Morocco: Textile Industry Development And Trade Investment Cooperation Potential

1. Country profile

geographical environment

Morocco is located in the northwest end of the African continent, guarding the Strait of gibraltarian and facing Spain. It covers an area of 459000 square kilometers (excluding 266000 square kilometers of Western Sahara), and has a coastline of more than 1700 kilometers. It is a hub connecting Europe, the Middle East and Africa. The territory is mainly Mediterranean climate, hot and dry in summer, mild and humid in winter, coastal plain perennial climate, enjoys the reputation of "North Africa garden".

natural resources

Morocco is short of water resources, and its dependence on oil, natural gas and other energy sources is more than 90%. Morocco is one of the few countries in North Africa that lacks fossil fuel resources. In 2020, Nuo project, the world's largest solar thermal power station, will be completed in the desert of warzazart, Morocco. The total installed power generation capacity of the third phase project is 500 MW, which greatly alleviates the shortage of local power supply.

infrastructure

In recent years, the infrastructure construction in Morocco has been developing and improving day by day. The highway mileage is about 1800 km, and the road condition is good; The first high-speed railway in Africa, the Tangier genetra high-speed railway, has been successfully opened to traffic at the end of 2018. At present, Morocco has 38 ports, including Tangier Mediterranean port, the largest container port in the Mediterranean region, and 16 international airports. In January 2020, Royal Moroccan Airlines officially opened a direct flight route from Beijing to Casablanca.

population distribution

Morocco has a population of 37.34 million, with an urbanization rate of 62.4%, and the capital Rabat has a population of about 600000. Casablanca, the largest city and economic center in China, has a population of 3.7 million, with 1 / 3 industrial enterprises and 55% production enterprises. The population under the age of 34 accounts for about 64% of the total population, and the labor force is 12 million. Because the Moroccan government attaches importance to the popularization of education, the quality of the labor force in the country is relatively high. The official languages of Morocco are Arabic and Berber, and French is widely used.

Macro economy

Morocco is the fifth largest economy in Africa and the third largest in North Africa. It is dominated by service industry. In 2020, the GDP of Morocco is 113.55 billion US dollars. Affected by the impact of the new epidemic, the growth rate is - 7.0%, and the per capita GDP is about 315.8 billion US dollars. Morocco's business environment is the best in North Africa. In recent years, the government has continuously improved its investment environment to attract foreign investment. According to the world investment report of the United Nations Conference on Trade and development, Morocco will attract 1.6 billion US dollars of foreign direct investment in 2019, ranking eighth among African countries.

2. Current situation of textile industry

Industrial scale

Textile and garment industry is the most important traditional pillar industry and the largest employment industry in Morocco (providing 175000 jobs, accounting for 27% of the country), contributing 25% of the country's industrial GDP and accounting for 9% of GDP. There are about 1900 textile enterprises in Morocco, with an annual export volume of more than 3 billion US dollars, mainly facing the European market. Some famous brands from France, Spain, Italy and other countries are processing and producing in Morocco, providing a large number of fast fashion clothing for Zara, H & M and other European retailers.

international trade

According to the data of the foreign exchange administration of Morocco, in 2020, Morocco exported 3.04 billion US dollars of textiles and clothing to the world. The main export destinations include Spain (1.61 billion US dollars, accounting for 53%), France (600 million US dollars, accounting for 20%), Portugal, Britain, Italy and Germany.

The export products of Morocco's textile industry are mainly woven garments, and most of them are processed with supplied materials. In 2020, Morocco exported $1.93 billion of woven garments and accessories to the world, accounting for 63% of its total exports of textiles and clothing, followed by knitwear products, with an annual export of $620 million, accounting for 20%. Most of the raw materials and semi-finished products used in the country's textile manufacturing industry rely on imports, such as yarn, flour and accessories. In 2020, Morocco imported 3.16 billion US dollars of textiles and clothing from the world, mainly from China (870 million US dollars, accounting for 28%), Spain (480 million US dollars, accounting for 15%), Turkey (440 million US dollars, 13.8%) and Italy.

Since the outbreak of the global epidemic, the textile and clothing industry has become one of the most affected industries in Morocco. As a result of the epidemic, some European orders were cancelled, and many Moroccan manufacturers' funds were occupied and could not be recovered, thus facing financial crisis. In 2020, Morocco's textile and clothing exports will drop by 16.6% year-on-year, and the exports to Spain, Portugal, Britain, Ireland and other European countries will drop by 20% - 40%.

3. Trade and investment policy

Foreign trade policy

In order to promote foreign trade, Morocco has reached a series of free trade agreements with the European Union, the United States, Turkey, Tunisia, Egypt, Jordan and the United Arab Emirates. As of May 2019, Morocco's free trade agreements and preferential trade arrangements cover 56 countries and regions, covering a market of 1 billion people. At present, Morocco is the only African country to sign a free trade agreement with the United States. As a result of the above preferential trade arrangements, Morocco's textile and clothing products exported to the EU and the United States enjoy a zero tariff policy. In 2019, Morocco joined the African continent free trade area and negotiated free trade agreements with the economic community of West African States, Mercosur, Canada and Russia, providing a broad market and a relaxed trade environment for its export expansion and cooperation with Africa.

