AEROSPACE INDUSTRYNOVEMBER 2018

AMONG THE
WORLD'S MOSTDYNAMIC AEROSPACELOCATIONS
2

A 20-YEARS JOURNEY TO BUILD A LEADING AEROSPACE INDUSTRY

Number of companies
Boeing sourcing
ecosystem

Non-exhaustive
Industrial
acceleration plan

130

Midparc
launching
IMA aerospaceengineering school

52
MATIS aerospace
joint-venture
Safran Aircraft
Engines

2252000

2004

2008

2018

Sources: Companies website, Moroccan Ministry of Industry and Trade
CONFIDENTIAL INFORMATION AND PROPERTY OF ADMIE. MOROCCO NOW. DO NOT DISTRIBUTE WITHOUT AGREEMENT.

3

MOROCCO'S AEROSPACE INDUSTRY SPREADS ITS WINGS

Sales

Employees

Companies(USD bn)(k employees)(# companies)

+33 %

+55 %

+30 %

1.20.92014

15.52014(% local integration)+71 %13029 %10010.0

2018

Integration

17 %2018

20142018

2014

2018

Morocco’s Aerospace ranked #5 most attractive country for suppliers#1 in Africa
Source: Office des changes, AMDIE, Mazars 2016 Commercial Aerospace Study Insight for Suppliers
CONFIDENTIAL INFORMATION AND PROPERTY OF ADMIE. MOROCCO NOW. DO NOT DISTRIBUTE WITHOUT AGREEMENT.

4

A FORECAST GROWTH OF MORE THAN 20% PER YEAR IN THE COMING YEARS

A turnover multiplied by at least 2 times in 5 years+130 new companies expected to choose Morocco by 2030

Forecast turn over evolution based on backlog ($ bn)

Number of aeronautic players present in Morocco

X2+ 90$ 2.6 bn1

Forecast based on
current backlog - Not
including Boeing'secosystem$ 1.2 bn2018

~2202021~1302018

2030

1. On the basis of existing capabilities, excluding the additional turnover generated by the expected 90 new companies / Source: Experis, MIICEN, BCG Analysis
CONFIDENTIAL INFORMATION AND PROPERTY OF ADMIE. MOROCCO NOW. DO NOT DISTRIBUTE WITHOUT AGREEMENT.

5

STRONG INSTALLED CAPABILITIES

Aeronautic
Equipment
Equipment, final assembly& test ( Actuators, Cockpit& Cabin Equipment)

Aero structure

Engineering

MRO

Assembly work packages(fuselage, nacelles…)Composite structural & nonstructural

Mechanic, Electric,
Electronic, HydraulicStudy, design, FEA,
Simulations 3D Printing

Heavy/line engine support
services interiors

Machining

Special processes

Sheet metal works

Electrical wiring

CNC machining/aluminum/steel/titanium
metal analysis/mechanical testing

Anodizing(OAC,OAD,OAS,OAT…)
Plating, coating, phosphating,passivation

Cutting metals stamping ,bending, shot peening, orwelding processes

Wiring /technicalharnesses electronics
systems testing

A High Value anddiversified Supply
Chain

Source: AMDIE, GIMASCONFIDENTIAL INFORMATION AND PROPERTY OF ADMIE. MOROCCO NOW. DO NOT DISTRIBUTE WITHOUT AGREEMENT.

6

A UNIQUECOMBINATION OFCOMPETITIVEADVANTAGES
7

MOROCCO IS STRATEGICALLY LOCATED"Morocco is to Europe what Mexico is to the USA"

EuropeMonthly average labor cost
2,300$/m (Spain)75% of European import transit
through the Straits of Gibraltar

14 km

Closest Africancountry to the US andEurope
14km from Europe

Tangier Med Port
Monthly average labor
cost 330$/m

7-hour flight to North
America

MoroccoSource: TMSA, MIICENCONFIDENTIAL INFORMATION AND PROPERTY OF ADMIE. MOROCCO NOW. DO NOT DISTRIBUTE WITHOUT AGREEMENT.

8MOROCCO IS WELL CONNECTED WITH THE REST OF THE WORLD, THANKS IN
PARTICULAR TO TANGER MED PORTTanger Med Port is connected to 174 ports in 74 countries

1st sea connectivity in Africa, 16th worldwide
UNCTAD Connectivity
index1-2 d10 d

95 % of the Moroccan
foreign trade transits
through sea routes

Connected cities< 10 days

12...
131415161719...
222627...
137

2017
ChinaSingapore...
FranceTaiwan
Sri Lanka
MoroccoJapan
Italy
...
TurkeyEgyptPortugal...
Tunisia

10 to 20 days

Source: TMSA, UNCTADCONFIDENTIAL INFORMATION AND PROPERTY OF ADMIE. MOROCCO NOW. DO NOT DISTRIBUTE WITHOUT AGREEMENT.

