HomeReportsBureau of Economic and Business Affairs2018 Investment Climate Statements...Morocco

# 					2018 Investment Climate Statements: Morocco			

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													Executive Summary											

                -  Executive Summary 
                -  1. Openness To, and Restrictions Upon, Foreign Investment   
                -  2. Bilateral Investment Agreements and Taxation Treaties   
                -  3. Legal Regime   
                -  4. Industrial Policies   
                -  5. Protection of Property Rights   
                -  6. Financial Sector   
                -  7. State-Owned Enterprises   
                -  8. Responsible Business Conduct   
                -  9. Corruption   
                -  10. Political and Security Environment   
                -  11. Labor Policies and Practices   
                -  12. OPIC and Other Investment Insurance Programs   
                -  13. Foreign Direct Investment and Foreign Portfolio Investment Statistics   
                -  14. Contact for More Information   

## Executive Summary

Morocco enjoys political stability, robust infrastructure, and a strategic location, which are helping it emerge as a regional manufacturing and export base for international companies. Morocco is actively encouraging and facilitating foreign investment, particularly in export sectors, through macro-economic policies, trade liberalization, investment incentives, and structural reforms. Morocco’s overarching economic development plan seeks to leverage its unique status as a multilingual nation with a tri-regional focus (toward Sub-Saharan Africa, the Middle East, and Europe) to transform the country into a regional business hub. The Government of Morocco has implemented a series of strategies aimed at boosting employment, attracting foreign investment, and raising performance and output in key revenue-earning sectors, such as the automotive and aerospace industries.

An ambitious 2014 strategy set out to create 500,000 new jobs in manufacturing by 2020 by targeting higher levels of Foreign Direct Investment (FDI) and strengthening the linkages between the small business sector and Morocco’s industrial leaders. Between 2008 and 2016, FDI in Morocco rose by an annual average of 4.4 percent. To strengthen its position as a financial hub for Africa, Morocco offers incentives for firms that locate their regional headquarters in the Casablanca Finance City (CFC), Morocco’s flagship financial and business hub launched in 2010 by King Mohammed VI. Its successful return to the African Union in January 2017 and the launch of the African Continental Free Trade Area (CFTA) in March 2018 also nets Morocco further opportunities to promote foreign investment and trade and accelerate economic development. Despite the significant improvements in its business environment, the lack of skilled labor, weak intellectual property rights protection, inefficient government bureaucracy, and the slow pace of regulatory reform remain challenges for Morocco.

Morocco has ratified 68 bilateral investment treaties for the promotion and protection of investments and 60 economic agreements that aim to eliminate the double taxation of income or gains, including with the United States and most EU nations. Its Investment Charter has put in place a dirham convertibility system for foreign investors, and gives investors the freedom to transfer profits. Morocco’s Free Trade Agreement (FTA) with the United States entered into force in 2006, immediately eliminating tariffs on more than 95 percent of qualifying consumer and industrial goods. For a limited number of products, tariffs will be phased out through 2030. Since the U.S.-Morocco FTA came into effect, overall bilateral trade has increased by more than 300 percent, making the United States Morocco’s fourth largest trading partner. The U.S. and Moroccan governments work closely to increase trade and investment through high-level consultations, bilateral dialogue, and the annual U.S.-Morocco Trade and Investment Forum, which provides a platform to strengthen business-to-business ties.

*Table 1*

							1. Openness To, and Restrictions Upon, Foreign Investment					

**Policies Towards Foreign Direct Investment**

Morocco actively encourages foreign investment and has sought to facilitate it through macro-economic policies, trade liberalization, structural reforms, infrastructure improvements, and incentives for investors. Law 18-95 of October 1995, constituting the Investment Charter , is the principal Moroccan text governing investment and applies to both domestic and foreign investment (direct and portfolio). In 2014, Morocco launched its Industrial Acceleration Plan, a new approach to industrial development based on establishing efficient “eco-systems” that integrate value chains and supplier relationships between large companies and small and medium-sized enterprises (SMEs). In December 2017, Morocco launched the Moroccan Investment and Export Development Agency (AMDIE) – merging the Moroccan Export Development Agency (CMPE) (commonly referred to as “Maroc Export”), the Casablanca Exhibition and Exhibition Office (OFEC), and the Moroccan Investment Development Agency (AMDI) –making AMDIE Morocco’s primary agency responsible for the development and promotion of investments and exports. The Agency’s website aggregates relevant information for interested investors and includes investment maps, procedures for creating a business, production costs, applicable laws and regulations, and general business climate information, among other investment services. Further information about Morocco’s investment laws and procedures is available on AMDIE ’s website. For further information on agricultural investments, visit the Agricultural Development Agency (ADA) website  or the National Agency for the Development of Aquaculture (ANDA) website .

Moroccan legislation governing FDI applies equally to Moroccan and foreign legal entities, with the exception of certain protected sectors.

When Morocco acceded to the OECD Declaration on International Investment and Multinational Enterprises in November 2009, Morocco guaranteed national treatment of foreign investors (i.e., according like treatment to both foreign and national investors in like circumstances). The only exception to this national treatment of foreign investors is in those sectors closed to foreign investment (noted below), which Morocco delineated upon accession to the Declaration.

**Limits on Foreign Control and Right to Private Ownership and Establishment**

Foreign and domestic private entities may establish and own business enterprises, barring some sector restrictions. While the U.S. Mission is not aware of any economy-wide limits on foreign ownership, Morocco places a 49 percent cap on foreign investment in air and maritime transport companies and maritime fisheries. Foreigners are prohibited from owning agricultural land, though they can lease it for up to 99 years. The Moroccan government holds a monopoly on phosphate extraction through the 95 percent state-owned Office Cherifien des Phosphates (OCP). The Moroccan state also has a discretionary right to limit all foreign majority stakes in the capital of large national banks, but does not yet appear to have exercised that right. In the oil and gas sector, the National Agency for Hydrocarbons and Mines retains a compulsory share of 25 percent of any exploration license or development permit. The Moroccan central bank (Bank Al Maghrib) may use regulatory discretion in issuing authorization for the establishment of domestic and foreign-owned banks. As set forth in the 1995 Investment Charter, there is no requirement for prior approval of FDI, and formalities related to investing in Morocco do not pose a meaningful barrier to investment. The U.S. Mission is not aware of any instances in which investors have been turned away for national security, economic, or other national policy reasons. The U.S. Mission is not aware of any U.S. investors disadvantaged or singled out by ownership or control mechanisms, sector restrictions, or investment screening mechanisms, relative to other foreign investors.

**Other Investment Policy Reviews**

The World Trade Organization (WTO) 2016 Trade Policy Review  (TPR) of Morocco found that the trade reforms implemented since the last TPR in 2009 have contributed to the economy’s continued growth by stimulating competition in domestic markets, encouraging innovation, creating new jobs, and contributing to growth diversification. In February 2015, the European Bank for Reconstruction and Development published its first country strategy for Morocco , which recognized Morocco’s notable political reforms since 2013, as well as its good economic performance, despite some volatility. The United Nations Conference on Trade and Development (UNCTAD) analyzed investment conditions and opportunities in Morocco in a 2015 implementation report . The report noted that due to investments directed at higher value-added industries, such as the automotive, aeronautics, and agro-processing sectors, Morocco has generated tangible economic and social benefits. As a result of a continuing reform process driven by the creation of the National Committee on Business Environment (CNEA) and the Moroccan Investment Development Agency (now the Moroccan Investment and Export Development Agency [AMDIE]), the majority of recommendations made in the 2008 Investment Policy Review (IPR) have been implemented.

