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Morocco, The Top Reformer
22 September 2006 16:19
The Top Reformer
Morocco, Volume 109
Morocco's efforts to reform and develop its economy and infrastructure earned it an accolade from the World Bank as the top reformer in the Middle East and North Africa.

Morocco has carried out many reforms in 2005 and 2006, and in January of this year the Morocco-US free trade agreement (FTA) came into force. On September 18, Salah-Eddine Mezouar, the minister of industry, trace and economic upgrading met with Holly Vineyard, the US deputy under-secretary for trade in Rabat to discuss ways in which the two countries can overcome any new challenges that have developed since the treaty came into force, as well as review some provisions of the treaty to assure there are no imbalances in benefits.

Mezouar told the local press that trade has improved considerably between the two countries, especially in the textile and garment sectors, which doubled their exports to the US in the first five months of 2006, compared to the same period in 2005.

"Significant" orders have been received from the US, according to Mezouar. He also said that US investors are becoming more aware of the Moroccan market. Increasing numbers are interested in the new opportunities made available by the FTA, such as paper, footwear, spare parts and food, which also saw a jump in some segments in exports to the US this year.

The US Agency for International Development (USAID), in partnership with the ministry of trade, industry and economic upgrading is running a three-year, $2.5m project, called the Morocco Fast Track Trade Project, designed to help Moroccan business better adapt to and take advantage of the export opportunities created by the FTA.

However, Vineyard pointed out that the two countries will have to schedule more visits by trade representatives and businesses to better facilitate bilateral trade.

Businesses setting up shop will find an increasingly friendly environment to work in, despite its ranking of 115 out of 175, up two places from 117 in the previous year. According to the World Bank's annual "Doing Business" report, the minimum capital required to start a new business in the country has been reduced from Dh100,000 ($27,206) to Dh10,000 ($2720.65). The country has made positive reforms in registering property and the transfer of property has become easier, as the transfer tax was halved to 2.5% of the property's value. Other tax rules were simplified, with multiple regulations compiled into one source.

Meanwhile, the tax system is set for further reform, as the EU granted Morocco 80m euros ($102.53m) specifically to facilitate taxation reform, in line with the Programme Indicatif National Maroc 2005-2006. The government is expected to continue efforts to enhance transparency, simplicity and rationality in the system. It is also meant to improve services to taxpayers.

The grant is part of the EU's Euro-Mediterranean Partnership Programme, which is funding projects in Morocco in the areas of water, health, public administration and transport.

Furthering efforts to improve infrastructure, on September 15, the World Bank approved a $60m loan to build rural roads. Work will be phase I of the five-year second National Programme to Build Rural Roads. At the end of the programme, the countryside should be laced with 7900 km of new roads, which would help to facilitate reforms in agriculture as well as improve living standards and increase the provision of other government services to citizens.

Trade figures will also get a boost, as Morocco and Austria each ratified a double taxation treaty this year, though it was signed in Rabat back in 2002. The two countries are seeking to increase business ties, and Austrian businesses are being encouraged to use the North African kingdom as a launching pad for expansion into the rest of the continent. Trade between Austria and Morocco totalled a relatively modest 107m euros ($137.17m) in 2005, with Morocco exporting 9m euros ($11.54m) worth of goods more than it imported from Austria.

In addition, telecoms infrastructure and internet penetration are improving rapidly. Foreign companies looking to outsource or move operations a less expensive location are encouraged by Morocco's technological know-how and infrastructure. As a result, the call centre industry is developing at a healthy clip.
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