93 HOURS AWAY FROM WESTERN EUROPE AND 7 FROM THE US

A platform for travelers between Africa, Middle-East, Europe & America

16 international airports
Triple Open Sky agreement with the US,
the EU and Canada

7h3hCasablanca #1 hub between Europeand Africa
More than 1,200 weekly flights
Strong advantage for technologicaltransfers & subsidiary management

Source: RAM, IATA, ONDA, BCG analyses
CONFIDENTIAL INFORMATION AND PROPERTY OF ADMIE. MOROCCO NOW. DO NOT DISTRIBUTE WITHOUT AGREEMENT.

10MOROCCAN FTAS GIVING TAX-FREE ACCESS TO 55 COUNTRIESAgreement with USA(2005)

Association Agreement with the European
Union (1996)
Advanced status granted in 2008
FTA with EFTA
Agreement with Turkey (2003)
Agadir Agreement with Egypt, Jordan, and Tunisia(2004)
United Arab Emirates Agreement (2003)
Arab League Agreement (1998)

Morocco to become member of the
Economic Community of West African
States (ECOWAS)Free Trade Agreements
with55 countries(#1 in Africa)
Only African country
having a FTA withthe US

Africa Continental Free Trade Agreement(AfCFTA) signed by 44 countries in March2018
Source: Institutional websites
CONFIDENTIAL INFORMATION AND PROPERTY OF ADMIE. MOROCCO NOW. DO NOT DISTRIBUTE WITHOUT AGREEMENT.

11

A COMPREHENSIVEECOSYSTEMAPPROACH

12

THROUGH ITS INDUSTRY POLICY, THE GOVERNMENT OBJECTIVE IS TO FURTHER
DEVELOP THE AUTOMOTIVE ECOSYSTEM, TO REACH TOP 7 IN THE WORLD BY 2020
A whole set of support measures...

...to develop competitive clusters

Dedicated industrial parks
Tier 3Tier 2

Industrial fund: 20 bn MAD (~2 bn USD)

Tier 1
OEM

Specific strategies for each segment to complete
sectorial industrial maps

Coordinated and subsidized training programs
Targeted programs of cooperation
Long-term supply contracts and technologicaltransfers

Ecosystem-wide ripple effectto accellerate local integration andindustrialization

Source: MIICEN, AMDIECONFIDENTIAL INFORMATION AND PROPERTY OF ADMIE. MOROCCO NOW. DO NOT DISTRIBUTE WITHOUT AGREEMENT.

13

4 AEROSPACE ECOSYSTEMS
MotorsEngineering+ 3,400 job creations+ $ 0.1 Bn additional sales+ 4,900 job creations
EWIS+ $ 0.3 Bn additional sales

AssemblyAmbitious
targets
by 2020
CONFIDENTIAL INFORMATION AND PROPERTY OF ADMIE. MOROCCO NOW. DO NOT DISTRIBUTE WITHOUT AGREEMENT.

Onboard electronics+ 8,700 job creations+ $ 1.0 Bn additional sales+ 6,000 job creations
MRO+ $ 0.2 Bn additional sales

Three new ecosystems
underway14

BOEING SUCCESSFUL SOURCING ECOSYSTEM IN MOROCCO

Long-term relationship between Morocco andBoeing• 2001: joint-venture with Safran in Casablanca• 2016: launch of Boeing sourcing ecosystem

Convergence
Between operational and quality requirement of Boeing andMorocco unique subcontractors ecosystem$1bn120
suppliers economic impact1

8,700
jobs2

0
offset3

We have witnessed the unique
opportunities that Morocco offers
to aerospace subcontractors toreduce their cost while producing
high quality aerospace products

Ray Conner
President of Boeing Commercial Airplanes

1. Yearly expected exports, in-country direct and indirect revenues 2. Expected number of direct jobs created 3. No replacement of existing industries
Sources: Institutional sites, AMDIECONFIDENTIAL INFORMATION AND PROPERTY OF ADMIE. MOROCCO NOW. DO NOT DISTRIBUTE WITHOUT AGREEMENT.