**Business Facilitation**

In the World Bank’s Doing Business 2018 report , Morocco ranks 69 out of 190 economies worldwide in terms of ease of doing business. In the past six years, Morocco has implemented a number of reforms facilitating business registration, such as eliminating the need to file a declaration of business incorporation with the Ministry of Labor, reducing company registration fees, and eliminating minimum capital requirements for limited liability companies. Morocco maintains a business registration website that is accessible through the Regional Investment Center (CRI – Centre Regional d’Investissement ). The business registration process is clear and complete and requires four steps: 1) obtain a “Certificat Negatif” in person or online at www.directinfo.ma, which registers the company name at the CRI; 2) pay stamp duty; 3) file documents with CRI to register with the Ministry of Economy and Finance for a patent tax, and with the Tribunal of Commerce for social security and taxation, and 4) make a company stamp. The business owner then receives the “patente,” the fiscal identification, the commercial registration certificate, legal books, and the registration for social security (Caisse National de Securite Sociale) approximately one week after filing the documents. The business owner may request to be notified by text message when the file is ready.

Foreign companies may utilize the online business registration mechanism. Except for French companies, which are provided an exemption, foreign companies are required to provide an apostilled Arabic translated copy of its articles of association and an extract of the registry of commerce in its country of origin. Moreover, foreign companies must report the incorporation of the subsidiary a posteriori to the Foreign Exchange Board (Office National de Change) to facilitate repatriation of funds abroad (such as profits and dividends). According to the World Bank, the process of registering a business in Morocco takes an average of 10 days (significantly less time than the Middle East and North Africa regional average of 20 days). Including all official fees and fees for legal and professional services, registration costs 9.1 percent of Morocco’s annual per capita income (less than half the region’s average of 25.8 percent). Moreover, Morocco does not require any paid-in minimum capital to be deposited in a bank or with a notary.

On February 15, 2018, Morocco’s Government Council approved a draft law on establishing businesses electronically. The Moroccan Office of Industrial and Commercial Property (OMPIC) stated its plans to coordinate the issuance of business registration certificates to promote domestic and foreign investment. The electronic platform will include filing all contracts, summary statements, meeting minutes, deliberations, and judicial decisions.

The business facilitation mechanisms provide for equitable treatment of women and underrepresented minorities in the economy. The U.S. Mission is not aware of any special assistance provided to women and underrepresented minorities through the business registration mechanisms. In cooperation with the Moroccan government, civil society, and the private sector, there have been a number of initiatives aimed at improving gender quality in the workplace and access to the workplace for foreign migrants, particularly from sub-Saharan Africa.

**Outward Investment**

In 2017, Morocco’s FDI in Africa was $2.57 billion, boasting a 12 percent increase over 2016. According to data from the African Development Bank, Morocco is ranked as the second biggest investor in Sub-Saharan Africa, after South Africa, with up to 85 percent of its foreign direct investments going to the region. The U.S. Mission is not aware of a formal outward investment promotion agency or any restrictions for domestic investors attempting to invest abroad. However, under the Moroccan investment code, repatriation may only be performed using convertible Moroccan Dirham accounts. Further, capital controls limit the ability of residents to convert dirham balances into foreign currency or to move funds offshore.

							2. Bilateral Investment Agreements and Taxation Treaties					

As of March 2018, Morocco has signed bilateral investment treaties (BITs) with the following 68 countries, of which 49 are in force: Argentina (force), Austria (force), Bahrain (force), Benin, Belgium-Luxembourg Economic Union (force), Bulgaria (force), Burkina Faso (force), Cameroon, Central African Republic, Chad, China (force), Croatia, Czech Republic (force), Denmark, Dominican Republic (force), Egypt (force), El Salvador (force), Equatorial Guinea, Estonia (force), Ethiopia, Finland (force), France (force), Gabon (force), Gambia (force), Germany (force), Greece (force), Guinea, Guinea-Bissau, Hungary (force), India (force), Indonesia (force), Iran (force), Italy (force), Jordan (force), South Korea (force), Kuwait (force), Lebanon (force), Libya (force), Macedonia (force), Malaysia (force), Mali (force), Mauritania (force), Netherlands (force), Nigeria, Oman (force), Pakistan, Poland (force), Portugal (force), Qatar (force), Romania (force), Russia, Rwanda, Senegal, Serbia, Slovakia, Spain (force), Sudan (force), Sweden (force), Switzerland (force), Syrian Arab Republic (force), Tunisia (force), Turkey (force), Ukraine (force), United Arab Emirates (force), United Kingdom (force), United States of America (force), Vietnam, and Yemen. Morocco’s four most recent BITs, all signed in 2016, were with Russia (March), Rwanda (October), Ethiopia (November), and Nigeria (December).

The United States and Morocco signed a BIT on July 22, 1985, but its provisions were subsumed by the investment chapter of the U.S.-Morocco FTA, which entered into force on January 1, 2006. The BIT’s dispute settlement provisions remained in effect for 10 years after the effective date of the FTA for certain investments and investment disputes which predated the agreement. On January 1, 2016, the dispute settlement provisions of the Morocco-U.S. BIT Articles VI and VII were suspended in their entirety.

Morocco has also signed a quadrilateral FTA with Tunisia, Egypt, Lebanon, and Jordan (under the Agadir Agreement), an FTA with Turkey, an FTA with the United Arab Emirates, the EFTA with Iceland, Liechtenstein, and Norway, and the Greater Arab Free Trade Area agreement (which eliminates certain tariffs among 15 Middle East and North African countries). The Association Agreement (AA) between the EU and Morocco came into force in 2000, creating a free trade zone in 2012 that liberalized two-way trade in goods. The EU and Morocco developed the AA further through an agreement on trade in agricultural, agro-food, and fisheries products, and a protocol establishing a bilateral dispute settlement mechanism, all of which entered into force in 2012. However, the legal standing of the agreement’s rules of origin, particularly in regards to fisheries, has come into question in recent years with both sides looking to resolve the issue. The U.S. Mission is not aware of any U.S. companies impacted by the EU decision to review the agreement. In 2008, Morocco was the first country in the southern Mediterranean region to be granted “advanced status” by the EU, which promotes closer economic integration by reducing non-tariff barriers, liberalizing the trade in services, ensuring the protection of investments, and standardizing regulations in several commercial and economic areas.

On March 3, 2018, Morocco signed an agreement along with 43 other African states forming the African Continental Free Trade Area (CFTA) that will seek to establish a market of over 1.2 billion people, with a combined gross product of over $3 trillion. The CFTA is a flagship project of Agenda 2063, the African Union’s long-term vision for an integrated, prosperous, and peaceful Africa. Its entry into force requires the agreement to be ratified by at least 22 member States.

The United States signed an income tax treaty  with Morocco in 1977. Morocco also has tax agreements with the following countries: Albania, Austria, the Arab Maghreb Union (UMA) countries (Algeria, Libya, Mauritania, and Tunisia), Bahrain, Belgium, Bulgaria, Canada, China, Cote d’Ivoire, Croatia, Czech Republic, Denmark, Egypt, Estonia, Finland, Gabon, Germany, Greece, Guinea, Hungary, India, Indonesia, Ireland, Italy, Jordan, Kuwait, Latvia, Lebanon, Lithuania, Luxembourg, Macedonia, Malaysia, Malta, Netherlands, Norway, Oman, Pakistan, Poland, Portugal, Qatar, Romania, Russia, Saudi Arabia, Senegal, Serbia, Singapore, Slovenia, South Korea, Spain, Sweden, Switzerland, Syria, Turkey, the UAE, the UK and Northern Ireland, Ukraine, and Vietnam. Morocco has signed tax agreements that have not been ratified with the following countries: Burkina Faso, Cameroon, Guinea Bissau, Mali, Mauritius, and Sao Tome and Principe. Morocco has initialed tax agreements with the following countries: Central African Republic, Chad, Congo Brazzaville, Ethiopia, South Africa, Seychelles, and Sudan. Morocco is currently negotiating tax agreements with the following countries: D.R.C, Equatorial Guinea, and Ghana. Morocco has invited the following countries to establish a tax agreement: Benin, Kenya, Niger, Nigeria, and Togo.

