Description
A RESEARCH REPORT . ON POSSIBLE THRUST AREAS OF INDIAN EXPORT AND THRUST PRODUCT TO BOOST THE INDIAN EXPORTS
2011
Engineering Goods in
GROUP MEMBERS PRIYANKA BIYANI - 070 ATIT SANGHAVI – 078 MEHUL SHAH - 097 ASHWIN GADA - 113 NAVIN TODI - 124 SANTOSH PATHAK - 129
GROTH PROSPECT & THRUST AREA OF INDIAN EXPORTS
BY CELESTA TO PROF CAJETAN D’SOUZA 3/13/2011
ACKNOWLEDGEMENT
Apart from our efforts, the success of any project depends largely on the encouragement and guidelines of many others. We take this opportunity to express our gratitude to the people who have been instrumental in the successful completion of this project. We would like to show our greatest appreciation to Prof. Cajetan D‘Souza. We can‘t say thank you enough for his tremendous support and help. We feel motivated and encouraged every time we attend his lecture. Without his encouragement and guidance this project would not have materialized. The guidance and support received from all the members who contributed and who are contributing to this project, was vital in completion of the project. We are grateful for their constant support and help.
TABLE OF CONTENTS
KINGDOM OF MOROCCO .................................................................................................................... 9
Country Snapshot ................................................................................................................................................................. 10 PESTEL ANALYSIS ................................................................................................................................................................ 12 Political Analysis: ................................................................................................................................................................. 12 Political Pressure & Leaders............................................................................................................................................ 13 Elections and Government Makeup ................................................................................................................................ 13 Domestic politics .............................................................................................................................................................. 13 Government ..................................................................................................................................................................... 14 Leadership and Political Officials.. .................................................................................................................................. 14 Social Problems and Control. .......................................................................................................................................... 15 Military Activity .............................................................................................................................................................. 15 Military branches: ........................................................................................................................................................... 15 Economic Analysis: .............................................................................................................................................................. 17 Economic Performance .................................................................................................................................................... 17 Business Reforms in Morocco .......................................................................................................................................... 21 Policy trends..................................................................................................................................................................... 21 Fiscal policy...................................................................................................................................................................... 22 Monetary policy ............................................................................................................................................................... 22 International assumptions ............................................................................................................................................... 22 Economic growth ............................................................................................................................................................. 23 Inflation ........................................................................................................................................................................... 24 Exchange rates ................................................................................................................................................................. 24 External sector ................................................................................................................................................................. 25 Investment by Sector in Budget 2010, Morocco............................................................................................................... 25 Annual Data And Forecast .............................................................................................................................................. 26 Quarterly Data ................................................................................................................................................................. 27 Key Issues ........................................................................................................................................................................ 28 Prospects .......................................................................................................................................................................... 29 Social Analysis ...................................................................................................................................................................... 30 Demography..................................................................................................................................................................... 30 Linguistic Affiliation. ....................................................................................................................................................... 30 People ............................................................................................................................................................................... 31 Symbolism. ....................................................................................................................................................................... 32 Classes and Castes............................................................................................................................................................ 32 Symbols of Social Stratification. ...................................................................................................................................... 32 Social Welfare and Change Programs ............................................................................................................................. 33 Nongovernmental Organizations and Other Associations ............................................................................................... 33
Marriage. .......................................................................................................................................................................... 33 Religious Beliefs................................................................................................................................................................ 33 Religious Practitioners. .................................................................................................................................................... 34 Rituals and Holy Places. ................................................................................................................................................... 34 Morocco's Unemployment Rate ....................................................................................................................................... 34 Technological Analysis.......................................................................................................................................................... 36 Science and technology in Morocco.................................................................................................................................. 36 National policy.................................................................................................................................................................. 36 Technopolis Project .......................................................................................................................................................... 36 Research industry............................................................................................................................................................. 37 Institutions........................................................................................................................................................................ 37 International co-operation ............................................................................................................................................... 38 Communication ................................................................................................................................................................ 38 Broadcast media:.............................................................................................................................................................. 38 Environmental Analysis ........................................................................................................................................................ 39 Morocco is divided into sixteen regions. ............................................................................................................................... 42 Tanger-Med...................................................................................................................................................................... 42 Legal Analysis ....................................................................................................................................................................... 44 Legal system ..................................................................................................................................................................... 44 Suffrage: ........................................................................................................................................................................... 44 Legislative branch: ........................................................................................................................................................... 44 Judicial branch: ............................................................................................................................................................... 45 Corruption in Morocco .................................................................................................................................................... 45 Morocco's Legal system (Weaknesses) ............................................................................................................................. 45 Trade Relation of Morocco (Strategic Partnership) ............................................................................................................. 47 Major Trading Partners................................................................................................................................................... 47 Transnational Issues ............................................................................................................................................................. 47 International organization participation: ........................................................................................................................ 48 Major Trade Agreement of India & Morocco.................................................................................................................. 48 GSTP - General System of Trade Preferences among Developing Countries .................................................................. 48 Global System of Trade Preferences (GSTP) ................................................................................................................... 49 CUSTOMS REGULATIONS........................................................................................................................................... 50 DUTIABLE/RESTRICTED ITEMS ................................................................................................................................ 50 PROHIBITED ITEMS ..................................................................................................................................................... 50 PETS ................................................................................................................................................................................ 50 Doing Business Profile,Morocco ........................................................................................................................................... 51 The Global Enabling Trade Index 2010, Morocco................................................................................................................ 51 Major Trading Partners of Morocco (2008) ..................................................................................................................... 53 Morocco’s Export to India (Million Dirham) ................................................................................................................... 54
Morocco’s Import from India (Million Dirham) ............................................................................................................. 55 Morocco’s Import (Weight & Value ) .............................................................................................................................. 56 ENGINEERING GOODS (MOROCCO PERSPECTIVE) ................................................................................................. 57 Major opportunities in Morocco ...................................................................................................................................... 57 List of Potential Products................................................................................................................................................. 57 Products in Focus ............................................................................................................................................................. 58 Materials and components for mechanical engineering: ................................................................................................. 58 Machinery and accessories for:........................................................................................................................................ 58 SISTEP 2009 .................................................................................................................................................................... 59 Engineering Contracts ..................................................................................................................................................... 59 ENGINEERING GOODS (INDIAN PERSPECTIVE) ........................................................................................................ 60 Global engineering exports .............................................................................................................................................. 60 Product analysis: Indian engineering exports .................................................................................................................. 61 Export Performance ........................................................................................................................................................ 61 Engineering exports down by 15.74 % during March 2010 ............................................................................................ 62 Engineering exports may touch $52 billion this fiscal ...................................................................................................... 62 In comparison to cumulative export performance in 2008-09 ......................................................................................... 62 Export Value And Value Addition Matrix For India’s Engineering Export ................................................................... 63 ENGINEERING GOODS IN FTP 2009-2014 ...................................................................................................................... 64 ENGINEERING TRADE BY TRADE BLOCKS ................................................................................................................ 65 ASEAN ............................................................................................................................................................................. 65 NAFTA............................................................................................................................................................................. 65 European Union (EU) ...................................................................................................................................................... 65 Indian Engineering Sector: Need for More Focus ................................................................................................................ 66 Export Performance of Different Engineering Goods ..................................................................................................... 66 EXPORT OF ENGINEERING GOODS & SERVICES DURING 2008-09 TO 2009-10 ................................................ 69 EXPORT PERFORMANCE MONITOR........................................................................................................................ 72 TOP DESTINATIONS: 2009 – 10 ........................................................................................................................................ 73 Top 5 destinations: Product Performance ....................................................................................................................... 74 Recommendation....................................................................................................................................................................... 75 Changing Share of India’s Thrust Products Exports In Future .................................................................................. 76 Trade policy and promotion ................................................................................................................................................. 77 Promotional events by EEPC India ...................................................................................................................................... 77 TECHNOLOGICAL UPGRADATION ............................................................................................................................... 79 Support to status holders ...................................................................................................................................................... 80 Export of Spares ................................................................................................................................................................... 80 Market Access Initiative ....................................................................................................................................................... 80 Common Facility Centres ..................................................................................................................................................... 80 Zero duty EPCG Scheme...................................................................................................................................................... 81
Procuring/Manufacturing Goods For Export & Their Inspection By Government Authorities Of India. .......................... 82 In-Process Quality Control (IPQC) ...................................................................................................................................... 84 Self Certification Scheme ...................................................................................................................................................... 84 Market Research................................................................................................................................................................... 85 Brand Promotion and Publicity ............................................................................................................................................ 85 Key Support Elements For Successful Strategy Implemetnation ......................................................................................... 85 ROLE OF VARIOUS BODIES ................................................................................................................................................. 86 CENTRAL GOVERNMENT ............................................................................................................................................... 86 Foreign Trade Policy ........................................................................................................................................................ 86 Trade Agreements ............................................................................................................................................................ 86 Infrastructure ................................................................................................................................................................... 87 Foreign Direct Investment................................................................................................................................................ 87 Sectoral Policies ................................................................................................................................................................ 88 India Promotion ............................................................................................................................................................... 88 Indian Embassies / Trade Missions abroad...................................................................................................................... 88 Taxation ........................................................................................................................................................................... 88 Exchange Rate Management ............................................................................................................................................ 88 Labour Reforms ............................................................................................................................................................... 88 Partnership with Exporters.............................................................................................................................................. 89 Incentives to Promote SMEs ............................................................................................................................................ 89 Engineering Export Promotion Council (EEPC) .................................................................................................................. 89 Works Cited...................................................................................................................................... Error! Bookmark not defined.
EXECUTIVE SUMMARY
Morocco, officially the Kingdom of Morocco, is a country located in North Africa. It has a population of nearly 33 million and an area of 710,850 km², and also primarily administers the disputed region of the Western Sahara. It is a part of the Maghreb region, besides Tunisia, Algeria, Mauritania and Libya, with whom it shares cultural, historical, and linguistic ties. Morocco is a constitutional monarchy with an elected parliament. The King of Morocco holds vast executive powers, including dissolving parliament at will. Executive power is exercised by the government but more importantly by the king himself. Legislative power is vested in both the government and the two chambers of parliament, the Assembly of Representatives and the Assembly of Councillors. The political capital is Rabat, and the largest city is Casablanca; other large cities include Marrakesh, Tetouan, Tangier, Salé, Fes, Agadir, Meknes and Oujda. The population is a mix of Arabs and Berbers speaking a dialect of Maghrebi Arabic with many regional dialects. Berber-speaking Moroccans can be divided in three main dialectal groups: the Riffians, the High-Atlas Imazighen and the Middle-Atlas Imazighen inhabitants. Morocco is divided into 16 administrative regions (further broken into provinces and prefectures); the regions are administered by Walis (governors) appointed by the King. Morocco's macroeconomic performance since the start of 2001 has been relatively strong, with an average growth rate of 5% over 2001–04. This was mainly due to the good performance of the country‘s primary sector, with agriculture and phosphate mining particularly strong. In 2005, the momentum slowed down, with economic growth at 1.7%, primarily due to a contraction in the primary sector of around 18%. The economy recovered from the fall in performance in 2006 and recorded a growth rate of 6.7%. The economy grew at a CAGR of 4.7% over 2001–06, with growth in 2007 expected to have been 2.2% and the CAGR for 2007–11 expected to be 2.1%. Linked to such poverty are serious social problems, including an illiteracy rate of nearly 50 per cent, one of the highest in the Arab world. Despite an expansion in health care services, Morocco still trails Tunisia, Jordan and Egypt in the ratio of doctors to population. Those living in the countryside are especially deprived. About 45 per cent of rural homes were still without drinking water in 2003 and 38 per cent were without electricity. More than a quarter of rural homes were more than 10 kilometers from a health centre. Although about 1,500 kilometers of rural roads are being built each year, almost half the rural population is without a road that can be used throughout the winter. Moreover, following steady progress over a number of years, neo-natal and infant mortality rates rose between 1997 and 2004. Although the death rate of mothers before and during birth of children remained unchanged during this period, it compares poorly with that of neighboring Tunisia. Science and technology in Morocco has significantly developed in recent years. The Moroccan government has been implementing reforms to encourage scientific research in the Kingdom. While research has yet to acquire the status of a national priority in Morocco, the country does
have major assets that could transform its R&D sector into a key vehicle for development. The industry remains dominated by the public sector, with the universities employing 58% of researchers. Morocco‘s own evaluation of its national research system – carried out in 2003 – revealed that the country has a good supply of well trained high quality human resources and that some laboratories are of very high quality. Morocco‘s trade is heavily slanted towards the EU, with which it ratified an Association Agreement in 2000, paving the way for a gradual elimination of tariff and non-tariff barriers to trade. Phosphates and related products are Morocco‘s largest single export earners. Around three fourths of Morocco‘s exports are destined for EU markets. France‘s long-standing relationship with Morocco is reflected in its 21% share of Morocco's total exports, while Spain (20%) and the UK (5%) are the other major European export destinations. Italy and Germany each have a 5% share of Morocco's exports. Morocco has started to make its presence felt in the Asian markets with the recent rise in exports to India standing at 4% in 2006. On the import side, the EU market accounts for 56% of Morocco's total imports. France and Spain again dominate, with 18% and 14% shares, respectively. Italy, with a 6% share, closely follows Saudi Arabia, which has a 7% share. Germany has a 6% share in the Morocco's imports. Among the Asian countries, China has gained a 7% share of Morocco's total imports. India ranks 30th with a 0.8% share of world engineering exports in 2008. This low position is primarily attributable to three factors: 1. Low export-to-GDP ratio ((export-to-GDP ratio of 15% vis-à-vis 27% for other Indialike countries) 2. Low engineering-to-export ratio (engineering export-to-total export ratio of 24% vis-àvis 30% for other India-like countries) 3. Low technology intensity of engineering export (share of high and medium technology engineering exports - 62% for India vis-à-vis 71% for other India-like countries To realize this aggressive but achievable aspiration, concerted effort needs to be put in by the government, the council and exporters. The key imperatives for India include 1. Enhancing the alignment and effectiveness of trade drivers, 2. Boosting the competitiveness of the Indian engineering industry and facilitating upward movement along the value chain, 3. and strengthening enablers for growth by clearing infrastructural and procedural bottlenecks. These estimations and imperatives for the future growth of Indian engineering exports have been distilled from Ernst & Young‘s comprehensive analysis of previous year‘s trade data (2004–2008) at the product and market levels, substantiated and supplemented by insights from exporters, industry experts and secondary sources.
