1

INVESTMENT OPPORTUNITIES AND BUSINESS CLIMATE IN MOROCCO

2

MOROCCO OVERVIEW

Capital Rabat

Institutional System Democratic and social Constitutional

Monarchy

Area 710 850 km²

N° of inhabitants 33.8 million

Time Zone GMT (GMT+1 in summer)

Languages Arabic and Amazigh (official)

French, Spanish, English

GDP 925 Billion MAD (2014)

US$ 116 Billion

GDP per capita 27 768 MAD/ inhabitant (2014)

US$ 3 270

Average growth 4% (over the last 5 years)

GDP Distribution

(2014)

Primary Sector 13%

Secondary Sector 29%

Tertiary Sector 58%

Inflation Rate 1.2% (2014)

Source: Haut Commissariat au Plan et Office des Changes

3

Contents

Morocco: An Attractive Country For Investors I

II Value Proposition

Investment Incentives III

Moroccan- African vision IV

4

A monarchy established in the year 788 (12 centuries ago)

The Constitutional Council reviews the constitutionality of all laws

In July 2011, a referendum established a new Constitution, guaranteeing:

A Stable Political Environment

A continuing drive for openness and democratisation

• Human rights • The legality of the State and its institutions • Individual and collective liberty

• Improved moral standards in public life • The plurality of the Moroccan identity

Morocco, most pacifist country in North Africa in

2013

Morocco, most democratic

country in Arab region in 2013

According to Global Peace Index 2013 According to the Egyptian center Ibn Khaldoun

Morocco, most stable country in North Africa in 2012

According toThe Association

For International Affairs

5

MOROCCO

TUNISIA

TURKEY

MOROCCO, LOW RISK COUNTRY

UNITED STATES

Political Risk Security Risk LOW

LOW

LOW

LOW

QATAR

LOW

LOW

SOUTH AFRICA MEDIUM MEDIUM

BRAZIL MEDIUM MEDIUM

ROMANIA MEDIUM LOW

SPAIN MEDIUM

LOW

JORDAN MEDIUM

LOW

MEDIUM MEDIUM

MEDIUM

LOW

ALGERIA HIGH MEDIUM

EGYPT HIGH MEDIUM

FRANCE

LOW

LOW

Control Risks is an independent, global risk consultancy specializing in helping organizations manage political, integrity and security risks in complex and hostile environments. Working across five continents and with 36 offices worldwide, Control Risks provides a broad range of services since 1975.

Strong Macroeconomic Drivers

* Flux Net des IDE entrant Sources: Haut Commissariat au Plan, Office des Changes; Bank Al Maghrib; Banque Mondiale

6

GDP Growth 4.8%

Inflation 1.8%

FDI Growth* 38%

Unemployment

rate

S&P affirms Morocco's rating and changes perspective from

negative to stable Mai 2014

Fitch Ratings maintains Investment Grade

Avril 2014

Christine Lagarde - FMI January 2014

“… the economic reforms under way in Morocco […] a model to follow in the

region. …"

#2 African Country of the future 2013-2014

in Africa 4.8%

1.9%

25%

9.5%

Average 2013

2001-2013

2001-2013

2011-2013

#1 en 2011 - 2012

2.6%

1.1%

10%

9.9%

2014

7

Plus de 50 conventions de

non double imposition+pr

otection de l’investisseme

nt

3

No restrictions to capital for non-residents

Free repatriation of

profits and capital for non-

residents

More than 100 protection

foreign investment agreements and double

taxation

2 1 3

Easiness of doing business

8

A Business Environment Favorable to Investment

•51 Double Tax Avoidance Agreements •62 Investment Protection Agreements •Member of OECD Investment Committee •Member of International Centre for Settlement of Investment Disputes (ICSID) •Member of MIGA (Multilateral Investment Guarantee Agency)

•The creation of the Business Environment National Committee (CNEA) to facilitate procedures and access to information, and to carry out legal reforms •The modernisation of business law •The strengthening of intellectual property protection •A new law on arbitration and mediation •New banking regulations •Administrative simplification

•Reduction of tax burden •The creation of funds specifically for investment promotion

Investor

Protection

Legal Reforms

An Incentive Tax

System

International

Instruments

•Morocco adhered to the OECD Declaration on Propriety, Integrity and Transparency in

the Conduct of International Business and Finance and to the OECD Declaration on Green Growth