							3. Legal Regime					

**Transparency of the Regulatory System**

Morocco is a constitutional monarchy with an elected parliament and a mixed legal system of civil law based mainly on French law with some influence from Islamic law. Legislative acts are subject to judicial review by the Constitutional Court. The Constitutional Court has the power to determine the constitutionality of legislation, excluding royal decrees (Dahirs). Legislative power in Morocco is vested in both the government and the two chambers of Parliament, the Chamber of Representatives (Majlis Al-Nuwab) and the Chamber of Councillors (Majlis Al Mustashareen). The King can also issue royal decrees which have the force of law. The principal sources of commercial legislation in Morocco can be found in the Code of Obligations and Contracts of 1913 and Law No. 15-95 establishing the Commercial Code. The Competition Council and the Central Authority for the Prevention of Corruption have responsibility for improving public governance and advocating for further market liberalization. All levels of regulations exist (local, state, national, and supra-national). The most relevant regulations for foreign businesses depend on the sector in question. Ministries develop their own regulations and draft laws, including those related to investment, through their administrative departments and approval by the respective minister. Each regulation and draft law is made available for public comment. Key regulatory actions are published in their entirety in Arabic and usually French in the official bulletin on the website  of the General Secretariat of the Government. Once published, the law is final. Public enterprises and establishments can adopt their own specific regulations provided they comply with regulations regarding competition and transparency.

Morocco’s regulatory enforcement mechanisms depend on the sector in question, and enforcement is legally reviewable. The National Telecommunications Regulatory Agency (ANRT), for example, created in February 1998 under Law No. 24-96, is the public body responsible for the control and regulation of the telecommunications sector. The agency regulates telecommunication by participating in the development of the legislative and regulatory framework. Morocco does not have specific regulatory impact assessment guidelines, nor are impact assessments required by law. Morocco does not have a specialized government body tasked with reviewing and monitoring regulatory impact assessments conducted by other individual agencies or government bodies.

The World Bank’s 2018 Doing Business Report indicates that Morocco implemented reforms aimed at reducing regulatory complexity and strengthening legal institutions. These include simplification of property registration, enhanced electronic systems for paying taxes and the processing of documents for imports, improving online procedures, increasing administrative efficiency, introducing registry credit scores as a value-added service, expanding shareholders’ roles in company management, and implementing an unemployment insurance plan. In addition, the report indicates that Morocco was one of the countries to introduce greater requirements for corporate transparency into their laws and regulations for promoting detailed disclosure on primary employment and the appointments and remuneration of directors, ensuring detailed and advance notice of general meetings of shareholders, obliging members of limited liability companies to meet at least once per year, and allowing shareholders to add items to meeting agendas. The U.S. Mission is not aware of any informal regulatory processes managed by nongovernmental organizations or private sector associations.

**International Regulatory Considerations**

European standards are widely referenced in Morocco’s regulatory system. In some cases, U.S. or international standards, guidelines, and recommendations are also accepted. Morocco has been a WTO member since January 1995 and reports technical regulations that could affect trade with other member countries to the WTO. Morocco is a signatory to the Trade Facilitation Agreement  and has a 91.2 percent implementation rate of TFA requirements.

**Legal System and Judicial Independence**

The Moroccan legal system is based on both civil law (French system) and Islamic law, regulated by the Decree of Obligations and Contracts of 1913 as amended, the 1996 Code of Commerce, and Law No. 53-95 on Commercial Courts. These courts also have sole competence to entertain industrial property disputes, as provided for in Law No. 17-97 on the Protection of Industrial Property, irrespective of the legal status of the parties. According to the European Bank for Reconstruction and Development’s 2015 Morocco Commercial Law Assessment Report , Royal Decree No. 1-97-65 (1997) established commercial court jurisdiction over commercial cases including insolvency. Although this led to some improvement in the handling of commercial disputes, the lack of training for judges on general commercial matters remains a key challenge to effective commercial dispute resolution in the country. In general, litigation procedures are time consuming and resource-intensive, and there is no legal requirement with respect to case publishing. Disputes may be brought before one of eight Commercial Courts (located in Rabat, Casablanca, Fes, Tangier, Marrakech, Agadir, Oujda and Meknes), and one of three Commercial Courts of Appeal (located in Casablanca, Fes and Marrakech). There are other specialist courts such as the Military and Administrative Courts. Title VII of the Constitution provides that the judiciary shall be independent from the legislative and executive branches of government. The 2011 Constitution also authorized the creation of the Supreme Judicial Council, headed by the King, which has the authority to hire, dismiss, and promote judges. Enforcement actions are appealable at the Courts of Appeal, which hear appeals against decisions from the court of first instance.

**Laws and Regulations on Foreign Direct Investment**

The principal sources of commercial legislation in Morocco are the 1913 Decree (Dahir) of Obligations and Contracts, as amended, Law No. 18-95 that established the 1995 Investment Charter, the 1996 Code of Commerce, and Law No. 53-95 on Commercial Courts. These courts have sole competence to hear industrial property disputes, as provided for in Law No. 17-97 on the Protection of Industrial Property, irrespective of the legal status of the parties. Morocco’s CRI or Centre Regional d’Investissement  and AMDIE (cited above) provide users with various investment related information on key sectors, procedural information, calls for tenders, and resources for business creation.

**Competition and Anti-Trust Laws**

Restrictive agreements and practices are regulated by law. Morocco’s Competition Law No. 06-99 on Free Pricing and Competition (June 2000) outlines the authority of the Competition Council  as an independent executive body with investigatory powers. Together with the Central Authority for the Prevention of Corruption, the Competition Council is one of the main actors in charge of improving public governance and advocating for further market liberalization. Law No. 20-13, adopted on August 7, 2014, amended the powers of the competition council to bring them in line with the 2011 constitution. The Competition Council is now charged with: 1) making decisions on anti-competition practices and controlling concentrations, with powers of investigation and sanction, 2) providing opinions in official consultations by government authorities, and 3) publishing reviews and studies on the state of competition. However, the Moroccan government has not yet appointed new members to the Competition Council, rendering it ineffective. In response to overlapping mandates, a 2016 decree stipulated that the Competition Council would exercise oversight over sectors that did not already have an established regulator, preserving the role of previously established regulators, such as the telecommunications regulator, ANRT. Mission Morocco is aware of one allegation of unfair competition in the telecommunications sector, though it did not involve a U.S. firm.

**Expropriation and Compensation**

Expropriation may only occur in the context of public interest for public use by a State entity, although in the past, private entities that are public service “concessionaires,” mixed economy companies, or general interest companies have also been granted expropriation rights. Article 3 of Law No. 7-81 (May 1982) on expropriation, the associated Royal Decree of May 6, 1982, and Decree No. 2-82-328 of April 16, 1983 regulate government authority to expropriate property. The process of expropriation follows two phases. In the administrative phase, the State declares public interest in expropriating specific land, and verifies ownership, titles, and value of the land, as determined by an appraisal. If the State and owner are able to come to agreement on the value, the expropriation is complete. If the owner appeals, the judicial phase begins, whereby the property is taken, a judge oversees the transfer of the property, and payment compensation is made to the owner based on the judgment. The U.S. Mission is not aware of any recent, confirmed instances of private property being expropriated for other than public purposes (eminent domain), or being expropriated in a manner that is discriminatory or not in accordance with established principles of international law.

**Dispute Settlement**

*ICSID Convention and New York Convention*

Morocco is a member of the International Center for Settlement of Investment Disputes (ICSID) and signed its convention in June 1967. Morocco is also a party to the New York Convention of 1958 on the Recognition and Enforcement of Foreign Arbitral Awards. Law No. 08-05 provides for enforcement of awards made under these conventions.