KINGDOM OF MOROCCO Morocco is a constitutional monarchy on the northwest coast of Africa. It has a mostly Arab
population, although like other North African Arab states its society has a largely secular and moderate Islamic outlook. Morocco has strong cultural and trading links with Europe, particularly France (the former colonial power) and Spain (its close neighbor across the straits of Gibraltar). However, as a moderate Muslim state, it is also a close and useful ally of the US. Following a decade of low and erratic growth, Morocco's economic situation has picked up since 2001. A series of economic and political reforms have helped to breathe life into the moribund economy, assisted by a stable monetary and fiscal environment. However, substantial economic challenges remain. Around one third of the population is under 15, and youth unemployment in urban areas tops 30%. Illiteracy is widespread, and rates of poverty remain high, particularly in rural areas, where public services are often meager and inadequate, even by national standards. The economy remains relatively undiversified, as it is reliant on agriculture, phosphate production and low-end manufacturing such as textiles. The transition to a more open and pluralistic political system, spearheaded by the relatively young King Mohammed VI, has been the most encouraging development in Morocco in recent years. The 2002 parliamentary elections were widely perceived as Morocco‘s most fair and open to date. Although the monarch retains a decisive role in the political sphere and political parties remain relatively fractured, Morocco‘s transition to a stable and effective democratic system is now entrenched. The pace of economic reform in Morocco has been somewhat slower, held back by political infighting, as well as genuine concerns about protecting the most vulnerable citizens from the vagaries of economic change. This is particularly difficult when the social safety net is almost absent; rates of poverty are already high, and the risk of creating supporters for militant Islamist groups is ever-present. In reality, Morocco has largely avoided the schisms of other Muslim and Arab states, preserving its Mediterranean tradition of practicing a relatively laidback and inclusive form of Islam. Although terrorist attacks in the business capital of Casablanca in the spring of 2003 shattered this image; broadly speaking, support for militants remains low. International investors, particularly in the more risk-averse climate of recent years, might be tempted to shy away from Morocco for fear of the threat of Islamic-fundamentalist militancy that has swept across much of the globe. However, as the country increasingly embraces democracy and the economy is successively liberalized and becomes more integrated with the economies of its EU neighbors, those who look behind the headlines are likely to be pleasantly surprised. Source: (Data Monitor, )29439003.pdf (Page No. 4-5) (Ebsco Host)
COUNTRY SNAPSHOT
Official name: Local long form: Local short form: Independence: Currency: Languages: Form of state: Land area: Kingdom of Morocco Al Mamlakah al Maghribiyah Al Maghrib 2 March 1956 (from France) Dirham (Dh) = 100 centimes Arabic (official); Berber languages; French and Spanish are also used. Constitutional monarchy 710,850 sq km (including the disputed territory of Western Sahara, which covers 252,120 sq km) 31,600,000 (mid-2008 IMF estimate) Population in '000 (mid-2004 census) Casablanca 2,950 Rabat (capital) & Sale 1,398 Fes 954 Marrakesh 844 Tangier 704 Kenitra 573 Warm on the coast, hot inland
Population: Main towns:
Climate:
Weather in Rabat: Hottest month, August, 18-28°C (average daily minimum and maximum); coldest month, January, 8-17°C; driest month, July, 1 mm average rainfall; wettest month, December, 86 mm average rainfall Measures: Metric system. Some local measures are also used Time: Fiscal year: Flag description: GMT January 1st-December 31st Red with a green pentacle (five-pointed, linear star) known as Sulayman's (Solomon's) seal in the center of the flag; red and green are traditional colors in Arab flags, although the use of red is more commonly associated with the Arab states of the Persian gulf; the pentacle represents the five pillars of Islam and signifies the association between God and the nation; design dates to 1912 Based on French and Islamic law and French legal procedure
Legal system:
National legislature: Bicameral system, consisting of a directly elected 325-seat lower House of Representatives and a 270-seat upper Chamber of Advisers indirectly elected by an electoral college National elections: Last elections: June 2009 (municipal); September 2007 (House of Representatives). Next elections: 2012 (House of Representatives) King Mohammed VI There are 39 provinces and eight urban prefectures; real provincial power is in the hands of governors appointed by the Ministry of the Interior The king appoints the prime minister, who chooses a Council of Ministers, which is then approved by the king; a new prime minister was appointed in September 2007, and a new government was approved shortly afterwards Loyalist: Rassemblement national des independents; Union constitutionnelle; Mouvement populaire (entered government in July 2009); Alliance nationale; Parti de l'authenticité et de la modernité (left the government in June 2009). Left and centre-left: Union socialiste des forces populaires; Parti Istiqlal; Parti du progrès et du socialisme; Gauche socialiste unifiée. Islamist: Parti de la justice et du développement. The country‘s largest Islamist movement is the banned al-Adl wal-Ihsane (Justice and Charity) Abbas el-Fassi Mohand Laenser
Head of state: Administration:
Executive:
Political parties:
Prime minister: Minister of state:
Source: (Data Monitor, )
PESTEL ANALYSIS POLITICAL ANALYSIS:
Morocco is divided into 16 administrative regions (further broken into provinces and prefectures); the regions are administered by Walis (governors) appointed by the King. The Moroccan Constitution provides for a monarchy with a Parliament and an independent judiciary. Ultimate authority rests with the King. The King presides over the Council of Ministers; appoints the prime minister following legislative elections; appoints all members of the government taking into account the prime minister's recommendations; and may, at his discretion, terminate the tenure of any minister, dissolve the Parliament, call for new elections, or rule by decree. The King is the Commander in Chief of the military and holds the title of Amir al-Mou'minin, the country's religious leader. Since the constitutional reform of 1996, the bicameral legislature consists of a lower chamber called the Chamber of Representatives, which is directly elected, and an upper chamber, the Chamber of Counselors, whose members are indirectly elected through various regional, local, and professional councils. The councils' members themselves are directly elected. Parliament's powers, though limited, were expanded under the 1992 and 1996 constitutional revisions to include budgetary matters, approval authority, and establishment of commissions of inquiry to investigate the government's actions. The lower chamber of Parliament may dissolve the government through a vote of no confidence. Parliamentary elections were held in November 2002 and were considered largely free, fair, and transparent. At that time, King Mohammed VI formed a government appointing then- Interior Minister Driss Jettou as Prime Minister. Cabinet level positions were drawn from most major parties in the coalition. Following the 2002 elections, King Mohammed VI highlighted several goals toward which the new government should work: expanded employment opportunities, economic development, meaningful education, and increased housing availability. To meet the King's objectives, the Jettou government embarked on a series of initiatives and reforms, which Jettou laid out in his early days as Prime Minister. Jettou emphasized that modernization and revitalization of the country's infrastructure (roads, trains, communications, water, etc.) and national economy (support for Moroccan businesses, preparations for competition, modernization of modes of production, etc.), were necessary to further development progress in Morocco. In order to create employment opportunities, the government is promoting investment in the tourism, industrial, fishing, and service industries, and is ameliorating, restructuring, and modernizing the education system. Parliamentary elections were held in September 2007. Abbas El Fassi was designated to form a new government. Source: (The Office of Electronic Information, Bureau of Public Affairs, 2010) On the political front, Morocco has been moving steadily towards a pluralistic democracy under its liberal-minded monarch Mohammed VI. The September 2002 parliamentary elections were judged to be Morocco‘s freest yet. The administration took up where its predecessor left off, promoting greater economic and political liberalization. Despite the moves towards democracy, the monarch has retained a decisive political voice. However, at present, the politicians and king share the same liberalizing and western-leaning instincts. The most recent parliamentary elections were held in
September 2007, when Abbas El Fassi was appointed as the prime minister to form the new government. Relations with the EU and US are largely good, although 2002 saw an ugly territorial dispute with Spain over a small Mediterranean island, Perejil, which is claimed by both countries. The US attack on Iraq and the continued occupation remain unpopular within Morocco, although the authorities continue to toe the Washington line with respect to the ?war‘ on terrorism. Morocco's relations with its Arab neighbors are hindered by Algeria‘s support for the independence of Western Sahara, a sparsely inhabited coastal territory to the south that Morocco continues to claim as its own following its annexation in 1976. An UN-brokered ceasefire in 1991 has stopped the fighting between Morocco and the independence forces, although a lasting solution still seems out of reach. The discovery of substantial oil deposits off the coast of the disputed territory is unlikely to facilitate a resolution to the stand-off. POLITICAL PRESSURE & LEADERS Democratic Confederation of Labor or CDT [Noubir AMAOUI]; General Union of Moroccan Workers or UGTM [Abderrazzak AFILAL]; Moroccan Employers Association or CGEM [Hassan CHAMI]; National Labor Union of Morocco or UNMT [Abdelslam MAATI]; Union of Moroccan Workers or UMT [Mahjoub BENSEDDIK] ELECTIONS AND GOVERNMENT M AKEUP Morocco is officially a democratic constitutional monarchy. Since the accession of the have accelerated. However, the monarch continues to have a decisive voice in politics. For the most part his influence has been positive, as he has promoted modernization, political pluralism and good government. However, the monarch faces mounting internal criticism from both left and right. Liberals question his commitment to civil liberties, particularly since a leading journalist was jailed in May 2003 for defaming the king. Meanwhile, Islamists have attacked his pro-US stance and modernizing tendencies. In fact, particularly in the build up to the US attack on Iraq, the prowestern stance of the king and his government became increasingly unpopular. However, widespread revulsion at the recent terrorist attacks in Casablanca means that this anger is probably unlikely to build into broad-based support for Islamic terror groups. The parliamentary elections held in September 2002 were widely regarded as the most free and fair in Morocco‘s history. Furthermore, there was an additional women-only list to boost female political representation in the lower house of parliament. Elections for the lower house are held every five years. Members of the upper house, the Assembly of Councilors, are elected by local councils and professional groups, with elections held every nine years. Driss Jettou, the prime minister appointed after the 2002 elections. hails from the Socialist Union of People‘s Forces (USFP). The 31-strong cabinet took in USFP and Independence Party members, and maintained the reformist and modernizing agenda of the previous USFP-Independence coalition. The most recent elections, held in September 2007, had a very low voter turnout of 37%, which is the lowest in Morocco's history. The USFP lost a quarter of its seats and was replaced by the Istiqlal party, while the leader of the Istiqlal party, Abbas El Fassi, became the prime minister. He is in the process of forming a coalition government with four other parties. The political outlook for the economy remains stable under the new government, as the king is the most important figure in the political system. Source: (Data Monitor, )Ebsco Host - 29439003.pdf, Page No. 6-7. DOMESTIC POLITICS The political scene will remain broadly stable in 2010-11, under the rule of the king, Mohammed VI, but there will be sporadic social unrest over economic inequalities and widespread disaffection with the formal political process. The monarch and his coterie of advisers will maintain their
dominance over policymaking and are unlikely to take significant steps towards further democratization. Parliament and the political parties within it are therefore expected to remain relatively weak. Morocco‘s particular version of proportional representation tends to result in a fragmented elected chamber, and at present the 325 seats in the House of Representatives are divided between 21 parties, none of which has a strong power base. The king is believed to be relatively well liked, but tight restrictions will remain on public criticism of the monarchy. Moreover, widespread poverty and rising urban unemployment could lead to further protests, calling for increased government support and wage rises. These developments will prompt further state investment in housing and infrastructure. The legislative agenda will continue to be set largely by the king who will increasingly focus on judicial reform and decentralization (the latter as part of efforts to devolve power in the disputed territory of Western Sahara)"and the makhzen (the monarch‘s inner circle). There are likely to be tensions within the four-party ruling coalition, which is led by Parti Istiqlal, as the parties hold different viewpoints and compete for influence. The Parti de l‘authenticité et de la modernité (PAM) recently left the coalition, to be replaced by the rightwing Mouvement populaire, but PAM will continue to build political support. The majority of Moroccans are likely to give more weight to religious and social groups than to formal political parties. The Islamist-leaning Parti de la justice et du development (PJD) will face challenges in trying to build popular support while also improving its relations with the political establishment. Although the PJD won the second-largest number of seats in the 2007 parliamentary election, it is not included in the ruling coalition, reflecting the tensions between it and the other parties and the concerns of the political elite about empowering a religious group. The PJD's limited progress within the parliamentary system could prompt some of its supporters to turn instead to the country‘s biggest Islamist movement, al-Adl wal-Ihsane (Justice and Charity), which opposes the monarchy and therefore is not legally recognised as a political party. To forestall support for anti-government Islamist groups including the minority that espouse violence the government will continue to promote a state sanctioned, politically quiescent interpretation of Islam. There is an ongoing risk of violent attacks by militant Islamists on government and Western targets, although these attacks do not present a systemic threat. There is a risk that Moroccan militants may pool resources with groups that have been held responsible for attacks elsewhere in the region and in Europe. Government The Kingdom of Morocco developed a constitutional monarchy based on Islamic law and French and Spanish civil law systems soon after receiving independence. The three branches of the government are the executive, the legislative, and the judicial. The executive branch includes the chief of state—the hereditary position held for life by the king—the prime minister, and a council of ministers, who are appointed by the king. The legislative branch consists of a bicameral parliament with a Chamber of Counselors and a Chamber of Representatives. The 270 members of the Chamber of Counselors are selected by local councils, professional organizations, and labor syndicates for nine-year terms. The 325 members of the Chamber of Representative are elected by popular vote for six-year terms. A judicial branch, consisting of a Supreme Court of Judges, is presided over by the monarch. Administration is further divided into thirty-seven provinces. Provincial governors are appointed by the king and answer to the central government. Leadership and Political Officials. The successor to Mohammed V, the first king of the independent Morocco, was his son Hassan II. Upon taking the throne in 1961, Hassan II agreed to
recognize the Royal Charter proclaimed by his father, which outlined steps for establishing a constitutional monarchy. Ruling for more than thirty-eight years, King Hassan II was one of the longest serving monarchs in the entire Arab world. In July 1999, King Hassan II died of heart failure at the age of seventy. Mohammed VI, the thirty-five-year-old son of Hassan II, took the throne in 1999 and became the eighteenth king of the Alaouite dynasty. In Morocco today there are an abundance of political parties, most of which belong to one of two major groupings. The National Entete is the coalition of rightist political parties that was created in 1993 by the National Popular Movement, the Social Democratic Movement, and the Constitutional Union. The Democratic Bloc, the opposition or leftist coalition created in 1992, comprises the Istiqlal Party, the Socialist Union of Popular Forces, the Party of Progress and Socialism, and the Organization of Democratic Popular Action. There are about a dozen Islamic fundamentalist political parties. These groups are not legal although they are unofficially tolerated. Several independent parties also exist. Relations between the king and the many parties have often been stormy, resulting in several attempts at restructuring political control. Social Problems and Control. The first constitution in 1962 favored a strong monarchy, subordination of all other political institutions to it, and minimal influence from political parties. This constitution was not well accepted and was followed by a period of civil unrest and student riots. In June 1965 the king responded by invoking a state of emergency and assumed all legislative and executive powers. A new government was created with no political parties. In July 1970 the state of emergency ended when the king submitted to referendum a new constitution with an even stronger monarchy. Following the political changes, two unsuccessful military coup attempts took place, one in 1971 and one in 1972. The king responded with another constitution, which increased the number of directly appointed parliamentary representatives. In the early 1990s opposition parties once again began calling for democratization of Morocco's political institutions. The king responded with yet another constitution, this time integrating the opposition parties to a greater degree than ever before. Nevertheless, requests for integration from the opposition have still not been met entirely. Military Activity The Moroccan Royal Armed Forces include the Army, Navy, Air Force, Gendarmerie, and Auxiliary Forces. The king is the commander in chief of all armed forces. In 1997–1998, military expenditures were about US $1.36 million, or 3.8 percent of the national gross domestic product. Since the mid-1970s the Moroccan military has been involved in the ongoing war with the Western Sahara guerilla group, the Polisario. Military branches: Royal Armed Forces (Forces Armees Royales, FAR): Royal Moroccan Army (includes Air Defense), Royal Moroccan Navy (includes Coast Guard, Marines), Royal Moroccan Air Force (Al Quwwat al Jawyiya al Malakiya Marakishiya; Force Aerienne Royale Marocaine) (2010) Military service age and obligation: 18 years of age for voluntary military service; service obligation - 18 months (2010) Manpower available for military service: Males age 16-49: 8,167,760, Females age 16-49: 8,599,418 (2010 est.)
