Current Developments in Morocco

The creation of the TEFZ (Tangier Exportation Free Zone) has increased the economic output of the city significantly. The TEFZ is a protected free trade environment where companies from around the world can operate tax-free. It covers an area of 345 hectares and incorporates a vast container port at the junction of the biggest maritime routes in the world with the capacity to handle both cargo and passenger ships. The free zone has allowed Tangier to develop into an industrial pillar of the country.

The Tangier-Med Project will contain the largest port in Africa and on the mediterranean sea. The project is a strategic priority of the Moroccan government for the economic and social development of the North Morocco region. It is part of the economic policy orienting Morocco towards exports, based on eight clearly identified export sectors, with particular emphasis on the free trade agreement with the European Union to be implemented by 2012.

Completion of the Tangier-Mediterranean project will have important economic effects in terms of jobs, creation of added value and foreign investment. Its particular position on the Straits of Gibraltar, at the crossing of two major maritime routes, and 15 km from the European Union will enable it to serve a market of hundreds of millions of consumers through the industrial and commercial free zones which will be run by well-known private operators. It will also win part of the strong growth market of container transshipment and become the leading hub for cereal transshipment, a facility which is non-existent in the north-west African region at present.

The project will be implemented, coordinated and managed by TMSA, a private company with public prerogatives, operating under an agreement with the State and interacting with the different ministries involved.

The port complex will have important economic effects in terms of jobs, creation of added value and foreign investment. In addition to the economic effects of the operation of the port, there will be important effects resulting from its construction, particularly through foreign investments, and others from the operation of the free zones.

A draft loan contract of $180 million to fund the expansion works of Tanger-Med port was signed in October 2008 for building a second deepwater port, dubbed "Tangier Med II", to meet the growing demand for containers treatment at the international level in sea transport. The port, to be operational by the second half of 2012, will include two container terminals with a total length of 2,800 m and a nominal capacity of 5 million containers.

Morocco’s intention is to establish a Euro-Mediterranean free trade zone by 2012 with the inclusion of almost 40 states, namely the European Union's 25 member countries, several more European countries and Tunisia, Morocco, Egypt, Algeria in North Africa and the Middle East's Turkey, Israel, the Palestinian territory, Jordan, Lebanon and Syria.

The city's new port is set to become one of the largest in the world - transforming the region into a competitive hub.
The aim is that Tanger-Med will increase Morocco's competitiveness by attracting foreign investments and boosting the country's industries (textile and manufacturing). The port's container activities will be complemented by a series of free zones, which will develop the country's import and export capacity. "The philosophy is to take advantage of our geographical location, but the objective is to fuel the development of a real industrial platform for Europe, North America and West Africa," says Said Elhadi, chairman of Tanger Mediterrannee Special Agency (TMSA), the governing body overseeing the development of Tanger-Med. "This is something new for Morocco."

As a deep-sea port, it will comfortably accommodate the latest generation of super container ships. "Experts forecast that container shipping will reach 60 million TEU (twenty-foot equivalent unit) by 2030-35 (current capacity stands at 25-26 million TEU)," says Elmostafa Almouzani, director of Tanger-Med. "Yet, the container capacity in the Mediterranean is small. Gioia Tauro is 2 million TEU, Cagliari 1 million, Port Said 1 million and a bit. The only ports that have significant growth potential are Algeciras and us."

Under current plans, the port will have a capacity of 3.5 million TEU by 2010; a possible extension could add 5 million TEU. With a total capacity approaching 9 million, Tanger-Med would be among the 15 largest ports in the world. The port and the free zones will employ 150,000 people in the long run.

The TFZ is a pioneer of what is set to become a crucial part of Tanger-Med's success. Started in 1999, the TFZ was designed to attract foreign investors to Morocco through a comprehensive package of incentives: no import tax, no benefit tax for the first five years (8.75% thereafter), no custom duty, business conducted in home currency (no exchange rate) and state subsidies for industrial estates in priority industries such as automotives, aeronautics and electronics.

TFZ also pioneered a management concept known as 'facilitator' that TMSA now uses: it is a private company with state prerogatives. In other words, companies wishing to set up shop in the TFZ are able to avoid all the usual bureaucratic and red tape obstacles. In a country such as Morocco, ranked 115 out of 175 on the World Bank's index on ease of doing business, this is a major selling point. "Investors usually allow a year to get everything off the ground," explains Mikou. "Here, we can deliver building permits, so we give them the parameters. If their architect works fast, it can be done in a week. I then get the plans; the next morning it's signed."

There are now 352 companies in the TFZ, with a strong emphasis on automotive and aeronautics: "Some EU companies now come here so that they can sell their products to the US without being affected by the WTO restrictions between the EU and US," says the director. "If it's produced here, the product becomes 'made in Morocco' and can go through under the free trade agreement."

TMSA is now a shareholder of TFZ and is likely to capitalise on this to develop two more industrial free zones in the port's hinterland. Tanger-Med will also benefit from a logistics free zone, Medhub: located behind the container terminals, it will focus on light, value-added activities and process container goods in transit. Third-party logistics companies that specialise in distribution, such as TNT or UPS, will use the zone as a distribution platform.

The concept was tried and tested in Dubai with immense success and it was a logical step for the parent company Jebel Ali Free Zone (Jafza) to run Medhub. "Dubai was built around the port and its free zone," says M'bouirik Mouilek, general manager of Medhub. "Jafza brings 20 years' experience to Medhub, so Morocco is buying itself time. There's no point in reinventing the wheel; it just needs to be customised."

As with TFZ, Medhub clients will benefit from a worry-free environment, proximity to large markets, low-cost logistics and cheap labour. But Mouilek says that it is the possibility of working 'just-in-time' with Europe that constitutes the biggest draw. "Take a retail business such as a consumer goods supermarket chain. It consolidates orders at Shanghai out of products originated from China and neighbouring Asian countries. The order preparation is labour-intensive. If you ordered directly from China, it would be cheap, but it would take a month. If you did it from here, you could have your order sent directly to the supermarkets at a competitive labour cost. We can deliver anywhere in Europe within 12 to 48 hours."

The message that cost effective manufacturing solutions can be found in Tangier has clearly got through as the US automobile manufacturer, the Delphi Group created 3,441 jobs in 2008 through an agreement signed with the National Agency for the Promotion of Employment and Skills (ANAPEC).

The jobs have been recruited in the Delphi Automotive Systems Morocco Unit in Tangier  which already employs 2,289 workers and the new Delphi Packard  Systems Morocco Unit in  the Tangier Free Zone which will employ 1,1 52 workers. Delphi has become the largest car component manufacturer in Tangier. The Michigan based group present in Morocco since 1999, employs 170,000 workers in 36 countries and chose Morocco  because of its attractive incentives for investment and its key geographical location.

In addition there is a Renault Nissan manufacturing agreement in the Tangier Free Zone to build a euro 600 million plant to make 200,000 cars by 2010. Further investment by the Group of another 200 to 400 million euros is envisaged depending on the vehicles produced.

This automobile manufacturing plant will be the biggest in the Mediterranean and will provide 6,000 direct and up to 30,0000 indirect jobs. The Chief Executive of Renault Nissan , Carlos Ghosin  commented that the plant will supply low cost cars to the international market noting that it was now impossible to achieve this level of production in Western European plants because of cost factors. This is a highly significant success for Morocco.