10

Ambitious Sectoral Strategies

Launched in 2014

INDUSTRY: Performant Ecosystem Strategy 2020

• Industrial GDP to reach 23% of global GDP

• Creation of 500 000 jobs

• Creation of Industrial Development Fund: $2.5 Bn

• Allocation of 1 000 hectars of land for rent

Launched in 2008

AGRICULTURE: GREEN MOROCCO PLAN 2020

Launched in 2009 (Solar) and in 2010 (Wind)

ENERGY: MOROCCAN SOLAR PLAN 2020

LOGISTICS PLAN 2016

• To modernise the agricultural sector

• US$10 billion in additional GDP from agriculture

• US$15 billion in public and private investments

• Renewable energy >40% of national production by 2020

• Capacity: 2 000 MW of solar power + 2 000 MW of wind power

Launched in 2010

• To improve the country’s logistical competitiveness

• To reduce logistical costs from 20% to 15% of GDP

• An integrated national network of 70 multi-flow logistical zones

IT: MAROC NUMERIC

• Generalized access to broadband

• Encourage IT use by SMEs

• Development of government e-services

Launched in 2010

TOURISM: 2020 VISION

• 20 million tourists in 2020

• 200 000 new beds

• Tourism GDP: from US$6 billion in 2010 to US$17 billion in 2020

Launched in 2009

MINING SECTOR 2025

LIQUIFIED NATURAL GAS

• 4,6 MM USD d’investissement • Gas terminal • 400 km gazoduc • Combined cycle power plant

• Turnover *3 1.5 Bn USD

• Investment X10 0.4 Bn USD

• Jobs X2 30 000

11

Modern Infrastructure

Airports •15 international airports •Casablanca is #1 Europe-Africa hub

Tramways •Rabat and Casablanca •€1 billion

Highways • 2015: it will connect all the big cities of

Morocco

Railway Network •First high-speed train in Africa

(Tangier-Casablanca) in 2018 –€1.8 billion

Ports:

• Morocco has two coastlines (Mediterranean and Atlantic)

• More than 95% of trade in Morocco

go through the seaway. • Morocco has 38 ports of which 18

are devoted to foreign trade.

Tangier Med port:

• Ideal port platform to serve Europe and West African countries

12

Integrated Industrial Parks (P2Is) « Plug & Play »

RABAT

CASABLANCA

TANGER

KENITRA

TETOUAN BERKANE

OUJDA FES MEKNES

MARRAKECH

AGADIR

LAAYOUNE

DAKHLA

CASANEARSHORE

TETOUAN SHORE

FES SHORE NOUASSEUR AEROSPACE CITY

ATLANTIC FREE ZONE

TECHNOPOLIS

MARRAKECH SHORE

AGROPOLIS

TANGER FREE ZONE

OUJDA SHORE

CLEANTECH

TANGER AUTOMOTIVE CITY

GENERAL P2I

OFFSHORING P2I

AUTOMOBILE P2I AGRICULTURAL P2I

RENEWABLE ENERGY P2I

AERONAUTICS P2I

13

Contents

Morocco: An Attractive Country For Investors I

II Value Proposition

III

Moroccan- African vision IV

Investment Incentives

14

A Strategic Geographical Location

AMERICAS MIDDLE EAST 9 miles

EUROPE

AFRICA

TANGER MED

MOROCCO

15

At The Crossroads Of The Continents

PARIS

Flight duration

Sea/land route

ROME

FRANKFURT

SAO PAULO

NEW YORK

CAIRO

ACCRA

BEIJING

DAKAR

MADRID 22h

30d

10h

25d

3.5h

4h

4d

4h

5d

7h

10d

Sources: Royal Air Maroc; COMANAV

5h

3h

3h

4d

1h

1d

3h

2d 3d

3h

2d

16

Unique Set Of Free Trade Agreements

Located just 14 km from Europe

Agreement with Turkey (2003)

Agadir Agreement (2004) United Arab Emirates Agreement

(2003) Arab League Agreement (1998)

Agreement under negotiations with the Economic Community of West African

States (ECOWAS & CEMAC)

Agreement with United States of America (2005)

Agreement under negotiations with Canada

Association Agreement with European Union (1996)

Since 2008, Morocco enjoys an Advanced Status with the EU.