Manpower fit for military service: Males age 16-49: 6,960,026, Females age 16-49: 7,307,491 (2010 est.) Manpower reaching militarily significant age annually: Male: 300,262, Female: 298,227 (2010 est.) Military expenditures: 5% of GDP (2003 est.), Country Comparison to the world: 16 Source: (Advameg Inc., 2011)
ECONOMIC ANALYSIS:
Morocco‘s economy stagnated for much of the 1990s, held back by a series of droughts that impacted upon the still-dominant agricultural sector. However, manufacturing and services continued to grow steadily. Since 2000, the economy has recorded stronger growth, based on improved weather conditions, strong export growth and liberalizing policy moves. Macroeconomic policy has provided for a bedrock of relative fiscal and monetary stability by delivering declining budget deficits and low inflation. A small and well-managed devaluation of the Moroccan currency in 2001 also helped to promote export demand. Morocco's macroeconomic performance since the start of 2001 has been relatively strong, with an average growth rate of 5% over 2001–04. This was mainly due to the good performance of the country‘s primary sector, with agriculture and phosphate mining particularly strong. In 2005, the momentum slowed down, with economic growth at 1.7%, primarily due to a contraction in the primary sector of around 18%. The economy recovered from the fall in performance in 2006 and recorded a growth rate of 6.7%. The economy grew at a CAGR of 4.7% over 2001–06, with growth in 2007 expected to have been 2.2% and the CAGR for 2007–11 expected to be 2.1%. Reform programs have suffered the effects of a political logjam, and the pace of privatization and liberalization has not been as rapid as could have been hoped for. The Jettou administration prioritized further reform, particularly as the political reform agenda that took up much of policy-makers‘ energy in the late 1990s was largely complete by the start of his leadership. Liberalization should provide a further boost to investment and exports, particularly given Morocco‘s improving access to the EU and US markets. This should help to drive down a cripplingly high level of unemployment, which is concentrated on the young. In 2009 Morocco was ranked among the top thirty countries in the off shoring sector. Morocco opened its doors to off shoring in July 2006, as one component of the development initiative Plan Emergence, and has so far attracted roughly half of the French-speaking call centre‘s that have gone offshore so far and a number of the Spanish ones. According to experts, multinational companies are attracted by Morocco's geographical and cultural proximity to Europe, in addition to its time zone. In 2007 the country had about 200 call centre‘s, including 30 of significant size, that employ a total of over 18,000 people. The country's currency, the dirham, is now fully convertible for current account transactions; reforms of the financial sector have been implemented; and state enterprises are being privatized. The major resources of the Moroccan economy are agriculture, phosphates, and tourism. Sales of fish and seafood are important as well. Industry and mining contribute about one-third of the annual GDP. Morocco is the world's third-largest producer of phosphates (after the United States and China), and the price fluctuations of phosphates on the international market greatly influence Morocco's economy. Tourism and workers' remittances have played a critical role since independence. The production of textiles and clothing is part of a growing manufacturing sector that accounted for approximately 34% of total exports in 2002, employing 40% of the industrial workforce. The government wishes to increase textile and clothing exports from $1.27 billion in 2001 to $3.29 billion in 2010. ECONOMIC PERFORMANCE Morocco‘s economy performed poorly in the 1990s due to slow growth in its major export markets and a series of droughts (six in 10 years) that hit the key agricultural sector. Historically, the agricultural sector has been the key driver of improved economic performances, followed by the construction and mining sectors. Average GDP growth
over the course of the decade was slightly over 2% per year, barely sufficient to keep pace with the rapid population growth. As a result, poverty and unemployment rates increased sharply. However, a more reformist policy stance from the late 1990s onwards—initially focused on the political sphere, but increasingly active in the area of economic policy—has helped to improve the macroeconomic environment. Real GDP growth in 2001 picked up to around 5%, from a mere 1% in 2000, while growth in 2002 was around 4.6%. The improved growth in performance since 2001 has occurred against a backdrop of low and stable inflation, and a slight easing in unemployment in 2002, although the unemployment rate remained cripplingly high at 11.6%. A predominantly Muslim Arab nation, the tourism industry was hit badly in the wake of the September 11 attacks on the US and the subsequent global developments. A series of suicide bombings in Morocco‘s business capital Casablanca in May 2003 has had a further negative impact upon the region's tourism industry. Private transfers—largely remittances from Moroccans working overseas—are a key source of foreign currency. In 2002, net private transfers were equivalent to almost half of Morocco‘s total earnings from merchandise exports. The introduction of euro notes and coins in 2001 provided a big boost to recorded transfers, as Moroccans at home and overseas converted cash holdings in the Eurozone‘s various soon-to-be obsolete national currencies into Moroccan dirhams. However, the slowdown of transfers in 2002 was negligible, suggesting a sustained trend of repatriating foreign earnings, indicative perhaps of a growing faith in investment opportunities and the general financial environment in Morocco. The economy continued to perform well in 2003 and 2004. Output growth accelerated to 6% in 2003, driven by a particularly strong performance in the dominant agricultural sector. In 2004, growth fell back to 4.4% as the one-off effect of the strong harvest in 2003 diminished. However, improved investment growth and the relatively expansive fiscal position continued to drive the economy forward. Reflecting the impact of robust domestic demand on imports, the external current account surplus moderated somewhat, from more than 3.5% of GDP in 2003, to a little over 1% of GDP in 2004. During 2005, growth in the agriculture sector was not as substantial as in other sectors. The primary sector contracted by around 18%, while non-agricultural activities continued the trend displayed in the previous year, growing at 5.2%. The growth in the tourism sector, with tourist arrivals increasing by 5.5%, came on the back of several positive changes in 2004 involving the liberalization of the air transport and closer co-ordination with foreign tour operators. Exports increased by 7.4%, mainly driven by a more than 16% rise in exports of phosphates and their derivatives. Imports soared even higher by 14.2%, primarily as a result of increases in oil prices globally and increased purchases of foodstuffs. The trade deficit in 2005 amounted to almost 19% of GDP. The unemployment rate was at 10.2%, mainly due to the lack of job opportunities in rural areas, where unemployment rose from 3.2% in 2004 to 3.6% in 2005. The urban unemployment rate was almost the same as 2004 at 18.3%. Economic growth in 2006 was at one of the highest levels seen in this decade at 6.7%, as the agricultural sector recovered from a relatively poor performance in 2005. The IMF has said that Morocco needs to sustain real GDP growth at around 6% if it is to be able to address its socioeconomic issues. In 2007, Morocco was expected to experience a drop in the rate of growth on account of a decline in agricultural output.
The high cost of imports, especially of petroleum imports, Communicati is a major problem. Another on, 15 Industry, 8.8 chronic problem is unreliable Transport & rainfall, which produces drought Storage, 3.9 or sudden floods; in 1995, the country's worst drought in 30 Banking & years forced Morocco to import Financial Services, 1.4 grain and adversely affected the economy. Another drought Agriculture, F Minerals & orestry, Fishi occurred in 1997, and one in Minning, 0.5 ng, 63.2 1999–2000. Reduced incomes Energy, 4.5 due to drought caused GDP to Business & fall by 7.6% in 1995, by 2.3% in Other 1997, and by 1.5% in 1999. Services, 0.7 During the years between Tourism, 0.2 TPR, 2 drought, good rains brought GDP CONTRIBUTION BY SECTOR IN %- 2007 bumper crops to market. Good rainfall in 2001 led to a 5% GDP growth rate. Morocco suffers both from unemployment (9.6% in 2008), and a large external debt estimated at around $20 billion, or half of GDP in 2002. Population below poverty line: 15% (2007 est.) Labor force - by occupation: Agriculture: 44.6% Industry: 19.8% Services: 35.5% (2006 est.) Labor force: 11.63 million (2010 est.) Country Comparison to the world: 43 by
Unemployment rate: 9.8% (2010 est.) Country Comparison to the world: 109 9.1% (2009 est.) Household income or consumption percentage share: Lowest 10%: 2.7% Highest 10%: 33.2% (2007) Central bank discount rate: 3.31% (31 December 2009) Country Comparison to the world: 112 3.32% (31 December 2008) Stock of narrow money: $67.33 billion (31 December 2010 est) Country Comparison to the world: 40 $64.58 billion (31 December 2009 est) Stock of domestic credit: $93.21 billion (31 December 2010 est.) Country Comparison to the world: 53 $91.83 billion (31 December 2009 est.)
Commercial bank prime lending rate: 6.5% (31 December 2008)
Stock of broad money: $108.7 billion (31 December 2009) Country Comparison to the world: 51 $99.5 billion (31 December 2008)
Agriculture - products: Industries: Barley, wheat, citrus fruits, grapes, vegetables, phosphate rock mining and processing, food olives; livestock; wine processing, leather goods, textiles, construction, energy, tourism Industrial production growth rate: 4.4% (2010 est.) Country Comparison to the world: 76 Electricity - production: Electricity - consumption: 19.78 billion kWh (2008 est.) 20.78 billion kWh (2007 est.) Country Comparison to the world: 71 Country Comparison to the world: 68 Electricity - imports: 3.429 billion kWh (2009 est.) Oil - production: Oil - consumption: 4,053 bbl/day (2009 est.) 187,000 bbl/day (2009 est.) Country Comparison to the world: 97 Country Comparison to the world: 57 Oil - exports: Oil - imports: 17,420 bbl/day (2007 est.) 195,800 bbl/day (2007 est.) Country Comparison to the world: 92 Country Comparison to the world: 45 Oil - proved reserves: Natural gas - proved reserves: 100 million bbl (1 January 2010 est.) 1.501 billion cu m (1 January 2010 est.) Country Comparison to the world: 70 Country Comparison to the world: 96 Natural gas - production: Natural gas - consumption: 60 million cu m (2008 est.) 560 million cu m (2008 est.) Country Comparison to the world: 81 Country Comparison to the world: 94 Natural gas - exports: Natural gas - imports: 0 cu m (2008 est.) 500 million cu m (2008 est.) Country Comparison to the world: 91 Country Comparison to the world: 59 Exports - partners: Imports: Spain 22.02%, France 20.22%, India 4.91%, $34.19 billion (2010 est.) Italy 4% (2009) Country Comparison to the world: 54 $30.55 billion (2009 est.) Reserves of foreign exchange and gold: Debt - external: $24.57 billion (31 December 2010 est.) $22.69 billion (31 December 2010 est.) Country Comparison to the world: 38 Country Comparison to the world: 70 $23.58 billion (31 December 2009 est.) $21.12 billion (31 December 2009 est.) Stock of direct foreign investment - at home: Stock of direct foreign investment - abroad: $42.19 billion (31 December 2010 est.) $1.047 billion (31 December 2010 est.) Country Comparison to the world: 57 Country Comparison to the world: 72 $40.72 billion (31 December 2009 est.) $1.333 billion (31 December 2009 est.)