*Investor-State Dispute Settlement*

Morocco is signatory to over 60 bilateral treaties recognizing binding international arbitration of trade disputes, including one with the United States. Law No. 08-05 established a system of conventional arbitration and mediation, while allowing parties to apply the Code of Civil Procedure in their dispute resolution. Foreign investors commonly rely on international arbitration to resolve contractual disputes. Commercial courts recognize and enforce foreign arbitrations awards. In general, investor rights are backed by an impartial procedure for dispute settlement that is transparent. There have been no claims brought by foreign investors under the investment chapter of the U.S.-Morocco Free Trade Agreement since it came into effect in 2006. However, the U.S. Mission is aware of approximately ten cases of business disputes over the past ten years involving U.S. investors. In several of these cases, the investors claimed that the incentives associated with their investments were not fulfilled, or were fulfilled later than originally promised.

Morocco officially recognizes foreign arbitration awards issued against the government. Domestic arbitration awards are also enforceable subject to an enforcement order issued by the President of the Commercial Court, who verifies that no elements of the award violate public order or the defense rights of the parties. As Morocco is a member of the New York Convention, international awards are also enforceable in accordance with the provisions of the convention. Morocco is also a member of the Washington Convention for the International Centre for Settlement of Investment Disputes (ICSID), and as such agrees to enforce and uphold ICSID arbitral awards. The U.S. Mission is not aware of extrajudicial action against foreign investors.

*International Commercial Arbitration and Foreign Courts*

Morocco has a national commission on Alternative Dispute Resolution (ADR) with a mandate to regulate mediation training centers and develop mediator certification systems. Morocco is currently seeking to position itself as a regional center for arbitration in Africa, but the capacity of local courts remains a limiting factor. The Moroccan government established the Center of Arbitration and Mediation housed in Rabat and the Casablanca International Mediation and Arbitration Center (CIMAC). The U.S. Mission is not aware of any investment disputes involving state owned enterprises (SOEs).

**Bankruptcy Regulations**

Morocco’s bankruptcy law is based on French law. Commercial courts have jurisdiction over all cases related to insolvency, as set forth in Royal Decree No. 1-97-65 (1997). The Commercial Court in the debtor’s place of business holds jurisdiction in insolvency cases. The law gives secured debtors priority claim on assets and proceeds over unsecured debtors, who in turn have priority over equity shareholders. Bankruptcy is not criminalized. Parliament passed in March 2018 an update to Livre V, the national insolvency code. The new law shifts the focus of bankruptcy from liquidation and restructuring to prevention and settlement. The World Bank’s 2018 Doing Business report ranked Morocco 134 out of 190 economies in “Resolving Insolvency,” and the Moroccan government reportedly undertook the bankruptcy reforms specifically to increase its ranking on this indicator. In February 2008, The Moroccan Central Bank signed a 25-year agreement with Experian, the global information services company, to upgrade and run its Credit Bureau facilities in Morocco to provide credit institutions with objective, reliable, and pertinent data to assist them in the underwriting process.

							4. Industrial Policies					

**Investment Incentives**

As set out in the Investment Code (Section 2.4), Morocco offers incentives designed to encourage foreign and local investment. Morocco’s Investment Charter gives the same benefits to all investors regardless of the industry in which they operate (except agriculture and phosphates, which remain outside the scope of the Charter). With respect to agricultural incentives, Morocco launched the Plan Maroc Vert  (Green Morocco Plan) in 2008 to improve the competitiveness of the agribusiness industry. The Plan offers technical and financial support to federations of the citrus and olive sectors to boost agribusiness value chains. Morocco has also set up free zones to offer companies investing in the zones incentives ranging from tax breaks, subsidies, and reduced customs duties. Additionally, businesses associated with Casablanca Finance City (CFC) receive a variety of incentives, including exemption from corporate taxes for the first five years after receiving CFC status. After five years, companies are taxed at a reduced rate of 8.75 percent instead of the standard 17.5 percent tax on export turnovers. Companies with regional headquarters in the CFC pay a reduced rate of 10 percent on profits, versus the average 30 percent standard rate. Employees of CFC-status companies also benefit from reduced personal income tax rates. Other CFC advantages include administrative assistance. CFC-status companies benefit from expedited processing of work permit applications for their foreign employees, which reduces wait times from six months to one week. For details on CFC eligibility, see CFC’s website . The Moroccan government launched its “investment reform plan” in 2016 to create a favorable environment for the private sector to drive growth. The plan included the adoption of investment incentives to support the industrial ecosystem, tax and customs advantages to support investors and new investment projects, import duty exemptions and a value added tax (VAT) exemption. AMDIE’s website  has more details on investment incentives.

In August 2017, the Government of Morocco fully approved the 2015 incentive plan to provide a 20 percent tax break on local expenditures to foreign film companies investing over $1 million in Morocco. The Ministry of Culture and Communications currently is developing the mechanisms to fully implement the procedure for claiming and receiving the reimbursements.

The 2018 budget law included the following incentives to support small to medium enterprises (SMEs): a reduction of up to 30 percent in corporate taxes for capital investments in startups in the new technologies sector; granting management companies of tourist residences and tourist entertainment companies a five-year corporate and income tax holiday and other tax benefits already extended to hotels; and a widening of the exemption from social security contributions and personal income tax charges for a company’s first ten employees.

**Foreign Trade Zones/Free Ports/Trade Facilitation**

The government maintains several “free zones” in which companies enjoy lower tax rates in exchange for an obligation to export at least 85 percent of their production. In some cases, the government provides generous incentives for companies to locate production facilities in the country. The Moroccan government also offers a VAT exemption for investors using and importing equipment goods, materials, and tools needed to achieve investment projects whose value is at least $20 million. This incentive lasts for a period of 36 months from the start of the business.

**Performance and Data Localization Requirements**

The Moroccan government views foreign investment as an important vehicle for creating local employment, although Moroccan labor law does not specifically require that companies hire Moroccan employees. However, visa issuance for foreign employees is contingent upon a company’s inability to find a qualified local employee for a specific position, and can only be issued after that company has verified the unavailability of such an employee with the National Agency for the Promotion of Employment and Competency (ANAPEC). If these conditions are met, the Moroccan government allows the hiring of foreign employees, including for senior management. The process for obtaining and renewing visas and work permits can be slow and may take up to six months.

The government does not require the use of domestic content in goods or technologies. The WTO Trade Related Investment Measures’ (TRIMs) database does not indicate any reported Moroccan measures that are inconsistent with TRIMs requirements. However, companies have reported that with regards to public procurement, there tends to be a preference for companies utilizing local content or establishing local production facilities. Though not required, tenders in some industries, including solar energy, are written with targets for local content percentages. Both performance requirements and investment incentives are uniformly applied to both domestic and foreign investors depending on the size of the investment.

The Moroccan Data Protection Act (Act 09-08) stipulates that data controllers may only transfer data if a foreign nation ensures an adequate level of protection of privacy and fundamental rights and freedoms of individuals with regard to the treatment of their personal data. Morocco’s National Data Protection Commission (CNDP) defines the exceptions according to Moroccan law. Local regulation requires the release of source code for certain telecommunications hardware products. However, the U.S. Mission is not aware of any Moroccan government requirement that foreign IT companies should provide surveillance or backdoor access to their source-code or systems.