17

Tanger Med Port - Logistics Hub of international stature Connections to 120 ports in 56 countries, with 40 services

Index of maritime connectivity in Morocco

Current capacity of 3 million containers (8millions in 2016)

2 container terminals

3.1 million TEUs * in 2014 (+20%)

Ambition: To be included in the World Top 15

84

16 0

20

40

60

80

100

2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015

18

Morocco: an unparalleled connection between Europe, the Middle East, and Africa

Direct connections to 32 European cities

Number of international passengers:

Steadily growing

Direct connections to 24 cities in Africa and the Middle East

In millions

8.5 10.1

11.5 12 13.5

15.1 15.1

2006 2007 2008 2009 2010 2011 2012

Sources: Office National des Aéroports & Royal Air Maroc

Mohammed V Airport in Casablanca: best airport in North Africa in 2012 According to the International Association of Airports

19

COMPETITIVE COSTS

Lower exports costs2 Competitive cost of labor1 Attractive tax rates3

595

805

823

990

Morocco

Tunisia

China

Turkey

Algeria 1,270

Spain 1,310

Mexico 1,499

Turkey 40.1%

Morocco 49.3%

Mexico 51.8%

Spain 58.2%

Tunisia 62.4%

China 64.6%

Algeria 72.7%

Production worker - Annual total cash ($) US$ per container % of commercial profits

5,538 Morocco

China 5,763

Algeria 5,793

Tunisia 5,966

Mexico 6,279

Turkey 12,498

Spain 32,090

1. Including salary, non-variable remuneration and incentives 2. Associated costs with all procedures required to export goods 3. Taxes and mandatory contributions paid by the company during the second year of activity. Source: World Bank 2014, Mercer 2013, BCG analysis

20

Strong people advantage A young and well educated workforce Government support for training

64% of Moroccans are aged under 34 years 175 000 university students 25 000 engineering graduates per year for

2015 and 25 000 for 2020

~10 millions of French speakers ~6 millions of Spanish speakers English: ranked 45th WW and 2nd in North

Africa1

Strong cultural and linguistic affinity with Europe

Dedicated entity for professional training (OFPPT) A network of 337 schools with ~400 000

trainees Training in 6 industries:

• Industrial, Tertiary, Construction, ICT, Tourism, Transport & Logistics

Government partnering with investors for training Creation of an Automotive Training Institute

(IFMIA) for the workers of the Renault plant Morocco financed 100% of the training

facility

OFPPT center IFMIA Tangier

1. World index of English level, by « Education First » organization - Source: Arab Social Media Report, Dubai School of Government; Haut Commissariat au Plan, Ministère de l’Enseignement Supérieur, Agence Nationale de Réglementation des Télécommunications, press search, BCG analysis

Accelerated Industrial Plan 2014-2020 : building à momentum for industrialization

21

Achieve the acceleration of our industrialization…

Employment

…Through a development focus on ecosystems

Value creation

Trade Balance

500 000 Industrial job creations

+ 9pts

0

Increase of the Industry’s share in the GDP to 23%

Rebalancing of the external accounts through exports promotion and

substitution to imports

• Corner stone of the IAP

• Tool to integrate and modernize industrial sectors

• Industrial Fund: 20 Bn Dhs

• Land: 1000 ha

• Dedicated financial products

• Coordinated training plans

• Offset and imports substitution

• Transverse objectives of the IAP

• Rebalancing of the trade balance

• Informal inclusion

• Vertical integration SME/LE

Ecosystems and sectorial support

Support measures

Trade balance and inclusive development

22

100 137 212 291 367 405 443 769

1,788

2,999

2004 2005 2006 2007 2008 2009 2010 2011 2012 2013

MOROCCO: HUB FOR EXPORTS CASE OF AUTOMOTIVE: X30 IN 10 YEARS

Automotive exports from Morocco (base 100 = 2004)

FRANCE 35%

SPAIN 13%

BELGIUM 4%

TURKEY 10%

EGYPT 10%

GERMANY6%

EQ. GUINEA 3%

POLAND 2%

ROMANIA 2%

Top 10 destinations of Automotive

exports from Morocco (2009-2013)

Source: Trademap

• Cabling for automotive • 8 production units; 1st in 2001 • 16 000 jobs • 2nd largest employer in Morocco

23

RENAULT TANGIERS • TANGIER FACTORY : the largest

automotive plant in Africa (2013)

• 6 000 employees • Production Capacity : 340 000 vehicles per year

• Production : 250 000 vehicles (2015 est. )

• 800 vehicles/day

• 300 hectares, o/w 220 hectares of covered buildings

• Bodywork-assembly, power trains, spare parts

• Vehicles produced: Dacia Lodgy, Dacia Dokker et Dacia Dokker Van on the 1st line and Dacia Sandero + Dacia Sandero Stepway on the 2nd line launched in September 2013 (30 vehicles/hour)

• 1.1 billion € : 700M€ for 1st line and 400M€ for the

2nd line lunched in 2013.