B USINESS REFORMS IN M OROCCO Doing Business 2011 Protecting Investors: Morocco strengthened investor protections by requiring greater disclosure in companies‘ annual reports. Doing Business 2010 Getting Credit: Access to credit was strengthened with a new private credit bureau that began operating in March 2009 in Morocco. Doing Business 2009 Getting Credit: The right of borrowers to inspect data on their creditworthiness was guaranteed, increasing their ability to control the accuracy of the information used by financial institutions in assessing their risk profiles. Paying Taxes: The corporate income tax rate was reduced from 35% to 30%, effective 2008. Trading Across Borders: Document requirements for importing and exporting were simplified, reducing the time to import by 1 day. Doing Business 2008 Dealing with Construction Permits: The time needed to obtain new licenses for construction firms was reduced by 10 days, by establishing a one-stop shop in Casablanca to provide better communication between the relevant agencies. Registering Property: The property registration process was complicated by adding the requirement to check several tax agencies, rather than just one, in order to obtain a tax clearance certificate. The reform is being implemented nationwide, and adds three procedures to the process of transfer. Trading Across Borders: A new risk-based inspections system was introduced, causing the time to export to decrease by 2 days, and import by 4 days. Source: (The World Bank Group, 2011) POLICY TRENDS The government is aware that its popular support will largely depend on its success in dealing with social and economic exclusion and will maintain high social spending on slum clearance, rural infrastructure, education and health. However, given limited resources, an inefficient bureaucracy and widespread nepotism and corruption, addressing the shortcomings of the country‘s infrastructure will prove difficult. The government, in its development plan, Emergence II, has retained its target of 6% annual average real GDP growth over the long term but has cut its job creation target. The government is also committed to building 150,000 housing units a year until 2013. These targets still look overambitious, particularly given the weak global economy and the vulnerability of GDP growth to shocks that affect agricultural output. The government‘s efforts to attract more private investment
and thus reduce unemployment and poverty will prove challenging at a time when there is little growth in the developed world. Priority sectors for foreign direct investment are textiles, electronic components, offshore services and tourism (a particularly labour-intensive sector). Another key policy issue will be upgrading agriculture and fisheries, under the Maroc Vert and Halieutis plans, respectively. There will be increasing investment in the energy sector, with a focus on alternative energy sources to alleviate the country‘s dependence on imports. State utilities will also be rationalised, with water and electricity providers to merge. FISCAL POLICY The Economist Intelligence Unit estimates that the fiscal account moved into deficit in 2009 and forecasts that the deficit will widen in 2010 before stabilising in 2011, given the projections of the draft 2010 budget. However, the shortfall (excluding privatisation earnings) in 2010 will, at 4.3% of GDP, be manageable but above the government‘s projection of 4% of GDP. Tax penetration is increasing as both compliance and the tax base have improved, but tax receipts declined in 2009 and will rise only modestly over the forecast period, as private consumption, customs duties and corporate profits grow slowly and the tax rate cuts mandated in the 2010 budget take effect. Nevertheless, the strong revenue base built up in 2007-08 will stand Morocco in good stead. A sharp fall in subsidy costs in 2009 (because of weaker commodity prices) was offset by higher public-sector wages and extensive infrastructure spending. Subsidy spending will rise modestly in 2010, and other components of spending particularly wages will remain a burden. Reforming the subsidy system is a priority for the government as large rises in global Commodity prices can be a serious drain on the public finances, but this will be politically difficult given widespread poverty. The government plans to spend heavily in 2010, although overall spending growth should ease in 2011. M ONETARY POLICY With the economy growing more slowly, inflation falling and credit conditions tightening, Bank alMaghrib (the central bank) will maintain its policy rate at 3.25%. Although the central bank will move cautiously, it is likely to be concerned about the negative impact of weakness in the euro zone on investment and exports. Weakening property prices may also prompt a further Lowering of interest rates (particularly as inflation remains muted), given that the recession and subsequent sluggish recovery in the euro zone will bite into European demand for second homes in Morocco. Interest rates will only start to rise from late 2010 at the earliest. The central bank will also use other tools to improve liquidity; reserve requirements were lowered to 6% from 8% in March. INTERNATIONAL ASSUMPTIONS We expect the euro area economy to grow slowly in 2010-11, at an average of 0.7% a year, having contracted by 4.1% in 2009. The weak outlook for European growth poses significant risks to Morocco‘s economy, since the euro zone is its main export market and provides employment for some 2.5m Moroccan expatriates. Inward investment from Europe will be sluggish because of volatility on international capital markets, although Morocco could see some benefits if European firms relocate to Morocco to lower costs. We expect world GDP (measured using purchasing power parity exchange rates) to expand by an average of 3.8% a year in 2010-11. Policy interest rates have been cut sharply and are unlikely to be raised until late 2010 at earliest in most major economies, but heightened uncertainty in world financial markets makes it likely that the spreads of money market interest rates over government bond yields will remain elevated in 2010-11. Oil
prices will be higher in 2010-11 (averaging around US$80/b) than they were in 2009, but still lower than in 2008; weaker world commodity prices will help to contain Morocco‘s subsidy bill
.
ECONOMIC GROWTH
We expect the Moroccan economy to grow by 4.1% in 2010 and 4.4% in 2011 as the impact of modest recovery in global demand for goods and services is offset by weaker agricultural performance. Morocco experienced a strong finish to 2009 (output grew by 7.8% year on year in the fourth quarter), with the agricultural sector expanding strongly and industry also growing, albeit after contracting in the first half of the year. Despite the recessions in Morocco‘s key export markets, real GDP growth for the whole year was 5.2% (according to supply-side data). Morocco will continue to face risks associated with its dependence on rain-fed agriculture, which typically accounts for some 15% of GDP but employs 42% of the workforce, with the result that changes in agricultural output can have a significant effect on private consumption. Agriculture‘s contribution to GDP will stagnate or fall in 2010-11, as flooding has ruined some crops, and over the longer term the non-agricultural sector‘s role will gradually increase as manufacturing develops and construction expands on the back of government housing and infrastructure projects, partly offsetting contraction in private-sector tourism developments. Private consumption growth will be more muted in 2010-11 than in 2008-09, reflecting weaker agricultural performance, although government public works, particularly in tourism, should generate some new jobs. Given that the equivalent of 20% of the domestic workforce is employed in Europe, the volatile economic conditions in the euro area are likely to feed into modest household consumption growth in Morocco. Remittances from Moroccans employed abroad, mostly in Europe, are equivalent to 8-9% of Morocco‘s GDP and are a crucial source of funds for household consumption. Investment growth is likely to be slower than in previous years owing to a weak global economy. However, government consumption growth will be higher as the state seeks to boost infrastructure provision. Export performance, although improving, will be constrained by competition from lower-wage countries and by weak European demand. Import growth should also be moderate as consumer demand growth will be weaker than in 2007-08 because of higher international commodity prices and a weaker Moroccan dirham. INFLATION As world and local food prices have fallen, consumer price inflation has also declined in Morocco; we estimate that it averaged just 1.2% in 2009. Inflation has been generally low in recent years, largely because of extensive government subsidies and the managed exchange rate, but also because of deficiencies in the way inflation is recorded; reforms to the latter may lead to a temporary spike in official inflation. The real cost of living may have increased more rapidly in recent years than government data suggest. Nonetheless, the risk of a wage-price spiral is limited given that the subsidy system will remain in place and commodity import prices will rise only modestly. The depreciation of the dirham against the US dollar will be a concern for monetary authorities, with subsidies for imports likely to continue to drag on public finances. Harvest results (and global prices) will determine food prices in 2010-11, with inflation increasing if wheat production is low and the country is required to import grain, but we expect inflation to average 2.5% over the two-year period. EXCHANGE RATES Moroccan dirham (MAD) per US dollar - 8.3619 (2010), 8.0571 (2009), 7.526 (2008), 8.3563 (2007), 8.7722 (2006). The current exchange-rate regime is a tightly managed float against a euro dominated basket of currencies. Despite opposition from exporters, Bank al-Maghrib argues that this system has been useful in anchoring the economy and keeping inflation low. The authorities aim to introduce a fully floating currency at an unspecified date, probably beyond the forecast period. In 2010-11, however, the dirham will move roughly in line with the euro, and will be
vulnerable to further pressure should global financial sentiment weaken. From an average of Dh8.06:US$1 in 2009, it will depreciate to Dh8.11:US$1 in 2010, before weakening to Dh8.24:US$1 in 2011. Morocco will also try to maintain competitiveness within the euro area. EXTERNAL SECTOR We expect Morocco‘s current account to remain in deficit throughout the forecast period, as higher energy prices and a weaker dirham hurt the terms of trade. The trade deficit is expected to widen in 2010-11, to an average of US$20bn, because of higher oil prices and restrictive tariffs on food imports. The trade and income deficits will be balanced by surpluses on the services and current transfer‘s accounts which will both widen in 2010-11, having shrunk in 2009 owing to weakening tourism demand and lower workers‘ remittances from Moroccan workers in Europe. The current-account deficit is forecast to widen to 6.5% of GDP in 2010, before narrowing to 4.9% of GDP the following year, reflecting stronger services and current transfer‘s surpluses. Source: 51232927.pdf, Page No. 5-9 (Ebsco Host) INVESTMENT BY SECTOR IN BUDGET 2010, M OROCCO
55 50 45 40 35 30 25 20 15 10 5 0 51
Dh bn
11
10
11
7
5.2
4.1
3.2
2.2
2.1
2
0.8
0.6
0.4
Source:Ministry of Finance & Economics
Source: 45586823.pdf, Page no. 12-13. (Ebsco Host)
ANNUAL DATA AND FORECAST
ANNUAL DATA AND FORECAST GDP Nominal GDP (US$ m) Nominal GDP (Dh bn) Real GDP growth (%) Expenditure on GDP (% real change) Private consumption Government consumption Gross fixed investment Exports of goods & services Imports of goods & services Origin of GDP (% real change) Agriculture Industry Services Population and income Population (m) GDP per head (US$ at PPP) Recorded unemployment (av; %) Fiscal indicators (% of GDP) Central government budget revenue Central government budget expenditure Central government budget balance Public debt Prices and financial indicators Exchange rate Dh:US$ (av) Exchange rate Dh:€ (av) Consumer prices (av; % change) Producer prices (av; % change) Stock of money M1 (% change) Stock of money M2 (% change) Money market rate (av; %) Current account (US$ m) Trade balance Goods: exports fob Goods: imports fob Services balance Income balance Current transfers balance Current-account balance External debt (US$ m) Debt stock Debt service paid Interest International reserves (US$ m) Total international reserves
a b
2005a 59,524 527.7 2.2 2.3 3.5 7.4 13.3 9.6 -13.5 4.9 6.3 30.5 3,547 11.0 25.3 30.3 -5.0 69.9 8.87 11.04 1.0 9.1 14.3 14.0 2.8 -8,204 10,690 -18,894 4,253 -383 5,283 949 16,174 2,728 590 16,467
2006a 65,642 577.4 7.8 6.9 2.9 9.7 11.6 8.2 25.3 4.9 5.2 30.9 3,904 9.7 26.8 28.9 -2.1 66.6 8.80 11.04 3.3 6.0 16.2 17.0 2.6 -9,757 11,926 -21,683 5,316 -477 6,233 1,315 17,270 2,109 618 20,791
c
2007a 75,114 615.4 3.2 3.8 4.4 14.3 5.2 15.0 -20.8 6.0 6.1 31.2 4,095 9.8 27.4 27.2 0.2 63.7 8.19 11.21 2.0 1.7 19.1 16.1 3.3 -14,170 15,146 -29,316 6,749 -404 7,601 -224 18,577 2,503 676 24,716
2008a 88,880 688.8 6.2 9.4 4.8 11.7 -1.1 10.9 16.3 3.3 4.1 31.6 4,385b 9.5 29.5 29.1 0.4 55.6b 7.75 11.39 3.8 17.9 7.9 10.8 3.4 -19,497 20,330 -39,827 6,722 -522 7,638 -5,659 20,154b 3,078b 758b 22,717
2009 b 92,624 747.2 4.0 6.7 5.2 5.0 -10.0 -2.0 26.0 1.7 1.0 32.0 4,563 9.0 25.3 26.3 -1.0 53.5 8.07 11.28 2.0 -7.0 5.6 6.4 3.1 -15,997 15,361 -31,357 6,449 -390 6,914 -3,023 20,278 2,979 782 22,342
2010c 101,915 799.9 3.8 4.0 3.8 4.2 3.5 4.0 -1.0 4.3 4.6 32.3 4,752 9.8 24.5 26.8 -2.3 51.7 7.85 11.16 2.7 2.0 8.4 8.7 3.3 -17,436 16,692 -34,129 6,683 -220 7,167 -3,807 20,779 2,780 662 23,267
2011c 107,453 853.4 4.3 4.5 3.6 5.0 4.9 5.0 3.0 3.9 5.0 32.7 4,972 9.6 24.6 26.7 -2.2 50.7 7.94 11.10 2.3 4.0 9.4 9.7 3.1 -17,564 18,292 -35,856 6,966 -148 7,516 -3,231 21,329 2,766 636 24,346
Actual Economist Intelligence Unit Estimates Economic Intelligence Unit Forecasts Source: IMF, International Financial Statistics
QUARTERLY DATA
Quarterly data Central government finance (Dh bn) Revenue (excl privatisation) Expenditure Balancea Employmentb & prices Labour force ('000) Unemployment ('000) Unemployment rate (%) Consumer prices (2000=100) Consumer prices (% change, year on year) Phosphate rock (US$/tonne) Financial indicators Exchange rate Dh:US$ (av) Exchange rate Dh:€ (av) Deposit rate (av; %) Discount rate (end-period; %) Money market rate (av; %) M1 (end-period; Dh bn) M1 (% change, year on year) M2 (end period; Dh bn) M2 (% change, year on year) Moroccan All Shares Index (MASI; Dec 31st 1991=1,000; end-period) Sectoral trends Industrial production indices (2000=100) Mining Energy Manufacturing Phosphates production ('000 tonnes) Tourism, visitors ('000) Foreign trade(Dh m) Exports fob Imports cif Trade balance Foreign reserves (US$ m) Reserves excl gold (end-period)
a
2007 4 Qtr 35,237 40,964 -5,727 10,963 1,064 9.7 106.7 1.7 98.3 7.79 11.30 3.73 3.25 3.68 519.83 19.1 644.96 16.1
2008 1 Qtr 54,409 42,842 11,567 11,274 1,078 9.6 106.9 2.4 234.4 7.58 11.36 3.70 3.25 3.32 522.98 16.0 649.48 12.8
2 Qtr 45,764 50,982 -5,218 11,340 1,033 9.1 109.7 4.6 367.5 7.32 11.43 3.83 3.25 3.21 533.52 13.1 675.89 13.9
3 Qtr 42,225 40,079 2,146 11,298 1,123 9.9 110.1 4.2 409.2 7.56 11.36 3.90 3.31 3.33 539.76 9.4 693.91 12.3
4 Qtr 40,276 48,062 -7,786 11,156 1,078 9.9 110.9 3.9 371.3 8.45 11.10 4.23 3.50 3.33 560.89 7.9 714.67 10.8
2009 1 Qtr 48,110 36,769 11,341 11,326 1,090 9.6 111.0 3.8 193.3 8.50 11.09 3.90 3.44 3.40 555.47 6.2 715.10 10.1
2 Qtr 43,675 54,030 -10,355 11,450 911 8.0 110.5 0.7 113.3 8.20 11.18 3.97 3.25 3.21 562.37 5.4 725.42 7.3
3 Qtr n/a n/a n/a n/a n/a n/a 110.6 0.5 90.0 7.88 11.27 n/a n/a n/a n/a n/a n/a n/a
12,695
14,684
14,191
12,488
10,984
10,402
11,589
10,765
106.3 108.0 113.5 6,649 1,002 30,139 -70,384 -40,245 24,123
135.3 100.8 109.7 6,965 946
104.2 102.2 119.2 6,980 1,104
106.6 107.5 110.9 7,226 1,128
96.7 101.9 108.7 4,652 1,034 27,954 -71,568 -43,614 22,104
105.7 107.3 108.8 1,847 909 25,555 -59,662 -34,107 21,612
84.4 103.4 102.5 4,799 1,193 28,978 -68,213 -39,235 21,244
n/a n/a n/a n/a 1,114 29,110 -65,610 -36,500 n/a
35,275 39,628 39,228 -70,852 -82,793 -87,257 -35,577 -43,165 -48,029 25,669 26,456 24,157
Excluding balance of Special Treasury Accounts; b Active population aged over 15. Sources: IMF, International Financial Statistics; Direction de la statistique, Bulletin Statistique; Haut commissariat au plan; Repères Statistiques; Casablanca Stock Exchange.