							5. Protection of Property Rights					

**Real Property**

Morocco permits foreign individuals and foreign companies (i.e. companies whose share capital is owned in whole or in part by a foreign individual or company) to own land but not agricultural land. However, foreigners may acquire agricultural lands in order to carry out an investment or other economical project that is not agricultural in nature, subject to first obtaining a certificate of non-agricultural use from the authorities. Morocco has a formal registration system maintained by the National Agency for Real Estate Conservation, Property Registries, and Cartography (ANCFCC), which issues titles of land ownership. According to USAID Morocco’s country profile, approximately 30 percent of the land is registered in the formal system, and almost all of that is in urban areas. Lack of registration in the formal system does not mean that ownership is completely unclear. In addition to the formal registration system, there are customary documents called *moulkiya* issued by traditional notaries called *adouls.*While not providing the same level of certainty as a title, a *moulkiya* can provide some level of security of ownership. Morocco also recognizes prescriptive rights whereby an occupant of a land under the *moulkiya* system (not lands duly registered with ANCFCC) can establish ownership of that land upon fulfillment of all the legal requirements, including occupation of the land for a certain period of time (10 years if the occupant and the landlord are not related and 40 years if occupant is a parent). There are also other specific legal regimes applicable to some types of lands, among which:

- Collective lands : lands which are owned collectively by some tribes, whose members only benefit from rights of usufruct;
- Public lands : lands which are owned by the Moroccan State;
- Guich lands : lands which are owned by the Moroccan State, but whose usufruct rights are vested upon some tribes;
- Habous lands : lands which are owned by a party (State, a certain family, a religious or charity organization, etc.) subsequent to a donation and the rights of usufruct of which are vested upon such party (usually with the obligation to allocate the proceeds to a specific use or to use the property in a certain way).

Morocco’s rating for “Registering Property” improved over the past year, with a ranking of 86 out of 190 countries worldwide in the World Bank’s Doing Business 2018 report, one place higher than in 2017. According to the 2018 World Bank report, Morocco made registering property easier by streamlining the property registration process. Mortgages and liens exist in Morocco, and banks compete heavily to market specialized mortgage products to Moroccans resident abroad in countries such as France and Belgium.

**Intellectual Property Rights**

The Ministry of Industry, Trade, Investment, and the Digital Economy oversees the Moroccan Office of Industrial and Commercial Property (OMPIC), which serves as a registry for patents and trademarks in the industrial and commercial sectors. The Ministry of Communications oversees the Moroccan Copyright Office (BMDA), which registers copyrights for literary and artistic works (including software), enforces copyright protection, and coordinates with Moroccan and international partners to combat piracy. The Ministry of Communication supported the enactment of new copyright decrees on May 20, 2014, which obligate the police to work on behalf of BMDA to investigate suspected cases of copyright infringement including the illegal selling/production of unlicensed media as well as the pursuit of illegal media use on the radio or television. Additionally, the Ministry of Communication and BMDA formed a national anti-piracy committee responsible for developing a strategy and a plan for consistent action in combating copyright infringement and counterfeit goods. The National Committee is supported locally by regional committees that mirror the national committee in composition and goals.

In 2016, the Ministry of Communication and World Intellectual Property Organization (WIPO) signed an MOU to expand cooperation to ensure the protection of intellectual property rights in Morocco. The memorandum committed both parties to improving the judicial and operational dimensions of Morocco’s copyright enforcement. Following this MOU, in November 2016, BMDA launched WIPOCOS, a database for collective royalty management organizations or societies, developed by WIPO. In spite of these positive changes, BMDA’s current focus on redefining its legal mandate and relationship with other copyright offices worldwide has appeared to lessen its enforcement capacity. However, the reforms BMDA is undertaking reflect positively on its commitment to protecting artists and companies’ copyrights to the utmost extent possible under the law.

Law No. 23-13 on Intellectual Property Rights increases penalties for violation of those rights and better defines civil and criminal jurisdiction and legal remedies. It also sets in motion an accreditation system for patent attorneys in order to better systematize and regulate the practice of patent law. Law No. 34-05, amending and supplementing Law No. 2-00 on Copyright and Related Rights, includes 15 items (Articles 61 to 65) devoted to punitive measures against piracy and other copyright offenses. These range from civil and criminal penalties to the seizure and destruction of seized copies, with fines between $500 and $10,000, and imprisonment terms from two to six months. Judges’ authority in sentencing and criminal procedures is proscribed, with little power to issue harsher sentences that would serve as stronger deterrents.

OMPIC enacted a Strategic Plan for 2016-2020 to strengthen the institution’s capacity to carry out its core mandate of granting industrial and commercial property titles and enforcing IPR. This new strategic plan focuses on promoting quality, transparency, and a service-oriented organizational culture, while underscoring the important role that IPR protection has in promoting innovation under Morocco’s 2014-2020 Industrial Acceleration Plan. OMPIC also partnered with the Moroccan General Business Confederation (CGEM) to form the National Committee for Industrial Property and Anti-Counterfeiting (CONPIAC), a bridge between the public and private sectors. The Casablanca region accounts for 85 percent of national counterfeiting cases. Preliminary studies show that counterfeiting is highest in textiles, followed by leather products, electrical goods, automobile parts, and cosmetics. In order to address these vulnerabilities, starting with the automotive industry, CONPIAC has been working with the private sector to create a collective certification mark to identify and vet legitimate distributers of auto parts. The Ministry of Industry officially launched this mark called *Salamatouna*, which means “our safety,” in December 2017. CONPIAC is planning to conduct a benchmarking study on online sales of counterfeited items in Morocco, in order to develop a program to address the increasing prevalence of online transactions. Additional data on Morocco’s counterfeit statistics is available at CONPIAC’s website .

Morocco prosecutes some IPR violations. Moroccan authorities appear committed to cracking down on counterfeiting but, due to resource constraints, have chosen to focus enforcement efforts on the most problematic areas, specifically areas with public safety and/or significant economic impacts. BMDA brought approximately a dozen court cases against copyright infringers in 2017. In 2017, Morocco’s customs authorities seized 5.3 million counterfeit items, representing a 15 percent increase in contraband seizures. These seizures resulted in MAD 557 million ($61 million) worth of counterfeit items in 2017, a record amount.

Morocco is finalizing an agricultural trade agreement with the EU that would require the protection of thousands of European Geographic Indications. The U.S. government is seeking to clarify how existing U.S. trademarks and products using generic or common names would be treated if the agreement were concluded, as well as conformity with provisions of the U.S.-Morocco FTA. The Moroccan government has indicated previously-filed U.S. trademarks will be respected, but there is as yet no formal written guidance as to how conflicts will be handled.

Morocco is not listed on the most recent of either USTR’s Special 301 report or the notorious markets report. Nevertheless, both software and DVD piracy are issues in Morocco. Moreover, while the intellectual property registration system is increasingly efficient and protection mechanisms are in place to defend these rights, enforcement can be lacking and legal avenues at times constrained due to a lack of familiarity with IPR law. For additional information about IPR treaty obligations and points of contact at government offices, please see WIPO’s country profiles .

For assistance, please refer to the U.S. Embassy local lawyers’ list, as well as to the regional U.S. IP Attaché .

							6. Financial Sector					

**Capital Markets and Portfolio Investment**

Morocco encourages foreign portfolio investment, and Moroccan legislation applies equally to Moroccan and foreign legal entities and to both domestic and foreign portfolio investment. The Casablanca Stock Exchange (CSE) founded in 1929 and re-launched as a private institution in 1993, is one of the few exchanges in the region with no restrictions on foreign participation. Local and foreign investors have identical tax exposure on dividends (10 percent) and pay no capital gains tax. With a market capitalization of $61 billion and 75 listed companies (as of April 2018), CSE is the second largest exchange in Africa (after the Johannesburg Stock Exchange). The market is currently dominated by institutional investors, who act on long-term trends. Short-selling, which would provide liquidity to the market, is not permitted. The Moroccan government initiated the Futures Market Act (Act 42-12) on October 2015 to define the institutional framework of the futures market in Morocco and the role of the regulatory and supervisory authorities.

In November 2015, the Government of Morocco, the Moroccan financial market supervisory body, and shareholders signed a memorandum of understanding setting out a framework to convert the CSE into a joint stock company with a mandate to manage the cash market. Through this demutualization, Morocco’s top banks, the Caisse de Depot et de Gestion (a state-owned financial institution), independent brokerage firms, insurance companies, and Casablanca Finance City Authority would divide the stock market’s share capital. The changes allowed the CSE greater flexibility and access to global markets, and better positioned it as an integrated financial hub for the region. Morocco has accepted the obligations of IMF Article VIII, sections 2(a), 3, and 4, and its exchange system is free of restrictions on making payments and transfers on current international transactions. Credit is allocated on market terms, and foreign investors are able to obtain credit on the local market.

