Cablegate: Embassy's Investment Conference Highlights


DE RUEHRB #0641/01 1031012
R 131012Z APR 07





E.O. 12958: N/A

Sensitive but unclassified -- protect accordingly

1. (U) Summary. In support of implementation of our
bilateral free trade agreement with Morocco, Mission Morocco
recently hosted an investment conference for potential
foreign investors in the automotive parts sector, a key
priority of Moroccan industrial policy. The event
highlighted success stories of existing American, European
and Asian investors, and included visits to several
manufacturing facilities. The GOM participated in the event,
and used the occasion to launch its new targeted program for
the auto parts sector under its overall "Plan Emergence."
Approximately 50 people attended the event and already two
companies have expressed strong interest in investing in
Morocco in the near future. End summary.

2. (U) On March 26-27, an Embassy/USAID conference (financed
with MEPI funding) hosted potential foreign investors from
the auto parts sector in Casablanca and Tangier.
Representatives from American and European companies were
briefed by experts in both the public and private sector.
Since 1996, Morocco's automotive sector has experienced
average growth rates of 26.4 percent in investment, 22
percent in export growth and 9.3 percent in overall growth.
The 120 companies in the sector account for $1.1 billion in
exports, representing 17 percent of total Moroccan exports.
Auto parts manufacturers in Morocco predominately supply
automotive assembly operations in southern Europe. Proximity
and low labor costs are the two main features that make
Moroccan produced automotive parts attractive to European
automotive assemblers. Delivery times for Moroccan products
are one to three days to Southern Europe and five days for
other parts of the continent, while wage rates in Morocco are
a fraction of those in the European Union.


3. (U) On the first day of the conference, Ambassador Riley
welcomed the participants and provided an overview of the
benefits that the FTA brings to Morocco-based manufacturers.
The Ministry of Industry's (MOI) Secretary General Bouselham
Hilia discussed the GOM's Emergence Plan, which seeks to
promote investment in seven key sectors identified through a
McKinsey Associates study: automotive, electronics, aviation,
tourism, textiles, agriculture and cinematography. The MOI's
Deputy Director of Industrial Production Ouatiqua Elkalfi
outlined the GOM's new plan to focus on the automotive
sector, rated by the GOM as the second most important sector
after textiles. Measures include financial incentives such
as paying up 20 percent of land acquisition and training
costs (up to five percent of total costs). In addition, the
GOM has established free trade zones that offer first rate
facilities and infrastructure, simplified customs
regulations, efficient management and tax incentives
(corporate income is tax free for the first five years and
only 8.75 percent for the next 20 years). In addition, the
GOM is constructing the world class Tangier Med Port to
facilitate vastly increased sea freight from Morocco as well
as to act as a major transshipment facility for the
Mediterranean region (the Straight of Gibraltar is one of the
busiest freight areas in the world).

4. (U) The rest of the conference had a predominately private
sector focus with current investors in the Moroccan
automotive sector sharing their business experiences with the
visiting potential investors Representatives from six
companies discussed teir investment stories, including one
who gave atour of his company's manufacturing facilities in
Casablanca. The second day of the conference shifted to
Tangier where participants visited the Tanier Free Zone
(TFZ) and toured four manufacturin plants. Finally,
representatives from the TFZ nd Tangier Med Port discussed
the plans for thei facilities and how they would help
manufacturersin Morocco to produce and export their products
fficiently. The investment conference was widely overed by
Moroccan TV and press, and interviews ith Ambassador Riley
featured prominently in thenews.


5. (U) Larbi Belarbi, the president of Moroco's only
automotive assembly company, Somaca, (ad the president of
the Moroccan Association of Automotive Industry and Trade)

shared the story of his company's evolution and recent
growth. The formerly state-owned company had produced cars
for Renault, Peugeot and Fiat before nearly being put out of
business by an influx of imported second-hand cars into
Morocco. In 2003, Renault bought Somaca and proceeded to cut
operating costs by 40 percent. In 2005, Somaca launched a
project to assemble the economy car "Logan" in Morocco.
After producing 20,000 Logans in 2005 for the domestic
market, Somaca built 30,000 cars in 2006 and made its first
foray into exporting cars to Spain and France. In 2007, the
company will raise production to 40,000 cars and seek to
expand exports further. Belarbi led the conference
participants on a tour of Somaca's production facilities that
helped demonstrate the quality of Moroccan workmanship.