KEY ISSUES A key problem facing the Moroccan economy is the continuing dominance of the agricultural sector. Much of the sector is rooted in low-productivity, traditional production, and output remains highly seasonal and susceptible to poor weather conditions. Most of the output variability recorded during the 1990s was a result of big swings in agricultural output, which, in turn, was due to a series of severe droughts. Achieving diversification into more specialized areas of agricultural production, manufacturing and tourism are key objectives for the Moroccan authorities. Morocco's strong export performance in recent years points to some progress towards economic diversification, largely due to improved access to the lucrative and nearby EU market. However, progress in this area will be hampered by a lack of available skills, as well as the continued effects of the 2003 Casablanca bombing and wider regional instability on tourism and investor confidence. Although agriculture accounts for only one sixth of output, it absorbs almost half of Morocco's labor force. This illustrates the extremely low level of labor productivity in the sector, but it also reflects the high levels of unemployment and the lack of other employment opportunities that force many Moroccans to eke out a meager existence on the land. Urban unemployment stands at around 18% and for the young, the rate is 34%. With around one third of the population presently under 15 years of age, labor market conditions are likely to become worse before they improve. Structural impediments, including a rigidly enforced minimum wage and restrictive hiring and firing laws, contribute to the unemployment problem. However, the poor economic performance of the 1990s and the resultant low levels of investment and job creation are the key problems. At 51.7%, Morocco's literacy rate has compounded the problem by limiting the skills that are available to investors. However, in recent years, the situation has been improved by a renewed focus on school enrolment, particularly of girls, who have traditionally been underrepresented. In time, this should deliver a step-change in education indicators. The reform to the labor code that was completed in 2003 has also helped to remove some structural impediments to growth. The financial sector is generally sound and has benefited from improved standards of regulatory and supervisory oversight in recent years. However, some structural problems remain, including the continued presence of a number of state-owned specialist development banks that are technically insolvent. The ratio of bad loans to equity is also relatively high. The comparatively low level of financial development and the sector‘s lack of integration with global financial markets reduce its exposure to potentially destabilizing shocks. However, as the external environment continues to be liberalized and as the sector itself is opened up to greater competition, the risk of financial sector instability creating wider macroeconomic imbalance is likely to increase. The main industries in Morocco are tourism, phosphate mining and processing, food processing, textiles, leather goods, construction and handicrafts. However, Morocco also has a huge, illegally operating cannabis industry. Although the industry has not come under the global scanner as yet, the country‘s desire to have closer ties with the stringent economies of the EU will translate into greater efforts to dismantle this illegal trade. The country is endowed with two thirds of the world‘s phosphate reserves. This puts it in a higher league than its other major competitors such as China, Russia and the US. Although it employs only 2% of the population, the phosphate mining industry is responsible for half of the nation‘s income. The country has good infrastructure to support an active oil and gas exploration and production industry. The roads, airports, seaports, pipelines and refineries are equipped with the latest amenities that are equal to European or North American standards.
The greatest challenge for the government is the ongoing risk of suicide bombings by militant Islamist groups. Indeed, several such attacks occurred in the first half of 2007. The government is also trying to push ahead on economic reforms aimed at tackling the problem of unemployment and infrastructure, but the success of these changes would be dependent upon the progress made on bureaucracy constraints, financial rigidities and structural weaknesses in the economy. PROSPECTS Morocco faces some daunting problems. Poverty, illiteracy and unemployment rates are high, particularly in urban areas. As a result, there is evidence of growing support for the radical Islamist message. On the other hand, partly due to the 2003 terrorist bombings in Casablanca, support for extremist groupings within the population remains relatively low. With the authorities clamping down hard on militant groups in the wake of the bombings, largely with popular support, they ought to be in a strong position to face down the extremist challenge. Overall, the political system is moving towards an embedded and stable democracy; however, it still has some way to go. Some 26 parties took part in the 2002 elections, and a wide array of factions representing disparate opinions jostle for a position in parliament. This can make it difficult to pass legislation and achieve necessary economic reforms, as witnessed under the previous administration, when the pace of reform was painfully slow. With the monarch granting more liberalized terms of trade and the central bank now commanding increased autonomy, the conditions for trade look favorable. Morocco‘s increasingly close ties with the US and Europe are another advantage, especially considering that most of its produce is absorbed by these markets. Robust export growth should continue to drive Morocco‘s economic integration with the EU economy over the medium term. The recently strong record of macroeconomic policy stability—if maintained in the face of increased liberalization and fiscal pressures—will provide the bedrock for a solid economic expansion. In the short term, the repercussions of the 2003 terrorist attacks and the fear of Islamic fundamentalism will continue to hurt tourism, and may also shake investor confidence more widely. However, over the medium to long term, Morocco‘s relative political stability and its continued journey down the path of economic reform will help to provide an investment climate conducive to further growth and development. The government is planning to achieve advances with economic reform, but progress is expected to be slow due to economic factors like the fall in agricultural output and limited resources; and non-economic factors, like inefficient bureaucracy and widespread nepotism and corruption. Morocco's economic activity will be affected by the performance of its agricultural sector. Because of periodic droughts, the CAGR of GDP is expected to be only 2.1% for the period 2007–11. This is much lower than the growth rate that is seen as necessary to have an impact upon two important problems for the economy; poverty and unemployment. The government is expected to start the liberalization of the exchange rate from late 2008, which should boost the country's export competitiveness leading to a surplus in the current account. Source: (Data Monitor, ) Ebsco Host 29439003.pdf, Page No. 11-15.
SOCIAL ANALYSIS
Al Maghrib, the Arabic name for Morocco, means "far west" or "where the sun sets." When the Arabs first arrived in northern Africa in the seventh century C.E. , Morocco was believed to be the westernmost point in the world. At that time, the Maghrib region included the countries that are today Morocco, Algeria, and Tunisia. The countries of the Maghrib share many common historical and cultural features. All have indigenous Berber populations and a strong Islamic base. Similarly, all were colonized by France, and remain largely bilingual, with both French and Arabic being spoken. Although European influence in Morocco is strong, it is still a country of distinctly Arabic tradition. The vast difference between the crude life on the streets and the hospitality and intimacy found in the home reflect the duality that is deeply ingrained in Moroccan culture. But one aspect of Moroccan life that is distinctly unified is religion. The king has declared that all citizens are born Sunni Muslims, and Islam is an important part of everyday ritual life. The Moroccan government is a constitutional monarchy, with a very powerful king. It is this mix of European and Arab influence, loyalty to the king and a strong Islamic base, that creates the uniquely Moroccan identity. Demography The current population of Morocco is approximately 30 million, half of whom are under the age of nineteen. Out of the total population, 99.1 percent are identified as Arab-Berber. The indigenous tribes who occupied much of northwestern Africa were given the generic title Berber, meaning simply non-Arab, by the Arabs. After centuries of intermingling, most Moroccans today are an Arab-Berber mix, although a few tribes in the countryside identify themselves as purely Berber. The remaining .09 percent of the population is comprised of Jews, white Europeans, and black Africans. (Demographic and other statistics presented in this article do not include Western Sahara.) Linguistic Affiliation. Moroccan Arabic is the official language of Morocco. It is spoken by roughly three-quarters of the population and differs slightly from modern standard Arabic and other dialects in grammar and vocabulary. Although half a century has passed since the French colonial period in Morocco ended, French remains the official language in business, government, and diplomacy. Before the Arabs spread their language and culture across northern Africa, Berber dialects were spoken in Algeria, Morocco, and Tunisia. Although the dialects can still be heard in some rural areas, the Berber linguistic tradition is oral rather than literary, and there is no formal alphabet or standard written form of the language. There are three main Berber dialects in Morocco. Rifan is the dialect spoken in the Rif Mountains as well as in some rural areas of eastern Morocco along the Algerian border. In the High and Middle Atlas region the dialect spoken has many names; it may be called Amazigh, Zaran, or Tamazight. In the southwestern oasis and the Anti-Atlas region, the dialect may be called Soussi, Celha, Tashelhait, or Chleuh. Spanish is widely spoken in the northern parts of the country, and English is commonly spoken to international tourists. Multi-lingualism exists to such a degree that Moroccans may switch from one language to another midsentence.
