1989.


7. Pan-Arab Free Trade Area: The FTA came into force in January 1998.

Sources: WTO Regional Trade Agreements database, Fitch Solutions

Foreign Direct Investment Policy

1. Foreign direct investment (FDI) in Morocco is welcomed into a wide range of sectors and has traditionally been channelled into sectors such as textiles manufacturing, autos, real estate, finance and tourism. Recent investment announcements have included renewable energy projects (notably the world's largest concentrated solar power plant), as well as automotive production plants and port expansions.


2. Invest in Morocco, the country's investment development agency, was created in 2009 to promote and develop investment in the economy. The agency also proposes legislation and regulations to create an environment conducive to investment.


3. Morocco's openness to FDI means that foreign investors face few regulatory or policy obstacles when entering the country's market. The legislative framework for FDI is based on the new investment charter (released in August 2016), which offers considerable updates and improvements on the previous charter from 1995. This provides for equal treatment of domestic and foreign investors, allows the convertibility of foreign currency and the freedom to repatriate profits.


4. Most sectors have no restrictions on foreign ownership and there is no mechanism for mandatory government screening of approval of projects. The only meaningful barriers to foreign investment concern caps on foreign involvement in air and maritime transport and fisheries, and the presence of state-owned enterprises (SOEs), which limit private sector activity in some sectors, notably phosphate mining. In general, these barriers do not pose a major concern for foreign investors in Morocco, and the government's favourable attitude towards FDI means that investor sentiment is not affected much by them.


5. Foreign participation in companies in the air and maritime transport and maritime fishery sectors is capped at 49%. Foreign ownership of agricultural land is not permitted, though leases of up to 99 years are available. The government has a monopoly on the phosphate mining industry through the 95% state-owned Office Chérifien des Phosphates, restricting foreign participation to downstream industries, such as fertiliser production.


6. The government is actively investing in hard infrastructure, particularly transport networks, in line with its commitment to position the country as the leading exporting and manufacturing hub between Europe and Africa.


7. SOEs continue to operate in some sectors of the economy, notably phosphate mining. While this precludes foreign involvement in these industries, SOEs do not significantly distort the playing field against foreign or private firms in most sectors.


8. Attractive free trade zones (FTZs) exist in a number of locations, offering a range of tax exemptions and incentives as well as logistics connections and access to local suppliers for export-oriented businesses. Foreign investors may also qualify for generous tax breaks and government support for the construction of premises or acquisition of capital goods.

Sources: WTO – Trade Policy Review, Invest in Morocco, Fitch Solutions

Important Updates to Taxation Information

• As of January 1, 2018, Moroccan CIT is levied using a progressive rate scale (instead of a proportional rate scale). Credit institutions and insurance companies remain subject to a flat rate of 37%. Furthermore, the capital gains on non-depreciable assets recorded following a merger/demerger operation cannot be offset against available losses.
• Starting January 1, 2019, the CIT rate applicable to the income ranging from MAD300,001 to MAD1,000,000 has been reduced to 17.5%.
• Starting January 1, 2019, a 'social cohesion contribution' is levied at 2.5% on companies with a net taxable income exceeding MAD40 million.

Fitch Solutions Risk Summary

ECONOMIC RISK
High trade exposure to the eurozone market poses a medium-term risk to Morocco's growth in the event of a significant drawdown in demand. Approximately two-thirds of the country's goods exports are absorbed by its northern neighbours. As a consequence, the export sector is highly vulnerable to any economic downturn in the eurozone, particularly in light of global trade tensions. The tourism industry also relies extensively on visitors from France, Spain, the Benelux countries and the UK, and any downturn in the security situation would harm growth. Over the long term, the economy will benefit from greater exposure to emerging markets in the Middle East and North Africa and in Sub-Saharan Africa. Weather-induced volatility in agricultural output will continue to constitute a risk to real GDP growth, given that the sector employs over a third of the workforce. Real GDP is expecting to contract on the back of Covid-19-related disruptions to economic activity and the incoming drought in the agricultural sector. Regional political tensions and weak activity in the eurozone pose the main downside risks to the outlook.

OPERATIONAL RISK
Morocco offers a number of strategic advantages across its operational risk profile which make it a more attractive location for investment than many of its regional peers. In particular, relatively high levels of security, an integrated supply chain network, openness to foreign investment and well developed financial markets contribute to an environment conducive to business. However, key risks are present in the country's labour market, including low levels of educational attainment, which dampen the competitiveness of the workforce. As a result, businesses may face elevated labour costs and limited availability of skilled workers. Morocco also has one of the highest income and personal tax rates in the Middle East and North African region, representing a notable drawback to the country's appeal for businesses. The newly expanded port of Tanger-Med is a global transhipment hub, and consequently export and import supply chains benefit from strong connections to international trade routes. Furthermore, the country is making great strides in terms of e-government readiness, improving the ease with which businesses can complete administrative procedures.

Source: Fitch Solutions
Date last reviewed: May 30, 2020

Fitch Solutions Political and Economic Risk Indices

Exchange Rate HK$/US$, average
7.75 (2015)
7.76 (2016)
7.79 (2017)
7.83 (2018)
7.77 (2019)

Treaties and Agreements between Hong Kong and Morocco

1. Morocco and Mainland China have a bilateral investment treaty which came into force in November 1999.

2. Morocco and Mainland China signed a Double Taxation Avoidance agreement which entered into force in August 2006.

Sources: UNCTAD, OECD

Chamber of Commerce (or Related Organisations) in Hong Kong

The Arab Chamber of Commerce & Industry (ARABCCI) was established in Hong Kong in 2006 as a leading organisation at promoting commercial tied between Hong Kong/mainland China and the Arab World.

The Arab Chamber of Commerce & Industry
Address: 20/F, Central Tower, 28 Queens Road, Central, Hong Kong
Email: info@arabcci.org, secretariat@arabcci.org
Tel: (852) 2159 9170
Fax: (852) 2159 9688

Source: The Arab Chamber of Commerce & Industry

Honorary Consulate of The Kingdom of Morocco
Address: 60 Peak Road, The Peak, Hong Kong
Liaison Visa Office: Room 3401, New World Tower, 18 Queen's Road Central, Central, Hong Kong

Tel: (852) 2138 3388

Fax: (852) 2868 1988

Source: Protocol Division Government Secretariat

Visa Requirements for Hong Kong Residents

HKSAR passport holders are granted 30 days visa-free access.

Source: Visa On Demand
Date last reviewed: May 31, 2020