Preferential policies for investment

The Moroccan government takes attracting foreign investment as an important strategy for economic development, and textile industry is one of its key industries to encourage foreign investment. According to the preferential policies for encouraging and promoting investment formulated by Morocco's "investment law", the country will provide preferential policies on land purchase, infrastructure construction, personnel training and other aspects for investment projects with an investment amount of more than 100 million dirhams (about 72 million RMB) or creating 250 jobs; For goods and services export enterprises, the company tax will be exempted for five years and reduced by half after five years. In addition, Morocco implements a policy of free access to foreign exchange (including profits) in full under investment, and there is no proportional restriction on foreign investment.

The Moroccan government has implemented more preferential tax policies than other regions in the country for more than 10 "industrial acceleration zones" such as Tangier, de Tuan, ujida, guerilla, Fez, Meknes, Rabat, Casablanca, Marrakesh and Agadir. From January 1, 2021, the enterprise income tax will be reduced or reduced in the first five years of the newly established company in Morocco; Since the sixth year, 15% of the corporate income tax will be levied on the enterprises in the industrial acceleration zone, and the new preferential tax policy will be adopted after the 20th year. In addition, investors will also enjoy simplified administrative procedures, free access to funds, simplified customs and commodity inspection procedures, and other preferential tax treatment. For example, it is free of import tariff, import value-added tax, production and consumption tax, export tax, enterprise establishment, capital increase, expansion, land purchase, business tax and city tax for 15 years, shares and similar income of foreign investors are exempt from tax, and goods from foreign countries and their jurisdiction are exempt from value-added tax.

In recent years, the Tangier industrial acceleration zone is a tax-free zone mainly built and recommended by the Moroccan government, with complete facilities and superior geographical location. At present, more than 500 companies have settled in the industrial acceleration zone, 40% of which are industrial enterprises, mainly involving metallurgy, electronic machinery, textile, leather, chemical industry and other industries. It should be noted that for export processing trade, only when the value-added rate of processing trade in Morocco exceeds 40%, it can be regarded as Moroccan products. Only by issuing the certificate of origin issued by the Moroccan chamber of Commerce and industry or the customs, can we avoid the trade tariff barriers and enter the European and American markets. 85% of the final products produced in the tax-free zone must be exported, and the remaining 15% can be sold in the domestic market of Morocco after tax payment.

4. Textile industry cooperation between China and Morocco

Morocco is the first Maghreb country to join the belt and road initiative. Under the guidance of the belt and road initiative, economic and trade cooperation between China and Morocco has continued to develop. At present, Morocco is China's tenth largest trading partner in Africa, and China is Morocco's third largest trading partner. In 2020, the bilateral export and import trade volume of China and Morocco will be 4.17 billion US dollars and 595 million US dollars respectively, of which the export and import of textiles and clothing account for 12.2% and 21.8% of China's import trade from Morocco.

In recent years, the export of China's textile industry to Morocco has been stable at US $500-600 million, with imports of about US $100 million. According to Chinese customs statistics, the main export products of the industry to Morocco include knitted fabrics (accounting for 34%), chemical fiber yarns and fabrics (chemical fiber staple fiber and filament yarn, fabrics accounting for 32%), and other textile products (mainly masks, accounting for 6%); The main import products from Morocco are needle, woven clothing and clothing accessories, accounting for more than 98% in total.

5. Summary and suggestions

(1) as a country with good business environment in North Africa, Morocco has stable politics, superior location, perfect infrastructure, rich human resources and high degree of economic openness. The government of Morocco actively encourages and facilitates foreign investment by issuing a series of preferential investment policies.

(2) the textile and garment industry is an important traditional pillar industry in Morocco, with an annual export volume of more than 3 billion US dollars, mainly for the European market, providing a large number of fast fashion clothing for Zara and other international brands. Since Morocco has signed free trade agreements with the EU and the United States, the export of textile and clothing products enjoys zero tariff preference, which is conditional on becoming an important platform for Chinese textile and garment enterprises to enter the European and American markets.

(3) the export products of Morocco's textile industry are mostly processed with imported raw materials and semi-finished products. Therefore, there is a great potential for cooperation between Morocco and China's textile industry in the fields of spinning, weaving and auxiliary materials, which is suitable for investment or trade cooperation of domestic upstream textile raw materials enterprises.

(4) more than 1 / 3 of the textile and garment products produced by Morocco are sold in the country every year. The growing domestic consumer market also provides market space and development potential for the cooperation between China and Morocco's textile industry.

(5) it should be noted that only when the value-added rate of export processing trade in Morocco exceeds 40%, it can be regarded as Moroccan products. Only by issuing the certificate of origin issued by the Moroccan chamber of Commerce and industry or the customs, can we avoid the trade tariff barriers and enter the European and American markets. In addition, 85% of the final products produced in the tax-free zone must be exported, and the remaining 15% can be sold in the domestic market of Morocco after tax payment.