People Nationality: Noun: Moroccan(s) Adjective: Moroccan Religions: Muslim 98.7%, Christian 1.1%, Jewish 0.2% Ethnic groups: Arab-Berber 99.1%, other 0.7%, Jewish 0.2%
Languages: Arabic (official), Berber dialects, French often the language of business, government, and diplomacy Population: 31,627,428 (July 2010 est.) Population growth rate: Country Comparison to the world: 38 1.077% (2010 est.) Country Comparison to the world: 118 Age structure: Median age: 0-14 years: 28.7% (male 4,548,808/female Total: 26.5 years 4,418,768) Male: 25.9 years 15-64 years: 65.4% (male 10,009,928/female Female: 27 years (2010 est.) 10,437,103) 65 years and over: 6% (male 851,190/female 1,019,377) (2010 est.) Birth rate: Death rate: 19.4 births/1,000 population (2010 est.) 4.74 deaths/1,000 population (July 2010 est.) Country Comparison to the world: 102 Country Comparison to the world: 195 Net migration rate: Urbanization: -3.88 migrant(s)/1,000 population (2010 est.) Urban population: 56% of total population Country Comparison to the world: 192 (2008) Rate of urbanization: 1.8% annual rate of change (2005-10 est.) Sex ratio: Literacy: At birth: 1.05 male(s)/female Definition: age 15 and over can read and write Under 15 years: 1.03 male(s)/female Total population: 52.3% 15-64 years: 0.96 male(s)/female Male: 65.7% 65 years and over: 0.83 male(s)/female Female: 39.6% (2004 census) Total population: 0.97 male(s)/female (2010 est.) Infant mortality rate: Life expectancy at birth: Total: 28.61 deaths/1,000 live births Total population: 75.69 years Country Comparison to the world: 76 Country Comparison to the world: 77 Male: 33.52 deaths/1,000 live births Male: 72.63 years Female: 23.46 deaths/1,000 live births (2010 Female: 78.9 years (2010 est.) est.) School life expectancy (primary to tertiary Education expenditures: 5.7% of GDP (2008) education): Total: 10 years Country Comparison to the world: 40 Male: 11 years Female: 9 years (2006)
Symbolism. Perhaps the most famous city in Morocco is Casablanca. Port activities by the French turned this city into the economic capital of the country in the early 1900s. In 1942 the city was the site of an Allied invasion, and in 1943 it was the host city for a conference between Franklin Delano Roosevelt and Winston Churchill. But it was the 1943 Hollywood classic film Casablanca, starring Ingrid Bergman and Humphrey Bogart, that transformed the city into an international symbol of romance and wartime struggle. The black-and-white film was the 1943 Academy Award winner for best picture. Other films with quintessential images of Morocco include Lawrence of Arabia and The Jewel of the Nile. A more eastern symbol of Morocco is the Hassan II Mosque, built in Casablanca in 1993. It is one of the largest and most extravagant mosques in the Arab world. Dating back to the Alaouite Dynasty in the seventeenth century, a red flag was used as a symbol of the Moroccan state. In Rabat and Salé the flag was raised every morning and lowered every evening. When the French took control in 1912, a five-pointed linear known as Solomon's seal was placed on the flag in order to distinguish the nation's flag from others. Because green is the traditional color of Islam, the star on the flag is green. CLASSES AND CASTES. A wide gap exists between the very rich and the very poor. A strong belief in fatalism, that things are meant to be exactly as they are, and the Islamic principal of giving to those in need, lends to the acceptance of social and economic inequality. At the top level of the class system exists the monarch and royal family, members of the government, and a group of very wealthy Moroccans who do not work. They are joined by wholesale merchants and the owners of large manufacturing, industrial, or international trading companies. The upper class often claims to be Arab, although there are as few pure Arabs as there are pure Berbers remaining. An upper middle and middle class is comprised of professionals, mostly educated in Europe. Another group, called Sherfa, are those who claim descent from the prophet Muhammad. Sherfa typically do not work, and those who have no inherited wealth live off the alms of others. A relatively new class, referred to as the Muhajerin, or emigrants, is comprised of nearly 2 million Moroccans who live and work abroad, in order to send their wages back to support their families in Morocco. Many of the Muhajerin are not likely to ever return to their native country. Berber farmers in the countryside have little access to the education and social climbing available to those in larger cities. Most remain poor and are looked down upon. Jews and other foreigners generally prosper, while sub-Saharan black Africans are often discriminated against. SYMBOLS OF SOCIAL STRATIFICATION. The number of languages spoken and the proficiency acquired are primary identifiers of social class in Morocco. Well-spoken French is perceived as a characteristic of a refined, sophisticated individual. The inability to speak any French usually signifies a lack of education. Fluency in Arabic is accepted, and rather expected of any respectable individual, while those who speak only Berber dialects are looked down upon. Other symbols of status are headgear and clothing. Moroccans have occasion to wear both traditional and Western clothing, therefore it is not the style of the clothes, but rather the quality of what is being worn that symbolizes one's status. For example, the jellaba, the traditional one-piece hooded garment worn by both men and women, comes in many varieties. Those of a higher class have theirs hand made by a tailor with intricate needlework and fine fabric. The jellaba is also available at corner shops at a much lower quality. Among the rural poor a knit cap is worn, which would never be placed on the head of an upper- or middle-class man. Turbans worn by Berber men are often white while those of Arab men are
orange. A more traditional, perhaps ceremonial, hat is the fez, worn by older upper-class men. Women who wish to show that they are Islamic fundamentalist cover their heads to the hairline with a scarf or the hood of the jellaba when in public. Young women are increasingly challenging traditions such as this, some even daring to sit in public cafés and smoke cigarettes with uncovered heads. SOCIAL WELFARE AND CHANGE PROGRAMS Pressure from the French and other European governments to investigate human rights violations against the Saharawi people in Western Sahara have yielded positive results. In eagerness to be accepted as an EU member country, and to divert international attention on the issue, the Moroccan government has taken action. In 1990 King Hassan II created a Consultative Council on Human Rights, composed of representatives from the government and opposition political parties. The council made an offer to provide compensation to the victims of abusive detention and the families of the disappeared. Since King Muhammad VI came to power in 1999, sixty-eight human rights abuse cases have been settled; the council, however, has taken nearly six thousand complaints. Compensation ranged from US $100,000 to US $250,000 per claimant. Many cases remain unresolved, but the council is reacting in a slow and careful manner, attempting to prevent a backlash from conservative forces in the government. NONGOVERNMENTAL ORGANIZATIONS AND OTHER ASSOCIATIONS Most of the nongovernmental organizations (NGOs) in Morocco came to the country in the early 1990s. The monarch's opening to human rights issues resulted in an inflow of NGOs, especially those concerned with the treatment of the Saharawi people. In 1994 the monarch allowed Human Rights Watch to conduct a fact-finding investigation on violations of human rights and to publicize the results. Some of the major NGOs active in the country include the Moroccan Organization of Human Rights, the Moroccan League for the Defense of Human Rights, and the Moroccan Association of Human Rights. Amnesty International has chapters located in Casablanca, Rabat, and Marrakech, although it is not officially recognized by the central government. Marriage. Parents still have considerable influence over the choice of their children's spouse, although in some less traditional families this practice is changing. Once a person with the appropriate economic and family background has been agreed upon, the groom offers a bride-price to the family of the bride-to-be. In return, the bride's family negotiates a dowry with the groom's family, and assures them that her virginity is intact. Weddings take place during summer months, and usually last for two or three days, depending on the financial circumstances. At traditional weddings, the bride is carried to the groom on a table, ornately decorated with henna-stained hands and feet. Islamic law dictates that Muslim women must marry Muslim men; it is acceptable, however, for a Muslim man to take a non-Muslim woman as his wife. If divorce occurs, it is likely to be instigated by the man, as a divorced woman has little chance to remarry and may have a difficult time providing for herself. Religious Beliefs. Nearly 99 percent of Moroccans are Sunni Muslim. Moroccans are tolerant of the small percentage of Christians and Jews living in the country, believing they worship the same God. The five main pillars observed by Muslims are: making a public profession of faith, praying five times a day according to the position of the sun, fasting during the month of Ramadan, giving alms to those in
need, and making a pilgrimage to Mecca once in a lifetime. Moroccans have added a few unique features of their own to traditional Islam. Two of these features, whose origins are likely attributed to Berber religious practices, are Baraka and Murabitin. Baraka refers to spiritual power that manifests in the form of a blessing or good fortune, similar to the concept of good karma in Buddhism. Murabitin are the individuals who possess good Baraka, similar to the concept of sainthood in Catholicism. Baraka may rub off on individuals who spend time with Murabitin. Also, most villages and medina neighborhoods have a fortune-teller who will charge to offer a vision, provide a remedy, or put a curse on someone. When news travels that pagan practices are taking place, Muslim missionaries will travel to the area to stop them and bring the people back to Islam. Religious Practitioners. The king claims to be a descendant of the prophet Muhammad, the founder of Islam. He also holds the position of the religious head of state, and all local religious leaders are subordinate to his decisions. Rituals and Holy Places. Small dome-shaped temples are constructed for the Murabitin after their death, as they are thought to continue exuding spiritual power. Individuals seeking blessings, such as a woman who wishes to become pregnant, make pilgrimages to Murabitin temples. Muslim mosques are found nationwide. Traditionally, non-Muslim foreigners are not allowed inside mosques. The Mosque Hassan II in Casablanca, however, allows foreigners to tour some facilities. M OROCCO'S UNEMPLOYMENT RATE In the past five years, Morocco‘s unemployment rate has decreased to its lowest of 7.70 percent. As a country Morocco‘s Gross Domestic Product (GDP) is $56.72 billion, with a GDP per capita of $4,400. The country has seen GDP growth rate of 6.7%. One of Morocco‘s main focus points is to continually decrease the unemployment rate. There are a few factors that should be central in the attempt to decrease unemployment, such as: education, property rights, trade, and freedom from corruption in regards to the bureaucratic government. Agriculture is a key part to Morocco‘s economy accounting for 20 percent of the GDP, and 40 percent of the population depends directly on agriculture, but only 13.3 percent of the people work in agriculture. Morocco has also seen an increase in economic development, especially through its $3.9 billon dollar tourist industry. However, Morocco is suffering in certain fields which are closely related to unemployment. Although education is free for children between the ages of 6 through 15, many children (especially girls) do not attend school. Morocco‘s literacy rate is 52.3 percent, which indicates that almost half of the country can not read or write. Morocco has an urban unemployment rate of 33 percent. The youth of Morocco are not in school and don not possess the skill needed to work. It is reported that Morocco has a moderately high crime rate in urban areas; by targeting tourists for assaults, muggings, and thefts. Another factor with the unemployment rate has to do with Morocco‘s government which operates as a constitutional monarchy. Companies and businesses find it difficult to operate in Morocco, because of the bureaucratic structure of the government. To obtain a business license is virtually impossible. In a bureaucratic government bribery is highly encouraged. Morocco is perceived as having high corruption; it is ranked 78 out of 158 countries according to Transparency International Corruption Perceptions index. If companies are not encouraged to open up businesses, the people of Morocco will continue to be unemployed. The barrier put up by the government prohibits the idea of innovation of any sort. In regards to private property rights Morocco scores exceptionally low.
Morocco has a high tax rates, the top income tax rate is 44 percent. As a result a substantial amount of individual‘s income is withheld from them. Morocco has improved on there trade policy by signing a bilateral Free Trade Agreement (FTA) between the United States and Morocco. As these two countries work together through trade, Morocco will begin to see the benefits. Trade allows for more imports and goods to come in and out of the country. Ultimately this trade policy will lead to more jobs in Morocco. Morocco trades over 70 percent of its goods to Europe, now that they have added the United States, it will strengthen their trade market. Furthermore, Morocco unemployment rate of 7.7 percent is the lowest the country has ever seen. Morocco‘s education system, bureaucratic government and trade agreements are the factor in determining if this unemployment rate will increase or decrease.
TECHNOLOGICAL ANALYSIS
Science and technology in Morocco It has significantly developed in recent years. The Moroccan government has been implementing reforms to encourage scientific research in the Kingdom. While research has yet to acquire the status of a national priority in Morocco, the country does have major assets that could transform its R&D sector into a key vehicle for development. The industry remains dominated by the public sector, with the universities employing 58% of researchers. Morocco‘s own evaluation of its national research system – carried out in 2003 – revealed that the country has a good supply of well trained high quality human resources and that some laboratories are of very high quality. However, the greatest gap at that point of time lied in the link between research and innovation. The educational qualifications of Moroccan researchers have increased significantly since the early 1990s. The University of Al-Karaouine is considered the oldest continuously operating academic degree-granting university in the world, by the Guinness Book of Records. NATIONAL POLICY The national system of scientific and technical research in Morocco is guided by different elements, such as the pronouncements of the king, reports of special commissions, five-year plans, and the creation of a special programme for the support of research. While spending on education has hitherto been relatively high (5% of GDP and 24% of government expenditures in recent years, change has been slow in coming. A royally designated "decade of education" was kicked off in Morocco in 1999 with the publishing of the National Charter for Education and Training, a road map to sector reform. As a result, literacy for men aged 15–24 has risen from 84% in 1990 to 87% in 2008, according the World Bank, while the percentage of all students completing primary school rose from 82% to 87% over the same period. The Moroccan government‘s Five- Year Plan for 2000-2004 articulated the priority lines for research. The declared objectives of this plan were to align S&T research with socio-economic development priorities. Sectors declared as priority areas were: agriculture, fisheries, drinking water, geology, mining, energy, environment, information and telecommunications technologies, and transport. This approach highlighted the need for effective institutional coordination, which enabled different parties to work together around common priority socioeconomic objectives.In 2002, 89% of the 542 researchers in a sample comprising INRA, INRH, IAV Hassan II, ENFI, and ENA were trained to the postgraduate level, and 34% held doctorate degrees. In 2009 Morocco has announced new support for scientific research including strengthening scientific infrastructure and giving universities more power. As part of the National Education Emergency Support Programme 2009-12, the Moroccan government has signed DH12.6bn (€1.1bn) in new agreements to improve the quality of its universities. This extra investment comes as the number of students in the science and engineering fields is expected to double by 2012, along with the number of those passing the baccalaureate exam after high school, additionally the country seeks to meet its UN Millennium Development Goals by 2015. The project will range from hiring additional lecturers and raising teaching credentials to expanding general infrastructure. The government has targeted accrediting 92% of its universities as research institutions by 2012, compared to 69% in 2008. TECHNOPOLIS PROJECT In 2005 the Moroccan king launched Technopolis Rabat, with the aim of creating 12,000-15,000 high-end jobs by 2016. The first phase was completed in 2006. The science park holds separate
engineering, high-tech, colleges and R&D spaces. Several companies have started operating in the park, including Nemotek Technologie, EDS-HP, Cleanroom, Alcatel and many others. In 2009 Technopolis Oujda started construction, the first phase is to be completed in 2011. The technopolis includes four main components: ?CleanTech? industrial and logistical park, a services center (offshoring and services), a commercial platform (retail park and showrooms), and a training campus. The project is expected to create 20,000 job opportunities. Only six African countries (Morocco, Egypt, Senegal, Madagascar, Tunisia and South Africa) have initiated programmes of technology parks as an integral strategy of their sustainable development. RESEARCH INDUSTRY The private sector is the least active player in research activity in Morocco. The REMINEX Corporation(Research on Mines and Exploitation) is the most prominent research performer in the private sector, and is a subsidiary of Omnium Nord Africain, the largest privatelyowned mining group in Morocco. Nemotek Technologie is also a big private player. The most recent figures available on the number of research staff in Morocco are those provided by the Ministry of National Education, Higher Education, Professional Training and Scientific Research in its 2002-2003 annual report. According to this report, Morocco had 17 390 research staff in 2002-2003.[1] The majority (58%) were employed in the university sector. Total agricultural researcher numbers in Morocco increased gradually throughout the 1980s and 1990s, while total agricultural R&D expenditures fluctuated somewhat erratically. INSTITUTIONS Research institutions include the Scientific Institute, founded in 1920 in Rabat, which does fundamental research in the natural sciences, and the Scientific Institute of Maritime Fishing, founded in 1947, in Casablanca, which studies oceanography, marine biology, and topics related to development of the fishing industry. Nine universities and colleges offer degrees in basic and applied sciences. In 1987–97, science and engineering students accounted for 41% of college and university enrollments. Under the 2009 initiative by the Moroccan government, universities will be made financially independent from the government to make them more responsive to research needs and better able to forge links with the private sector. A total of 17 agreements were signed to develop Moroccan universities, as part of the 2009-2012 emergency program which aims at reforming the country's ailing educational system and fostering a culture of entrepreneurship in the academic community. The University of Al-Karaouine is a university located in Fes. Founded in 859, as a madrasah, the university is one of the leading spiritual and educational centers of the Muslim world. It is considered the oldest continuously operating academic degree-granting university in the world.