• Environment :

– - 98% reduction of CO2 emission 135 000 tonnes of non emitted CO2 per year;

– 100% of the current power needs are generated by wind wills and water turbines;

– Water withdrawals for industrial processes are 70% lower*

48.9 100.9 174.2

250.0

2012* 2013 2014 2015**

Number of produced vehicles (000s)

*Inauguration Feb. 20th 2012 **Forecast

The 400 000th vehicle produced by Renault Tanger, a Dacia Lodgy grand taxi.

Production prize in the 5th « Sustainable Energy

Europe Awards » organised by EU

* For a conventional plant of equivalent size.

24

PSA Peugeot Citroën : Kenitra site

• €557 MILLION to build a plant in Kenitra province

• To be completed by 2019

• 4.500 direct jobs and 20,000 indirect

• Production Capacity : 200,000 cars and 200,000 engines per year

• B- and C-segment vehicles

• PSA Peugeot Citroën creates a new OPENLAB in

Morocco dedicated to the "car of the future“:

• The new OpenLab, dubbed "Sustainable Mobility for Africa", will engage in a four-year research programme to explore sustainable mobility systems with three core focuses: the electric vehicle of the future, renewable energy and the logistics of the future;

“The country is provided by high standard infrastructures and allow us access a high qualified and educated employees. The kingdom of Morocco has been chosen for the settlement of our company because of the win-win project elaborated

by our teams. The agreement signed with the Kingdom of Morocco will allow us to increase our production capacity in the heart of the region in order to achieve our goal of selling one million vehicles by 2025.“

Carlos Tavares, Chairman of the Managing Board

25

BOMBARDIER: MIDPARC

• 55 000 m² total industrial area owned by BOMBARDIER in MIDPARC exportation free zone (opened in 2013)

• 850 employees by the year 2020

• Production : mechanical components and sub-assemblies (leading edges …) for Canadair Regional Jet (CRJ) wings, a civilian airliner conceived by the Canadian airframe manufacturer (carried out so far in Belfast).

• 37.5 millions € to be invested in sourcing by the year 2024 for an expected global quantity of 500.000 pieces

• Nearly de 8.4 millions € will be set aside for sourcing from Morocco

• 13.1 millions € : allocated budget for the construction of the covered area of 14.000 m² o/w 9.500 m², and 18 m height, platform dedicated to production

BOMBARDIER site in Nouaceur Free zone is the le 3rd Group's largest industrial site , following the site of Queretaro in Mexico and Belfast’s site in Northern Ireland.

26

STELIA Aerospace, 100% subsidiary of AIRBUS group (fusion : Aerolia & Sogerma, jan.2015), 1.8 milliard € and6,100 employees worldwide (800 in Morocco )

Site launch: 2nd plant in Midparc Nouaceur, 15.000 m2 (Dec. 2015), delivery scheduled for June with operational force of 150-200 emp.

~40 millions € investment

400 - 500 employees (futur)

Activity : specialized in assembling complex aerospace sub assemblies (tq. Fuselage elements of A320 et A330, size of 3-4 m)

STELIA AEROSPACE AU MAROC

*Present in Morocco since 1951 through the subisidiary Maroc Aviation

27

INFRASTRUCTURE

2016: 3.3 Bn US$ Investment • Roads and Highways: 1.1 Bn US$ • Train: 0.4 Bn US$ • Ports: 0.77 Bn US$ • Airports:0.1 Bn US$

28

RENEWABLE ENERGY Energy source in %

COAL 28%

FUEL 27%

GAS 13%

HYDRO 27%

WIND 5% COAL

27%

FUEL 10%

GAS 21%

HYDRO

14%

SOLAIRE 14%

WIND 14%

2010 2020

Objective 2020: reach 42% of the installed power from reneweable energy

29

NOOR Thermosolar Power Plant Ouarzazate

• NOOR I Ouarzazate : the world’s largest parabolic trough CSP power plant, 160MW and 3 hours of thermal storage

• 470 000 tons/year (of operation) of CO2 reduction

• Up to 1 000 workers (during construction) and 60 (operation)

• US$ Cents 18.9 / kWh, lowest contracted tariff ever ascribed to date for Concentrated Solar Power Technology