15

MOROCCO, A STABLE
AND ATTRACTIVE
COUNTRY
16

MOST ATTRACTIVE AFRICAN COUNTRY FOR FOREIGN INVESTORSWORLD BANK EASE OF DOING BUSINESS
2010-2018
AfricaRank 2018

Global Rank
2018

vs. 2010

Morocco269+59China-78+11South Africa

582-48Tunisia788-19India-100+33

Brazil-125+41st Most attractive Africancountry for foreign investors

1st Most attractive economy forinvestments in Africa

Source: World Bank, Doing Business Report 2018, Ernst & Young Africa Attractiveness Survey 2017, Quantum Global Research Lab Africa Investment Index 2018
CONFIDENTIAL INFORMATION AND PROPERTY OF ADMIE. MOROCCO NOW. DO NOT DISTRIBUTE WITHOUT AGREEMENT.

17

MOROCCO IS A STABLE COUNTRY...

Countries by Standard & Poor's foreign rating (February 2018)

1 of the 2 countries inAfrica with investment
grade ratingAAAAAABBBBBBCCCCC

Source: Standard & Poor'sCONFIDENTIAL INFORMATION AND PROPERTY OF ADMIE. MOROCCO NOW. DO NOT DISTRIBUTE WITHOUT AGREEMENT.

18

... WITH STRONG MACRO-ECONOMIC FUNDAMENTALSSteady GDP growth

Low inflation

Decreasing unemployment

Sustainable public debt

Real GDP growth, IMF

Inflation rate, IMF

Unemployment rate, IMF

General government gross debt,
IMF

4.7%

2000-2010

3.7%

4.1%

2011-20172018-2022

Medium-term macroeconomic
prospects are stable

1.9%

1.8%

10.7%

1.2%

2000-20102011-20172018-2022

Inflation is low and well-anchoredIMF Article IV, November 2017

Fitch, March 2018

2000-20109.3%

8.9%

2011-20172018-2022

Raising potential growth andreducing unemployment are top
priorities for the government

57.4%

60.7%

59.7%

2000-20102011-20172018-2022

Public debt is sustainable
IMF Article IV, November 2017

IMF, March 2018
Source: IMF, UNCTAD, Fitch, BCG Analysis
CONFIDENTIAL INFORMATION AND PROPERTY OF ADMIE. MOROCCO NOW. DO NOT DISTRIBUTE WITHOUT AGREEMENT.

19

A "LOW SECURITY RISK", AT THE SAME LEVEL AS SPAIN OR FRANCE
ExamplesLow security
risk
MoroccoUSAFranceUKPortugalSpainSouth Africa

Romania

Tunisia

TurkeyMexicoBrazilAlgeria

Mauritania

Egypt

Nigeria

Mali

Venezuela

Mediumsecurity risk

High securityrisk

Source: ControlRisks, Risk Map 2018
CONFIDENTIAL INFORMATION AND PROPERTY OF ADMIE. MOROCCO NOW. DO NOT DISTRIBUTE WITHOUT AGREEMENT.

20

PROTECTION OFFERED TO INVESTORSNo restriction on investment
in local companies for nonresidents

Free repatriation of profits andcapital for foreign investment

CONFIDENTIAL INFORMATION AND PROPERTY OF ADMIE. MOROCCO NOW. DO NOT DISTRIBUTE WITHOUT AGREEMENT.

Protection of foreign
investment agreements anddouble taxation treaties withmore than 60 countries

21

AN ATTRACTIVE SET OF GOVERNMENT INCENTIVES

Government Subsidies

Tax Free Zones

Special Economic Zones

Government support

Investment: tailor-madeparticipation to investment
costs

5 year tax exemption

Land, office space, and industrial
plants in main cities

Meetings and direct line with
Minister of Industry, Trade andInvestment

Recruitment & Training: direct
financial incentives to cover
costs

20% flat fee for individual tax for
employees...then 8.75% tax for the next 20years

Exemption from export fees
Financial support for buildingand equipment

Support from AMDIE (Moroccan
Investment and Export
Development Agency): end-toend assistance for investors andexporters

Source: AMDIE, MIICENCONFIDENTIAL INFORMATION AND PROPERTY OF ADMIE. MOROCCO NOW. DO NOT DISTRIBUTE WITHOUT AGREEMENT.

22

A LARGE AND INCREASING NUMBER OF JAPANESE COMPANIES TRUST MOROCCOCONFIDENTIAL INFORMATION AND PROPERTY OF ADMIE. MOROCCO NOW. DO NOT DISTRIBUTE WITHOUT AGREEMENT.

23