**Money and Banking System**

Morocco has a well-developed banking sector, where penetration is rising rapidly and recent improvements in macroeconomic fundamentals have helped resolve previous liquidity shortages. Morocco has some of Africa’s largest banks, and several have become major players on the continent and continue to expand their footprint. The sector has several large, homegrown institutions with international footprints, as well as several subsidiaries of foreign banks. According to the IMF’s 2016 Financial System Stability Assessment on Morocco , Moroccan banks comprise about half of the financial system with total assets of 140 percent of GDP – up from 111 percent in 2008. There are 19 banks operating in Morocco, six offshore institutions, 33 finance companies, 13 micro-credit associations, and 10 intermediary companies operating in funds transfer. Among the 19 banks, the top three hold over two-thirds of the banking system’s assets and deposits. The top eight banks comprise 90 percent of the system’s assets (including both on and off-balance sheet items). Foreign (mainly French) financial institutions are majority stakeholders in seven banks and nine finance companies. The financial system also comprises several microcredit associations and financing companies, with combined assets of 10.5 percent of GDP. Moroccan banks have built up their presence overseas mainly through the acquisition of local banks, thus local deposits largely fund their subsidiaries.

The Bank Reform Law of 1993 laid out parameters for banking activities, clarified oversight and control responsibilities, specified legal penalties for violations of banking regulations, and established a deposit guarantee fund. The strength of the banking sector has grown significantly in recent years. Since financial liberalization, credit is allocated freely and the central bank has used indirect methods to control the interest rate and volume of credit. The banking participation rate is approximately 60 percent, with significant opportunities remaining for firms pursuing rural and less affluent segments of the market. At the start of 2017, Bank Al-Maghrib approved five requests to open Islamic banks in the country. The regulatory approvals concern the three major Moroccan banks Attijariwafa Bank, BMCE of Africa and Banque Centrale Populaire (BCP), and two smaller lenders Credit Agricole (CAM) and Credit Immobilier et Hotelier (CIH). Morocco’s parliament has yet to approve a bill regulating Islamic insurance products (takaful).

The incidence of non-performing loans in Morocco has increased in the past five years, with the corporate default rate reaching 15 percent in 2015. The proportion of debt that is overdue fell from 19.4 percent in 2004 to 6 percent in 2008 (an improvement attributed to the loan consolidation process banks undertook) before rising slightly to 7.2 percent in 2015. In 2017, non-performing loans rose to 8.9 percent reaching roughly $7 billion.

Morocco’s accounting, legal, and regulatory procedures are transparent and consistent with international norms. Morocco is a member of UNCTAD’s international network of transparent investment procedures . The Moroccan central bank (Bank Al Maghrib) is responsible for issuing accounting standards for banks and financial institutions. Circular 56/G/2007 issued by Bank Al Maghrib requires that all entities under its supervision use International Financial Reporting Standards (IFRS) for accounting periods that began January 2008. The Securities Commission is responsible for issuing financial reporting and accounting standards for public companies. Circular No. 06/05 of 2007 reaffirmed the Moroccan Stock Exchange Law (Law No. 52-01), which stipulated that all companies listed on the Casablanca Stock Exchange (CSE), other than banks and similar financial institutions, can choose between IFRS and Moroccan Generally Accepted Accounting Principles (GAAP). In practice, most public companies are using IFRS.

Legal provisions regulating the banking sector include Law No. 76-03 on the Charter of Bank Al-Maghrib, which created an independent board of directors and prohibits the Ministry of Finance and Economy from borrowing from the central bank except in exceptional circumstances. Law No. 34-03 (2006) reinforced the supervisory authority of Bank Al-Maghrib over the activities of credit institutions. Foreign banks and branches are allowed to establish operations in Morocco and are subject to provisions regulating the banking sector. At present, the U.S. Mission is not aware of Morocco losing correspondent banking relationships.

The 2018 Budget Bill introduced a new provision on “the right of communication and exchange of information for tax purposes.” Integrated into article 214 of the General Tax Code, the measure allows the tax authorities to collect information on taxpayers from financial institutions and to transfer it on-demand to foreign counterparts that have entered into agreements with Morocco permitting an automatic exchange of information for tax purposes, in accordance with procedures that will be determined by regulation. This provision preemptively established the tax authorities’ ability to request the information necessary for Moroccan banks to comply with the U.S. Foreign Account Tax Compliance Act (FATCA). On February 22, the Government Council approved the FATCA implementation decree (n° 6651), subsequently published on the official bulletin on February 26, on the systematic exchange of fiscal data with foreign countries, which authorizes Moroccan-based financial institutions to communicate on an annual basis to the Internal Revenue Service financial data regarding American tax-payers.

There are no restrictions on foreigners’ abilities to establish bank accounts. However, foreigners who wish to establish a bank account are required to open a “convertible” account that must be opened with foreign currency. The account holder may only deposit foreign currency into that account; at no time can they deposit dirhams.

In November 2017, the foreign exchange office (Office des Changes), the Ministry of Economy and Finance (MoEF), the Central Bank, and the Moroccan Capital Market Authority (AMMC) announced a prohibition on the use of cryptocurrencies, noting that they carry significant risks that may lead to penalties. Some business officials and lawyers oppose the financial institutions’ position on bitcoin and have developed a working group that seeks to develop a measure to regulate cryptocurrencies.

**Foreign Exchange and Remittances**

*Foreign Exchange Policies*

Foreign investments financed in foreign currency can be transferred tax-free, without amount or duration limits. This income can be dividends, attendance fees, rental income, benefits, and interest. Capital contributions made in convertible currency, contributions made by debit of forward convertible accounts, and net transfer capital gains may also be repatriated. For the transfer of dividends, bonuses, or benefit shares, the investor must provide balance sheets and profit and loss statements, annexed documents relating to the fiscal year in which the transfer is requested, as well as the statement of extra-accounting adjustments made in order to obtain the taxable income.

A currency-convertibility regime is available to foreign investors, including Moroccans living abroad, who invest in Morocco. This regime facilitates their investments in Morocco, repatriation of income, and profits on investments. Morocco guarantees full currency convertibility for capital transactions, free transfer of profits, and free repatriation of invested capital, when such investment is governed by the convertibility arrangement. Generally, the investors must notify the government of the investment transaction, providing the necessary legal and financial documentation. With respect to the cross-border transfer of investment proceeds to foreign investors, the rules vary depending on the type of investment. Investors may import freely without any value limits to traveler’s checks, bank or postal checks, letters of credit, payment cards or any other means of payment denominated in foreign currency. For cash and/or negotiable instruments in bearer form with a value equal to or greater than $10,000, importers must file a declaration with Moroccan Customs at the port of entry. Declarations are available at all border crossings, ports, and airports.

Amounts received from abroad must pass through a convertible dirham account, which ensures a convertibility regime in favor of foreign investors. This account permits the realization of investment transactions in Morocco and guarantees the transfer of proceeds for the investment, as well as the repatriation of the proceeds and the capital gains from any resale. AMDIE recommends that investors open a convertible account in dirhams on arrival in Morocco in order to be able to quickly dispose of the sums necessary for notarial transactions. Morocco has achieved relatively stable macroeconomic and financial conditions under an exchange rate peg, which has helped achieve price stability and insulated the economy from nominal shocks. The peg was adjusted from an 80/20 Euro/Dollar split to a 60/40 split in April 2015.

On January 12, 2018, the Moroccan Ministry of Economy and Finance, in consultation with the Central Bank, adopted a new exchange regime in which the Moroccan dirham may now fluctuate within a band of ± 2.5 percent compared to the Bank’s central rate (peg). The change, which took effect January 15, loosened the fluctuation band from its previous ± 0.3 percent.

