On November 3, 2023, the Marketing Department of China National Textile and Apparel Council (CNTAC), and the Sub-Council of Textile Industry, China Council for the Promotion of International Trade (CCPIT TEX) jointly released the Outbound Investment and Cooperation Guide by Country for the Textile Industry (2023) at the 6th Belt and Road Textile Conference. This report introduces and analyzes the investment environment of 20 countries worldwide. It provides information and guidance for textile enterprises to engage in “Belt and Road” cooperation.

Geography:

Morocco is located in the northwestern tip of the African continent, which connects Europe, the Middle East and Africa as a hub. It has a Mediterranean climate, with hot, dry summers and mild, humid winters, and a pleasant year-round climate in the coastal plains, which is known as the “Garden of North Africa”.

Natural Resources:

Morocco is short of water resources and is more than 90% dependent on foreign sources of energy, such as oil and gas, and is one of the few countries in the North African region that lacks fossil fuel resources. It is rich in mineral, wind and solar energy resources, with phosphate reserves accounting for about 75% of the world’s reserves. In 2020, the world’s largest photothermal power plant - Noor project - was inaugurated in the desert of Ouarzazate, Morocco, with a total of 500 megawatts (MW) of installed power generation capacity in the three phases of the project, which has effectively alleviated the tension in the supply of local electricity.

Infrastructure:

Morocco’s infrastructure is relatively well-developed, with well-developed land transportation, and the road condition is among the best in African countries. The railroad network is relatively developed, and the first high-speed railroad in Africa, the Tangier-Casablanca High-Speed Railway, was successfully opened to traffic at the end of 2018. Morocco has a long coastline and excellent port transportation conditions, with 43 ports including the largest container port in the Mediterranean region - Tangier Mediterranean Port. There are 18 international airports in the country.

Macroeconomy:

Morocco is the fifth-largest economy in Africa and the third-largest economy in North Africa. It boasts a good foundation for economic development; tourism, phosphate exports, and remittances are the main economic pillars, with an average annual economic growth rate of more than 3% from 2000 to 2019. In recent years, the industrial development momentum has been good; automobile, textile and apparel industries continue to expand. In 2022, Morocco’s GDP reached US$ 142.87 billion; the per capita GDP was US$ 3900. According to the World Bank’s Doing Business 2020 report, Morocco’s business environment ranks 53rd out of 190 economies in the world; it is the first in North Africa and the third in Africa. In recent years, Morocco’s government has continued to improve the investment environment to attract foreign investment. According to UNCTAD’s World Investment Report, Morocco attracted US$ 2.14 billion in foreign direct investment in 2022, moving it to fifth place among African countries.

Status of Textile Industry:

The textile and garment industry is an important traditional pillar industry and the largest employment industry in the industrial sector in Morocco, with more than 1,600 textile and garment enterprises and 220,000 employees. The output value of the textile and garment industry accounts for 15% of the GDP, producing more than 1 billion pieces of products. Textile and garment exports amounted to US$ 6.6 billion, accounting for 1/4 of the national total exports. Garments processing and exports are the principal parts of Morocco’s textile industry chain, mainly providing fast-fashion garment OEM for European retailers. INDITEX Group is one of the most important customers of Morocco’s textile and garment enterprises, and the company’s orders in Morocco have risen year by year in recent years. In addition, well-known apparel brands from France, Italy, Spain and other countries are also processing in Morocco.

International Trade

Morocco is the top exporter of ready-made clothes from Africa to the European Union. According to Morocco’s Foreign Exchange Office, Morocco exported US$ 4.09 billion worth of textiles and apparel worldwide in 2022. Spain is its major export market with US$ 2.37 billion worth of textiles and apparel in 2022, accounting for 57.9% of the total; the following main export markets also include France (accounting for 16.1%), the United Kingdom, Germany, Italy and Portugal, among other European countries. Among the export products, 88% are garments, mostly processed with incoming materials.

In 2022, Morocco imported US$ 4.39 billion of textile and apparel from the world, mainly from China (US$ 1.16 billion, 26.4%), Turkey (US$ 780 million, 17.8%), Spain (US$ 520 million, 11.8%) and Italy. The main imported products are chemical staples and fabrics (accounting for 24%), knitted fabrics (accounting for 16%), cotton, cotton yarn and cotton woven fabrics (accounting for 14%), chemical filaments and fabrics (accounting for 11%).

Trade and Investment Policy

In order to promote foreign trade, Morocco has in recent years concluded a series of free trade agreements with the European Union, the United States, Tunisia, Egypt, Jordan and the United Arab Emirates To date, Morocco has signed free trade agreements and preferential trade arrangements covering more than 50 countries and regions and 2.5 billion people. Morocco is the only African country to have signed a free trade agreement with the United States. As a result of these preferential trade arrangements, Moroccan textile and garment products exported to the European Union and the United States enjoy a zero-tariff policy. In 2019, Morocco joined the African Continental Free Trade Area and negotiated free trade agreements with the Economic Community of West African States, MERCOSUR in South America, Canada and Russia, which provides a broad market and a relaxed trade environment for the expansion of its exports and cooperation with Africa.

Summary and Suggestion for Investment

(1) Morocco, as a country with a better business environment in North Africa, boasts political stability, superior location, perfect infrastructure and a high degree of economic openness. Moreover, the government has taken attracting foreign investment as a major strategy for economic development and enacted a series of investment incentives to actively encourage and facilitate foreign investment.

(2) The textile and garment industry is an important traditional pillar industry in Morocco, which is mainly oriented to the European market and has good cooperation relations with some international brands. Textile and garment products enjoy zero tariffs to enter the European and American markets due to free trade agreements.

(3) Because of the shortage of raw materials and energy supply, and the weak foundation of the manufacturing industry and supporting industries, Moroccan exported textile products are mostly processed with materials. Raw materials and semi-finished products rely on imports.

(4) Morocco is relatively rich in human resources, and its labor cost is more advantageous than the neighboring countries such as Portugal, the Czech Republic, Poland, etc. It should be noted that, according to the Moroccan Labor Code, the proportion of local employees employed by foreign companies investing in Morocco shall not be less than 70%.

Source: CHINA TEXTILE LEADER Express