• 2nd phase of NOOR in Ouarzazate, the largest solar power complex in the world :

NOOR II and III projects : 200MW and 150MW solar power plants based on CSP (7.2 hours and 8 hours molten salt storage), with a total value of $ 2.0 Billion (funded on 80/20 debt to equity basis)

Saving approximately 1,108,600 tons of CO2

Commercial operation exp. during Q3/Q4 2017

• Technology provided by SENER (also equity investor in NOOR II)

• 25 years term PPAs signed between ACWA Power and Masen

• Masen holder of 25% equity in NOOR II and III

• SENER and SEPCO III constructors of both projects

CSP*: Concentrated Solar Power Technology; PPAs** Power Purchase Agreements.

30

Contents

Morocco: An Attractive Country For Investors I

II Value Proposition

Investment Incentives III

Moroccan- African vision IV

31

An Attractive Incentive Package Conventional Regime

Eligibility Conditions: • Investment ≥ 100 M DH • Jobs created ≥ 250 • Transfert of technoloy • Implementation in a priority area • Protection of environment

Land Assistance: A contribution up to

20% of acquisition costs

External Infrastructures: assistance of up to 5% of total amount of investment programme

Training: A contribution of up to 20% of training costs.

Industrial and

Investment Development

Fund

Eligibility Conditions: • Total investment ≥ 1O M DH • Investment in goods and

equipment ≥ 5 M DH • Sectors: Automobile,

aeronautics, nanotechnology, microelectronics, and biotechnology.

Contributions are limited to a

maximum of 15% of the total investment and 30 million DH covering land, building and equipment goods.

Hassan II Fund

or

Corporate tax Full exoneration for first 5 years and 17,5% starting from the 6th year

Income Tax : 20% cap in Nearshoring Business Parks

Training Subsidies up to US$7,800 (over 3 years)

Offshoring Sector

Incentives

32

Eligibility Conditions • Activities with non-resident

businesses • Compliance with financial

legislations and regulations, foreign trade and foreign exchange

For service companies CFC status: Total exemption from corporate

tax for companies during the first 5 years of operation and 8.75% thereafter.

For regional and international office: Taxed at a reduced rate of 10%

(corporate tax) Specific taxation rate of 20% for

wage income (income tax) Exemption acts of incorporation

and capital increase

Casablanca Finance

City

Eligibility Conditions • 85% of sales to be

achieved abroad

Unlimited exemption from customs duties

Simplified customs procedures Corporate tax = 0% for 5 years and

8.75% for 20 years Income tax = 0% for 5 years, then

80% tax reduction for 20 years Business tax exemption for 15

years Value Tax Added : unlimited

exemption for goods delivered and services

Registration fees: exemption acts of incorporation and capital increase

Free zone regime

An Attractive Incentive Package

Eligibility Conditions • Investment ≥ 100 M DH

VAT exemption for the importation of equipment goods, materials, and tools for the 36 months following the start of the activity.

This exemption is also granted to parts, spare parts and accessories imported at the same time as the above equipment

Exemption from import of

equipment goods, materials, and tools for the 36 months after the signing of the Investment Agreement

General Tax

Code

33

Contents

Morocco: An Attractive Country For Investors I

II Value Proposition

III

Moroccan- African vision IV

Morocco : priority to investor needs

34

• By 2050, Africa's economy would be close to 10 times bigger than it is today.

• Six of the world’s ten fastest-growing

economies in the world over the last decade were in Africa. It is expected to be seven by 2020.

• The economy in the Sahel region is

growing by more than 5% annually.

• There is a rise of a consumer society,

which increases demand, boosts local

production and amplifies middle class.

In 2014, 106 million Africans should have an

annual income of over $ 5,000*

African economic potentialities

The true size of Africa embraces China, the US, India, Eastern Europe and the most important Western European countries

* Bloomberg

35

Moroccan companies, large footstep in Africa Banking Insurance Telecom ICT & Media Mining

Construction and Real Estate Pharmaceutical Air transport

Tunisia

Mauritania

Senegal

Guinea

Mali

Ivory Coast

Burkina Faso

Benin

Cameroun

Gabon Congo

Madagascar

Tanzania

Kenya

Central African Republic

Niger

Ghana

Burundi

Djibouti

RDC Uganda

Alegria

Libya

Nigeria

Ethiopia

Angola

Equatorial Guinea

Liberia

THANK YOU

www.invest.gov.ma