*Remittance Policies*

Please refer to the previous section for information applicable to Moroccan remittance policies.

**Sovereign Wealth Funds**

Ithmar Capital is Morocco’s investment fund and financial vehicle, which aims to support the national sectorial strategies. It is based on a Sovereign Wealth Fund model that provides support to international partners wishing to invest in Morocco. Established in November 2011 by the Moroccan government and supported by the Hassan II Fund for Economic and Social Development, the fund initially followed the government’s long term Vision 2020 strategic plan for tourism. The fund is currently part of the long-term development plan initiated by the government in different economic sectors. Its portfolio of assets is valued at $1.8 billion.

							7. State-Owned Enterprises					

Moroccan SOEs are overseen by boards of directors (in single-tier boards) or supervisory boards (in dual-tier boards). These bodies are governed by the Financial Control Act and the Limited Liability Companies Act. The Ministry of Economy and Finance’s Department of Public Enterprises and Privatization monitors SOE governance. Pursuant to Law No. 69-00, SOE annual accounts are publicly available. Under Law No. 62-99, or the Financial Jurisdictions Code, the Court of Accounts and the Regional Courts of Accounts audit the management of a number of public enterprises.

As of March 2018, the Moroccan Treasury held a direct share in 212 state-owned enterprises (SOEs) and 44 companies. Several sectors remain under public monopoly, managed either directly by public institutions (rail transport, some postal services, and airport services) or by municipalities (wholesale distribution of fruit and vegetables, fish, and slaughterhouses). The Office Cherifien des Phosphates (OCP), a public limited company that is 95 percent held by the Moroccan government, is a world-leading exporter of phosphate and derived products. Morocco has opened several traditional government activities using delegated-management or concession arrangements to private domestic or foreign operators, which are generally subject to tendering procedures. Examples include water and electricity distribution, construction and operation of motorways, and the management of non-hazardous wastes. In some cases, SOEs continue to control the infrastructure while allowing private-sector competition through concessions. The Moroccan government provides a published list  of SOEs. SOEs benefit from budgetary transfers from the state treasury for investment expenditures.

The Moroccan National Commission on Corporate Governance was established in 2007. It prepared the first Moroccan Code of Good Corporate Governance Practices in 2008. Based on the OECD Principles of Corporate Governance, it applies to both the private and public sectors. Recognizing the specific features of the SOE sector, the Commission drafted in 2011 a code dedicated to SOEs, drawing on the OECD Guidelines on Corporate Governance of SOEs. The code, which came into effect in 2012, is aimed at enhancing SOEs’ overall performance. It requires greater use of standardized public procurement and accounting rules, outside audits, the inclusion of independent directors, board evaluations, greater transparency, and better disclosure. The Moroccan government prioritizes a number of governance-related initiatives including an initiative to help SOEs contribute to the emergence of regional development clusters. The government is also attempting to improve the use of multi-year contracts with major SOEs as a tool to enhance performance and transparency.

**Privatization Program**

In 1993, the Moroccan government initiated an ambitious program of privatization, which enabled Morocco to channel a large volume of foreign direct investment to key sectors such as telecommunications, energy, agribusiness, financial services, and tourism. When this program ended in August 2011, total revenue from divestment in SOEs and the granting of telecom licenses totaled approximately USD 13 billion. The state still holds significant shares in the main telecommunications companies, banks, and insurance companies, as well as railway and air transport companies.

							8. Responsible Business Conduct					

Responsible business conduct (RBC) has gained strength in the broader business community in tandem with Morocco’s economic expansion and stability. Businesses are active in RBC programs related to the environment, local communities, employees, and consumers. For example, business association CGEM awards “social labels” to companies based on a systematic analysis of the effects of their RBC activities on local communities. Large multinationals first started implementing RBC programs in Morocco in the 1990s. The Moroccan government does not have any regulations requiring companies to practice RBC nor gives any preference to such companies. However, companies generally inform Moroccan authorities of their planned RBC involvement. Authorities have supported companies’ RBC programs by giving them permission, where necessary, to operate and in some cases, by implementing these programs through public-private partnerships. The Moroccan Association of Textile and Apparel Industries awards a “Fibre Citoyenne” label to socially responsible companies. Additionally, Morocco joined the UN Global Compact network in 2006. The Compact provides support to companies that affirm their commitment to social responsibility. In 2016, the Ministry of Employment and Social Affairs launched an annual gender equality prize to highlight Moroccan companies that promote women in the workforce. While there is no legislation mandating specific levels of RBC, foreign firms and some local enterprises follow generally-accepted principles, such as the OECD RBC guidelines for multinational companies. NGOs and Morocco’s active civil society are also taking an increasingly active role in monitoring corporations’ RBC performance. Morocco does not currently participate in the EITI or the Voluntary Principles on Security and Human Rights. No domestic transparency measures exist that require disclosure of payments made to governments. There have not been any cases of high-profile instances of private sector impact on human rights in the recent past.

							9. Corruption					

In the 2017 Corruption Perception Index published by Transparency International (TI), Morocco improved by three points from the previous year (from 37 to 40 points) and moved up nine spots in the rankings (from 90th to 81st out of 180 countries). According to the 2016 State Department’s Country Report on Human Rights Practices, Moroccan law provides criminal penalties for official corruption, but the government does not implement the law effectively.

The Central Commission for the Prevention of Corruption (ICPC) is the agency responsible for combating corruption. In 2015, parliament amended the mandate of the ICPC, expanding its authority to conduct investigations of corruption allegations and solicit mandatory responses from government institutions; however, throughout 2017 it was without senior leadership. In 2010, ICPC set up an internet portal for civil society and small businesses to identify instances of corruption. In addition to ICPC, the Ministry of Justice and Liberties (MOJL) and the government accountability court have jurisdiction over corruption issues. The accountability court has no authority to conduct investigations or assign responsibility, and no cases were referred for prosecution by other authorities. The government reports corruption and other instances of police malfeasance through an internal mechanism, and sometimes investigated and referred such cases for prosecution. There were reports of abuses by the security forces that were not always investigated, contributing to a widespread perception of impunity. International and domestic human rights organizations claimed that authorities dismissed many complaints of abuse and relied only on police statements. Authorities investigated some low-level incidents of alleged abuse and corruption among security forces. The judicial police investigated allegations, including those against security forces, and advised the court of their findings. Cases often languished in the investigatory or trial phases. Morocco’s anti-corruption efforts include enhancing the transparency of public tenders and implementation of a requirement that senior government officials submit financial disclosure statements at the start and end of their government service, although their family members are not required to make such disclosures. Few public officials submitted such disclosures, and there were no effective penalties for failing to comply. Morocco does not have conflict of interest legislation.

Although the Moroccan government does not require that private companies establish internal codes of conduct, the Moroccan Institute of Directors (IMA) was established in June 2009 with the goal of bringing together individuals, companies, and institutions willing to promote corporate governance and conduct. IMA published the four Moroccan Codes of Good Corporate Governance Practices. Some private companies use internal controls, ethics, and compliance programs to detect and prevent bribery of government officials. Morocco signed the UN Convention against Corruption in 2007 and hosted the States Parties to the Convention’s Fourth Session in 2011. However, Morocco does not provide any formal protections to NGOs involved in investigating corruption. Although the U.S. Mission is not aware of cases involving corruption with regard to customs or taxation issues, American businesses report encountering unexpected delays and requests for documentation that is not required under the FTA or standardized shipping norms.