INTERNATIONAL CO-OPERATION The Morocco-US science and technology cooperation plan, signed in 2006 in Rabat, promotes the exchange of innovative scientific ideas, information and knowledge, skills and techniques and the training of technical experts. It also allows for joint scientific and technological projects, conferences and workshops. Apart from the S&T agreement with the United States, Morocco has S&T agreements with its regional neighbour Tunisia and countries related to its historical heritage (France, Belgium and Spain). Many Moroccan scientists received training in France or are performing research in collaboration with French scientists. In 2009 Morocco and South Korea have agreed to strengthen cooperation in the field of ICT and cyber security. Morocco also signed an agreement on scientific and technical cooperation with Turkey. In June 2009 a NASA scientific mission, including six Moroccan experts, has started a visit to Morocco with the aim of integrating Moroccan researchers into the global climate change initiative, Space Weather. COMMUNICATION Telephone system General assessment: good system composed of open-wire Telephones - main lines in use: lines, cables, and microwave radio relay links; principal 3.516 million (2009) switching centers are Casablanca and Rabat; national Country Comparison to the world: network nearly 100% digital using fiber-optic links; 45 improved rural service employs microwave radio relay; Telephones - mobile cellular: Internet available but expensive domestic: fixed-line 25.311 million (2009) teledensity is roughly 10 per 100 persons; mobile-cellular Country Comparison to the world: subscribership approached 75 per 100 persons in 2009 35 international: country code - 212; landing point for the Atlas Offshore, Estepona-Tetouan, Euroafrica, Spain-Morocco, and SEA-ME-WE-3 fiber-optical telecommunications undersea cables that provide connectivity to Asia, the Middle East, and Europe; satellite earth stations - 2 Intelsat (Atlantic Ocean) and 1 Arabsat; microwave radio relay to Gibraltar, Spain, and Western Sahara; coaxial cable and microwave radio relay to Algeria; participant in Medarabtel; fiber-optic cable link from Agadir to Algeria and Tunisia (2009) B ROADCAST MEDIA : 2 television broadcast networks with state-run Radio-Television Marocaine (RTM) operating one network and the state partially owning the other; foreign TV broadcasts are available via satellite dish; 3 radio broadcast networks with RTM operating one; the government-owned network includes 10 regional radio channels in addition to its national service (2007)
Internet country code: ma Internet hosts: 277,793 (2010) Country Comparison to the world: 61 Internet users: 13.213 million (2009) Country Comparison to the world: 29
Source: (Wikipedia, 2011)
ENVIRONMENTAL ANALYSIS
Morocco is situated on the north west of Africa and is over 446,000sq km in area. The Atlantic Ocean lies to the west and the Mediterranean to the north. The land borders of Morocco are with Algeria, and Mauritania. In the north-west Morocco is separated from Spain by the narrow Straits of Gibraltar. The capital city is Rabat on the Atlantic Coast. Casablanca, also on the Atlantic coast, is the country's chief port. The city of Fes is the spiritual and cultural centre of Morocco, famous for its ancient university. Marrakesh, an oasis at the edge of the desert, is also an important trade centre and the main city of southern Morocco. Tangier in the north, opposite Gibraltar is famous for the many writers and artists who have lived there. Along the coastline of the Atlantic lies a fertile plain which stretches to the Atlas mountains. Another mountain range, the Rif Mountains, runs west to east a short distance from the Mediterranean coast. The main rivers of Morocco are the Sebou which runs into the Atlantic and the Moulouya which runs into the Mediterranean. To the south and east lies the Sahara Desert. The Sahara is the world's largest desert and in Arabic its name means "wilderness". The desert is not entirely flat and waterless. The streams in the hills and the oases in the desert support both human and animal life. Morocco's climate varies: the north is Mediterranean and the south is subtropical. The sea and the mountains help to maintain a pleasant climate: the winters are mild and the summers are dry. Rain falls mostly in winter and the mountain peaks are covered with snow most of year. In the desert rainfall is very low and also unpredictable. The daytime temperatures are very high but the nights can be extremely cold. The natural environment reflects the wide variations of its geography and climate. In the desert regions we find the type of plants that can survive with little water; some have very deep roots, others have small leaves or spines instead. The desert animals must also survive with little water and many remain hidden during the heat of the day (like the desert fox); others, such as the gazelles, travel many miles in search of water. The mountains are often heavily wooded, with firs and cedars on the higher slopes. In winter many of the mountains are covered in snow. Here we will find typical mountain animals and birds such as eagles with some unusual species such as the Barbary Macaque - Africa's only macaque species. In the plains below the mountains where most of the country's agricultural production is to be found there are orange groves, date palms and forests of cork trees. Morocco is a very important staging point on the flight path of migratory birds which winter in Africa and spend the summer in Europe. There is a large natural bird reserve where the Moulouya River flows into the Mediterranean. The natural environment of Morocco is under pressure in a number of ways. The increasing number of tourists and the exploitation of resources such as oil and phosphates may damage the fragile desert ecosystem, while overgrazing and the spread of the desert may threaten the currently productive areas.
Geography Location Geographic coordinates Northern Africa, bordering the North Atlantic 32 00 N, 5 00 W Ocean and the Mediterranean Sea, between Algeria and Western Sahara Area: Land boundaries: Total: 446,550 sq km Total: 2,017.9 km Country Comparison to the world: 57 border countries: Algeria 1,559 km, Western Land: 446,300 sq km Sahara 443 km, Spain (Ceuta) 6.3 km, Spain Water: 250 sq km (Melilla) 9.6 km Coastline: 1,835 km Maritime claims: Land use: Territorial sea: 12 nm Arable land: 19% Contiguous zone: 24 nm Permanent crops: 2% Exclusive economic zone: 200 nm Other: 79% (2005) Continental shelf: 200 m depth or to the depth Irrigated land: 14,450 sq km (2003) of exploitation Climate Current Weather Terrain: Mediterranean, becoming more extreme in the Northern coast and interior are mountainous interior with large areas of bordering plateaus, intermontane valleys, and rich coastal plains Elevation extremes: Natural resources: Lowest point: Sebkha Tah -55 m Phosphates, iron ore, manganese, lead, zinc, Highest point: Jebel Toubkal 4,165 m fish, salt Total renewable water resources: 29 cu km Freshwater-withdrawal (2003) (domestic/industrial/agricultural): Total: 12.6 cu km/yr (10%/3%/87%) Per capita: 400 cu m/yr (2000) Environment - current issues: Natural hazards: Northern mountains geologically unstable and Land degradation/desertification (soil erosion subject to earthquakes; periodic droughts resulting from farming of marginal areas, overgrazing, destruction of vegetation); water supplies contaminated by raw sewage; siltation of reservoirs; oil pollution of coastal waters Geography - note Strategic location along Strait of Gibraltar Environment - international agreements: Party to: Biodiversity, Climate Change, Climate Change-Kyoto Protocol, Desertification, Endangered Species, Hazardous Wastes, Law of the Sea, Marine Dumping, Ozone Layer Protection, Ship Pollution, Wetlands, Whaling signed, but not ratified: Environmental Modification
Transportation
Airports: 58 (2010) Country Comparison to the world: 81 Airports - with paved runways: Total: 32 Pipelines: Gas 830 km; oil 439 km (2009)
Airports - with unpaved runways: Total: 26 2,438 to 3,047 m: 1 1,524 to 2,437 m: 7 Heliports: 1 (2010) 914 to 1,523 m: 10 Under 914 m: 8 (2010) Railways: Roadways: Total: 1,907 km Total: 57,625 km Country Comparison to the world: 74 Country Comparison to the world: 79 Standard gauge: 1,907 km 1.435-m gauge Paved: 35,664 km (includes 639 km of (1,022 km electrified) (2008) expressways) Unpaved: 21,961 km (2006) Merchant marine: Ports and terminals: Total: 30 Casablanca, Jorf Lasfar, Mohammedia, Safi, Country Comparison to the world: 84 Tangier By type: cargo 2, chemical tanker 2, container 7, passenger/cargo 15, petroleum tanker 1, roll on/roll off 3 Foreign-owned: 6 (france 4, germany 2) Registered in other countries: 5 (gibraltar 4, panama 1) (2010) Source: (The Central Intelligence Agency (CIA), 2011)
Morocco is divided into sixteen regions.
Region Chaouia - Ouardigha Doukkala - Abda Fès - Boulemane Gharb - Chrarda - Béni Hssen Grand Casablanca Guelmim - Es-Semara Laâyoune - Boujdour Sakia El Hamra Marrakech - Tensift - Al Haouz Meknès - Tafilalet Oriental Oued Lagouira Rabat - Salé - Zemmour - Zaer Souss - Massa - Draâ Tadla - Azilal MA.SM MA.TD 13 12 MO55 MO56 04 12 3,113,653 1,450,519 2,635,522 1,324,662 70,880 17,125 27,367 6,612 Agadir Béni Mellal Tanger - Tétouan Taza - Al Hoceima Taounate 16 regions 29,891,708 26,073,717 690,275 266,518 MA.TO MA.TH 01 03 MO57 MO58 16 15 2,470,372 1,807,113 2,036,032 1,719,844 11,570 24,155 4,467 9,326 Tanger Al Hoceima MA.RZ 07 MO49 10 2,366,494 1,985,602 9,580 3,699 Rabat Ed-Dahab MA.MT MA.OR MA.OL 06 04 16 MO48 MO54 13 08 01 2,141,527 1,918,094 99,367 1,903,790 1,768,691 36,751 79,210 82,900 50,880 30,583 32,008 19,645 Meknès Oujda Dakhla MA.MK 11 MO47 07 3,102,652 2,724,204 31,160 12,031 Marrakesh MA.GC MA.GE MA.LB 08 14 15 MO45 MO53 MO59 09 03 02 3,631,061 462,410 256,152 3,126,785 386,075 175,669 1,615 122,825 139,480 624 47,423 53,854 Casablanca Guelmim Laâyoune HASC MA.CO MA.DA MA.FB MA.GB ISO 09 10 05 02 FIPS MO50 MO51 MO46 MO52 St 06 11 14 05 Pop-2004 1,655,660 1,984,039 1,573,055 1,859,540 Pop-1994 1,509,077 1,793,458 1,322,473 1,625,082 Area(km.²) 7,010 13,285 19,795 8,805 Area(mi.²) 2,707 5,129 7,643 3,400 Capital Settat Safi Fès Kenitra
TANGER-M ED Tanger-Med is a cargo port located about 40 km from Tangier, Morocco. It is one of the largest ports on the Mediterranean and in Africa by capacity and went into service in July 2007. Its initial capacity was 3.5 million shipment containers. The Tangier-Med Project will contain the biggest port in Africa. The project is a strategic priority of the Moroccan government for the economic and social development of the North Morocco region. It is part of the economic policy orienting Morocco towards exports, based on eight clearly identified export sectors, with particular emphasis on the free trade agreement with the European Union to be implemented by 2012. Completion of the «Tangier-Mediterranean» project will have important economic effects in terms of jobs, creation of added value and foreign investment. Its particular position on the Straits of Gibraltar, at the crossing of two major maritime routes, and 15km from the European Union will enable it to serve a market of hundreds of millions of consumers through the industrial and
commercial free zones which will be run by well-known private operators. It will also win part of the strong growth market of container transshipment and become the leading hub for cereal transshipment, a facility which is non-existent in the north-west African region at present. The project will be implemented, coordinated and managed by TMSA, a private company with public prerogatives, operating under an agreement with the State and interacting with the different ministries involved. The port complex will have important economic effects in terms of jobs, creation of added value and foreign investment. In addition to the economic effects of the operation of the port, there will be important effects resulting from its construction, particularly through foreign investments, and others from the operation of the free zones (direct and indirect added value, direct gains, jobs and foreign investment). A draft loan contract of $180 mln to fund the expansion works of Tanger-Med port was signed in October 2008 to for building a second deepwater port, dubbed "Tangier Med II", to meet the growing demand for containers treatment at the international level in sea transport. The new port facilities, scheduled to be operational by the second half of 2012, will include two new container terminals with a total length of 2,800 m and an additional nominal capacity of 5 million containers.Final official approval for "Tangier Med II" was received on 7 January 2009, with actual construction started on 17 June 2009. In November 2010 the European Investment Bank (EIB) signed a loan of €200 million for the extension of the port. The port is expected to reach full capacity by 2015, and to operate 8 million containers, 7 million passengers, 700,000 trucks, 2 million vehicles, and 10 million MT of oil products.