6. (U) Representatives from seven foreign auto parts
manufacturers with operations in Morocco also spoke at the
conference or gave tours of their facilities in the TFZ. All
seven stressed Morocco's advantages, including low wage
rates, a large available pool of labor and close proximity to
Europe. One company reported that total monthly costs for a
typical machine operator, including benefits, cost only $400
in Morocco compared to $567 in Romania and $1,067 in
Lithuania. Clearly, Morocco's minimum wage rate of $1.15 per
hour helped make it an advantageous destination for
investment. In addition, several current investors noted
that they were pleased with the quality of the Moroccan labor
force, its strong work ethic -- absenteeism is very low, and
its ability to successfully operate with a minimum of expat
managers. Most of the companies participating in the
investment conference had experienced rapid growth in their
Moroccan operations, with their staffs doubling or tripling
in the first two to three years of operations.


7. (U) Both business participants and Free Zone officials
themselves stressed that the TFZ offers a well managed,
modern facility with good infrastructure and excellent port
connections Several also praised the GOM for its timely
assistance in securing investment incentives that helped them
get off to a quick start. Hicham El Aloui, an executive with
the Tangier Med Port, which owns the TFZ, added that other
free zones were being built in Tangier and there was abundant
space for more investors. Also, because the TFZ had proven
to be so popular with auto parts manufacturers, a "Tangier
Auto City" dedicated solely to the sector may be opened in
the future. El Aloui also presented plans for the new
Tangier Med Port, which will be much larger than the existing
port and will act as a major transshipment facility. The new
port will have increased storage facilities and modern
infrastructure. El Aloui suggested that the new port should
cut logistics costs by 30 to 40 percent for companies working
in the TFZ.


8. (SBU) The GOM has identified the auto sector as an area
with high potential for the country, and the conference (part
of our effort to advance the bilateral economic relationship
under the FTA) contributed to its own promotion activities.
We share, and sought to convey to investors, the view that
good opportunities exist for investors who do their homework
and select appropriate niches. At the same time, some
constraints remain to full realization of the "Emergence"
vision. These include notably a shortage of professionals in
engineering, design, and research and development.
Nonetheless, recent success stories and the interest of at
least two companies who attended the conference show that
this remains a sector with promise for Morocco. End Comment.
Visit Embassy Rabat's Classified Website;


© Scoop Media

World Headlines


New IPCC Report: ‘Unprecedented Changes’ Needed To Limit Global Warming

Limiting global warming to 1.5°C will require “far-reaching and unprecedented changes,” such as ditching coal for electricity to slash carbon emissions, says a special report that finds some of the actions needed are already under way, but the world must move faster… More>>


Jamal Khashoggi: UK, France, Germany Join Calls For Credible Investigation

Germany, the United Kingdom and France share the grave concern expressed by others including HRVP Mogherini and UNSG Guterres, and are treating this incident with the utmost seriousness. More>>


MSF Not Wanted: Nauru Government Shows Continued Callousness

The Nauruan Government’s decision to ask Doctors Without Borders to immediately leave shows continued callousness towards asylum seekers desperately seeking a safe place to call home, Green MP Golriz Ghahraman said today. More>>


Sulawesi Quake, Tsunami: Aid Response Begins

Oxfam and its local partners are standing by to deploy emergency staff and resources to the Indonesian island of Sulawesi, as an estimated 1.5 million people are thought to be affected by the massive earthquake and tsunami that hit on Friday. More>>


Decriminalising Same-Sex Relationships: UN Rights Chief Applauds Indian Decision

“This is a great day for India and for all those who believe in the universality of human rights," Bachelet said. "With this landmark decision, the Indian Supreme Court has taken a big step forward for freedom and equality...” More>>


  • Pacific.Scoop
  • Cafe Pacific
  • PMC