**Resources to Report Corruption**

Contact at government agency or agencies are responsible for combating corruption:

Name: Instance Centrale de Preevention de la CorruptionAddress: Avenue Annakhil, Immeuble High Tech, Hall B, 3eme etage, Hay Ryad-RabatTelephone number: +212-5 37 57 86 60Email address: contact@icpc.maFax: +212-5 37 71 16 73

Contact at “watchdog” organization:

Organization: Transparency International National ChapterAddress: 24 Boulevard de Khouribga, Casablanca 20250Email Address: transparency@menara.maTelephone number: +212-22-542 699http://www.transparencymaroc.ma/index.php 

							10. Political and Security Environment					

Morocco does not have a history of politically motivated violence or civil disturbance. There has not been any damage to projects and/or installations which has had a continuing impact on the investment environment. Demonstrations occur frequently in Morocco and usually center on political or social issues. They can attract thousands of people in major city centers, but most have been peaceful and orderly.

							11. Labor Policies and Practices					

A paradox of the Moroccan labor market is that large numbers of graduates are unable to find jobs commensurate with their education and training, while employers complain of skills shortages and mismatches. Many recent high school and university graduates lack the soft skills to communicate effectively with employers and find jobs commensurate with their education. Industrial skills are not prioritized, and skills that graduates acquire are often not transferrable to any real-world working environment, causing gaps between skills supply and demand. Since 2011, the Moroccan government has restructured its employment promotion agency, the National Agency for Promotion of Employment and Skills (ANAPEC), in order to assist new university graduates in preparing for and finding work in the private sector through specialized skills. The Bureau of Professional Training and Job Promotion (OFPPT), Morocco’s main public provider for professional training, also launched the Specialized Institute for Aeronautics and Airport Logistics (ISMALA) in Casablanca at the end of 2013 to offer technical training in aeronautical maintenance. In April 2018, the Government of Morocco launched a National Plan for Job Promotion, created after three years of collaboration with government partners involved in employment policy, to support job creation, strengthen the job market, and consolidate regional resources devoted to job promotion. According to figures released by Bank al Maghrib, unemployment in 2017 was 10.2 percent with unemployment among youth aged 15 to 24 reaching 40.8 percent in some urban areas.

As a result of a forward-leaning migration policy, the Moroccan government has regularized the status of over 20,000 sub-Saharans migrants since 2014 and is currently reviewing over 26,000 new applications to regularize the status of a second wave of sub-Saharan migrants. Regularization provides the migrants with legal access to employment, employment services, and education and vocation training. The majority of sub-Saharan migrants who benefitted from the regularization program work in call centers and education institutes, if they have strong French or English skills, or domestic work and construction.

According to section VI of the labor law, employers in the commercial, industrial, agricultural, and forestry sectors with ten or more employees must communicate a dismissal decision to the employee’s union representatives, where applicable, at least one month prior to dismissal. The employer must also provide grounds for dismissal, the number of employees concerned, and the amount of time intended to undertake termination. With regards to severance pay (article 52 of the labor law), the employee bound by an indefinite employment contract is entitled to compensation in case of dismissal after six months of work in the same company regardless of the mode of remuneration and frequency of payment and wages. The labor law differentiates between layoffs for economic reasons and firing. In case of serious misconduct, the employee may be dismissed without notice or compensation or payment of damages. The employee must file an application with the National Social Security Funds (CNSS) agency of his or her choice, within a period not exceeding 60 days from the date of loss of employment. During this period, the employee shall be entitled to medical benefits, family allowances, and shall be taken into consideration for pension entitlements. Labor law is applicable in all sectors of employment; there are no specific labor laws to foreign trade zones or other sectors. More information is available from the Moroccan Ministry of Foreign Affairs’ Economic Diplomacy  unit.

Morocco has roughly 20 collective bargaining agreements in the following sectors: Telecommunications, automotive industry, refining industry, road transport, fish canning industry, aircraft cable factory, collection of domestic waste, ceramics, naval construction and repair, paper industry, communication and information, land transport, and banks. The sectoral agreements that exist to date are in the banking, energy, printing, chemicals, ports, and agricultural sectors. According to the State Department’s Country Report on Human Rights Practices, the Moroccan constitution grants workers the right to form and join unions, strike, and bargain collectively, with some restrictions (S 396-429 Labor Code Act 1999, No. 65/99). The law prohibits certain categories of government employees, including members of the armed forces, police, and some members of the judiciary, from forming and joining unions and from conducting strikes. The law allows several independent unions to exist but requires 35 percent of the total employee base to be associated with a union for the union to be representative and engage in collective bargaining. The government generally respected freedom of association and the right to collective bargaining. Employers limited the scope of collective bargaining, frequently setting wages unilaterally for the majority of unionized and nonunionized workers. Domestic NGOs reported that employers often used temporary contracts to discourage employees from affiliating with or organizing unions. Legally, unions can negotiate with the government on national-level labor issues.

Labor disputes (S 549-581 Labor Code Act 1999, No. 65/99) are common, and in some cases, they result in employers failing to implement collective bargaining agreements and withholding wages. Trade unions complain that the government sometimes uses Article 288 of the penal code to prosecute workers for striking and to suppress strikes. Labor inspectors are tasked with mediation of labor disputes. On May 31, 2016, the major labor unions held a public-sector strike, including local collectivities, and planned a sit-in in front of Parliament to protest pension reform and the failure of the dialogue. In general, strikes are frequent in heavily unionized sectors such as education and government services, and such strikes can lead to disruptions in government services but usually remain peaceful. The Moroccan government passed the Domestic Worker Law and the long-debated pension reform bill in July 2016. The new pension reform legislation is expected to keep Morocco’s largest pension fund, the Caisse Marocaine de Retraites (CMR), solvent until 2028 with an increase in the retirement age from 60 to 63 by 2024 and adjustments in contributions and future allocations.

Chapter 16 of the U.S.-Morocco Free Trade Agreement (FTA) addresses labor issues and commits both parties to respecting international labor standards.

							12. OPIC and Other Investment Insurance Programs					

OPIC has a long history of supporting projects in Morocco and has provided finance or insurance support to 22 deals over the past four decades. Morocco signed an agreement with OPIC in 1961. The agreement was updated in 1995 and ratified by the Moroccan parliament in June 2004. The agreement can be found on OPIC’s website . In August 2013, OPIC provided its consent for a new $40 million, eight-year term loan facility with Attijariwafa Bank to support loans to small and medium-sized enterprises (SMEs) in Morocco under a risk-sharing agreement between OPIC and Citi Maghreb. In August 2014, OPIC signed an additional agreement with Attijariwafa and Wells Fargo to provide additional support to SMEs.

							13. Foreign Direct Investment and Foreign Portfolio Investment Statistics					

*Table 2: Key Macroeconomic Data, U.S. FDI in Host Country/Economy*

*Host Country Domestic GDP Source: Bank Al Maghrib, 2016. FDI Host Country Source: Office des Change, Morocco’s Global External Financial Position, 2016. Note: The discrepancy between the host nation and international statistical sources is due to the two sources referring to different periods of time for their stock figures.

*Table 3: Sources and Destination of FDI*

*Table 4: Sources of Portfolio Investment*

Data not available.

							14. Contact for More Information					

Foreign Commercial ServiceU.S. General Consulate Casablanca, Morocco+212522642082Office.casablanca@trade.gov

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### On This Page

                    -  Executive Summary 
                    -  1. Openness To, and Restrictions Upon, Foreign Investment   
                    -  2. Bilateral Investment Agreements and Taxation Treaties   
                    -  3. Legal Regime   
                    -  4. Industrial Policies   
                    -  5. Protection of Property Rights   
                    -  6. Financial Sector   
                    -  7. State-Owned Enterprises   
                    -  8. Responsible Business Conduct   
                    -  9. Corruption   
                    -  10. Political and Security Environment   
                    -  11. Labor Policies and Practices   
                    -  12. OPIC and Other Investment Insurance Programs   
                    -  13. Foreign Direct Investment and Foreign Portfolio Investment Statistics   
                    -  14. Contact for More Information   

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#### The Lessons of 1989: Freedom and Our Future