LEGAL ANALYSIS
Morocco operates under a constitutional and democratic monarchy. Since Morocco is ruled under a monarchy government there are no elections of the monarchy; the monarch is hereditary. Morocco gained its independence in 1956 from France. Morocco is run by a King, Mohammed VI, who is the Supreme Representative of the Nation. The King holds the power; he guarantees that the Constitution is respected, is the country‘s religious leader, appoints the Prime Minister and has the final say over those appointed government officials. The King has the power to break up its government and is in charge of the military. The King is also responsible for overseeing that the citizens of Morocco‘s rights are protected. Under the King stands the Executive Power or commonly called the Government. The Executive Power is made up of one Prime Minister, Abbas El Fassi, and a number of Ministers. Those Ministers then make up the cabinet, which falls under the head of government and is selected by the King. The Legislative Power, or Parliament, is composed of two sections; the upper house (Chamber of Counselors) and lower house (Chamber of Representatives). The Chamber of Counselors is comprised of 270 seats and those appointed will serve a nine-year term. The Chamber of Representatives is comprised of 325 seats and each of those members will service a five-year term. The Judicial branch of the government consists of judges who have recommendations from the Supreme Court but the final decision of who will be appointed is made by the King. The legal system in Morocco is a combination of French civil law system, with courts based around the Jewish and Islamic traditions. ?There are four levels of the common law court system: Communal and district courts, courts of first instance, the Appeals Court, and the Supreme Court.? Along with these court systems there are also a number of others. Along with these court systems are a couple more such as The Special Court of Justice, administrative courts, commercial courts, and military tribunal. These are responsible for cases from corruption up to cases involving military personnel. There are other authorities in Morocco including The Constitutional Council and The Economic and Social Council. Local communities and local assemblies make up The Administrative Power of Morocco. Morocco respects human rights; however, the citizens do not have the power to change the government. The King has control over the government and the way that Morocco is ran. The government is responsible for keeping their culture and language in tact. LEGAL SYSTEM Based on Islamic law and French and Spanish civil law systems; judicial review of legislative acts in Constitutional Chamber of Supreme Court; has not accepted compulsory ICJ jurisdiction SUFFRAGE : 18 years of age; universal LEGISLATIVE BRANCH : Bicameral Parliament consists of the Chamber of Counselors (or upper house) (270 seats; members elected indirectly by local councils, professional organizations, and labor syndicates to serve nineyear terms; one-third of the members are elected every three years) and Chamber of Representatives (or lower house) (325 seats; 295 members elected by multi-seat constituencies and 30 from national lists of women; members elected by popular vote to serve five-year terms)
Elections: Chamber of Counselors - last held on 3 October 2009 (next to be held in 2012); Chamber of Representatives - last held on 7 September 2007 (next to be held in 2012) Election results: Chamber of Counselors - percent of vote by party - NA; seats by party - NA; Chamber of Representatives - percent of vote by party - NA; seats by party - PI 52, PJD 46, MP 41, RNI 39, USFP 38, UC 27, PPS 17, FFD 9, MDS 9, Al Ahd 8, other 39 JUDICIAL BRANCH: Supreme Court (judges are appointed on the recommendation of the Supreme Council of the Judiciary, presided over by the monarch) CORRUPTION IN MOROCCO Conducing business in Morocco can be quite risky due to its political system. According to The Economist, Political Stability Risk earns a rating of "C", while Government Effectiveness Risk earns a rating of a ?D?.(Risk Briefing) This shows a political system which is generally in control but not very effective. Several analysts view corruption as a major constraint to economic development. Recently, local businesses ranked corruption only third to access to financing and tax rates, as the most problematic factors to doing business in Morocco. (Morocco Country Profile) The economic scene in Morocco is dominated by two main categories. The first consists of prominent families who have established ties with the government through centuries-old relationships and alliances. This elite enjoyed protection against foreign competitors and was able to establish monopolies over the import and export of certain goods as well as public procurement contracts. It still dominates economic life today, and finds transparency and free-market policies to conflict with its interests. However, since the 1980s, a group of executives in middle-sized firms started becoming influential. This elite differentiates itself from the first with its modernist outlook and its fight to eliminate privileges and monopolies in the business world. The main organization representing this elite is CGEM (Confederation Generale des Entreprises du Maroc). Alongside CGEM, international donors, such as the World Bank, have put pressures on Morocco to address the issue of corruption. This has helped bringing corruption as taboo subject, up until 1995, to the public. As a response, the government promised a series of administrative reforms, such as subjecting all public procurement contracts above 5 million dirhams to internal audit. Due to many factors, this process is showing slow improvements over the past decade. The unemployment rate fell sharply in 2006.[4] Morocco has also made progresses in investment sector, says Doing Business 2008 report. (World Bank) Despite these reforms, monitoring organizations assert that high levels of corruptions still plague the judicial system as well as public procurement. A survey done by Transparency Maroc states that 78% Moroccan companies do not find the judicial system reliable; 59% assert that illicit payments are involved in procurement; and 95% of the Moroccan entrepreneurs polled felt that corruption was prevalent within customs. Source: http://internationalbusiness.wikia.com/wiki/Moroccan_Political_and_Legal_System M OROCCO'S LEGAL SYSTEM (WEAKNESSES) Morocco is located in Northern Africa, bordering the North Atlantic Ocean and the Mediterranean Sea, between Algeria and Western Sahara. Its population is 33,757,175 consisting of a 98.7% Muslim religion (CIA.gov). Morocco‘s government type is constitutional monarchy. It has a dual legal system consisting of secular courts based on French legal tradition, and courts based on Jewish and Islamic Traditions (nationsencyclopedia). The secular system includes communal and district courts, courts of first instance, appellate courts, and a Supreme Court. There are five
division chambers in Morocco‘s Supreme Court, the divisions include; criminal, correctional (civil) appeals, social, administrative, and constitutional. Officials may be tried in the special court of justice on charges raised by a two-thirds majority of the full Majlis. There is also a military court for cases that involve military personnel and occasionally matters pertaining to a state security. The supreme council of the Judiciary regulates the courts and is presided over by the King of Morocco (King Mohamed VI). The way the judges are appointed their position is through the advice of the council. Judges in the secular system are university-trained lawyers. Since 1965 only Moroccans are able to be appointed as judges. Arabic is the official language of the courts system (nationsencyclopedia). Morocco‘s legal system holds weaknesses towards businesses. Some of their weaknesses are that they suffer from weak trade freedom, fiscal freedom, financial freedom, labor freedom, property rights, and freedom form corruption. The average tariff rate is high, and bureaucratic practices are opaque. The judiciary and the financial sector are inefficient and subject to substantial corruption (at least in the courts) and significant political interference from the king. The labor market is highly restrictive and is amongst the 20th least free in the world. Trade freedom is at 51%, fiscal freedom 75.5%, freedom from government 83.3%, investment freedom 70%, financial freedom 40%, property rights at 30%, freedom from corruption 32%, labor freedom 41.9 %( heritage). With freedom from corruption only at 32% this is a major problem toward businesses. There have been substantial efforts over the past few years to modernize Morocco‘s legal and regulatory framework, aiming at establishing a more business friendly environment. Such efforts have been motivated in large measure by the need to bring Morocco‘s legal system up to par in light of the 1997 Association agreement with the European Union. More recently, attention has turned to another key determinant of efficiently and effectiveness of the legal and regulatory framework of the functioning of the judiciary. The judiciary has long been criticized by all stakeholders in morocco, particularly with regards to business related litigation. As I mentioned before with freedom from corruption at 32%, corruption is still perceived as significant. Morocco ranks 78th out of 158 countries in transparency international‘s corruption perceptions index for 2005(heritage). The Moroccan policy-makers now fully understand and recognize the pressing need to improve the functions of the judiciary, and significant reform efforts are already underway. Source: (Wikia, 2011)
TRADE RELATION OF M OROCCO (STRATEGIC PARTNERSHIP)
Morocco!s relations with neighbouring Algeria will remain tense, largely because of the dispute over Western Sahara, a territory that Morocco claims sovereignty over but that Algeria would like to see become an independent state. Morocco is committed to its plan for limited autonomy for the territory, whereas the Algerian-backed Polisario Front demands a referendum on selfdetermination. The UN has appointed a new special envoy for the territory, who may have some success in breaking the current deadlock, but little progress is likely to be made in resolving the long-standing dispute. Tensions between the two countries will hold back attempts to boost intra-Maghreb cooperation, including regional trade, through the Arab Maghreb Union. However, there could be some cautious bilateral co-operation on security matters. Relations with EU member states, especially Spain and France, will remain strong. Morocco is keen to play a key role in the Union for the Mediterranean and has secured "advanced status" with the EU, which could eventually mean freer access to European labour markets for Moroccan workers, although this is unlikely in 2010-11, given the poor outlook for EU growth. M AJOR TRADING PARTNERS Morocco‘s trade is heavily slanted towards the EU, with which it ratified an Association Agreement in 2000, paving the way for a gradual elimination of tariff and non-tariff barriers to trade. Phosphates and related products are Morocco‘s largest single export earners. Around three fourths of Morocco‘s exports are destined for EU markets. France‘s long-standing relationship with Morocco is reflected in its 21% share of Morocco's total exports, while Spain (20%) and the UK (5%) are the other major European export destinations. Italy and Germany each have a 5% share of Morocco's exports. Morocco has started to make its presence felt in the Asian markets with the recent rise in exports to India standing at 4% in 2006. On the import side, the EU market accounts for 56% of Morocco's total imports. France and Spain again dominate, with 18% and 14% shares, respectively. Italy, with a 6% share, closely follows Saudi Arabia, which has a 7% share. Germany has a 6% share in the Morocco's imports. Among the Asian countries, China has gained a 7% share of Morocco's total imports.
TRANSNATIONAL ISSUES
Disputes - international: Claims and administers Western Sahara whose sovereignty remains unresolved - UN-administered cease-fire has remained in effect since September 1991, but attempts to hold a referendum have failed and parties thus far have rejected all brokered proposals; Morocco protests Spain's control over the coastal enclaves of Ceuta, Melilla, and Penon de Velez de la Gomera, the islands of Penon de Alhucemas and Islas Chafarinas, and surrounding waters; both countries claim Isla Perejil (Leila Island); discussions have not progressed on a comprehensive maritime delimitation, setting limits on resource exploration and refugee interdiction, since Morocco's 2002 rejection of Spain's unilateral designation of a median line from the Canary Islands; Morocco serves as one of the primary launching areas of illegal migration into Spain from North Africa
Illicit drugs:One of the world's largest producers of illicit hashish; shipments of hashish mostly directed to Western Europe; transit point for cocaine from South America destined for Western Europe; significant consumer of cannabis INTERNATIONAL ORGANIZATION PARTICIPATION : ABEDA, AfDB, AFESD, AMF, AMU, CD, EBRD, FAO, G-11, G-77, IAEA, IBRD, ICAO, ICC, ICRM, IDA, IDB, IFAD, IFC, IFRCS, IHO, ILO, IMF, IMO, IMSO, Interpol, IOC, IOM, IPU, ISO, ITSO, ITU, ITUC, LAS, MIGA, MONUSCO, NAM, OAS (observer), OIC, OIF, OPCW, OSCE (partner), Paris Club (associate), PCA, UN, UNCTAD, UNESCO, UNHCR, UNIDO, UNMIS, UNOCI, UNWTO, UPU, WCO, WHO, WIPO, WMO, WTO Source:https://www.cia.gov/library/publications/the-world-factbook/geos/mo.html M AJOR TRADE AGREEMENT OF INDIA & MOROCCO
Agreement WTO Document Number Signatories Date of Entry into Force Mar 01, 2000 Dec 01, 1999 Jan 01, 2006 Jan 01, 2006 Date of WTO Notification
Morocco EC - Morocco EFTA - Morocco Turkey - Morocco United States Morocco India Bangkok Agreement Bangkok Agreement Accession of China India - Buthan India - Singapore India - Sri Lanka SAFTA L/4418 L/4418/Corr.1 WT/COMTD/N/19 WT/COMTD/N/28 WT/REG228 S/C/N/393 WT/COMTD/N/16 Bangladesh, India, Laos, Philippines, Jun 17, 1976 Korea, Sri Lanka, Thailand Bangladesh, India, Laos, Philippines, Jan 01, 2002 Korea, Sri Lanka, Thailand, China India, Bhutan India, Singapore India, Sri Lanka Jul 29, 2006 Aug 01, 2005 Dec 15, 2001 Nov 02, 1976 Jul 29, 2004 Jun 30, 2008 May 03, 2007 Jun 27, 2002 Apr 21, 2008 WT/REG112 WT/REG91 WT/REG209 WT/REG208 EC, Morocco Iceland, Liechtenstein, Norway, Switzerland, Morocco Turkey, Morocco United States, Morocco Nov 08, 2000 Feb 18, 2000 Feb 21, 2006 Jan 16, 2006
WT/COMTD/N/26 Bangladesh, Bhutan, India, Maldives, Jan 01, 2006 Nepal, Pakistan, Sri Lanka
GSTP - GENERAL SYSTEM OF TRADE PREFERENCES AMONG DEVELOPING COUNTRIES Algeria Argentina Bangladesh Benin Bolivia Brazil Cameroon Chile Colombia Cuba Democratic People's Republic of Korea Ecuador Egypt Ghana Guinea Guyana India Indonesia Islamic Republic of Iran Iraq Libya Malaysia Mexico Morocco Mozambique Myanmar Nicaragua Nigeria Pakistan Peru Philippines Republic of Korea Romania Singapore Sri Lanka Sudan Thailand
Trinidad and Tobago Tunisia United Republic of Tanzania Venezuela Vietnam Yugoslavia Zimbabwe
GLOBAL SYSTEM OF TRADE PREFERENCES (GSTP)
The Agreement establishing the Global System of Trade Preferences (GSTP) among Developing countries was signed on 13th April, 1988 at Belgrade following conclusion of the First Round of Negotiations. The GSTP came into being after a long process of negotiations during the Ministerial Meeting of the Group of 77, notably at Mexico City in 1976, Arusha in 1979 and Caracas in 1981. The Ministers of Foreign Affairs of the Group of 77 in New York set up the GSTP Negotiating Committee in 1982. The New Delhi Ministerial meetings, held in July 1985, gave further impetus to the GSTP negotiation process. The Brasilia Ministerial Meeting held in May 1986 launched the First Round of GSTP Negotiations. At the conclusion of the First Round in April 1988 in Belgrade, the GSTP Agreement was signed on 13 April 1988. The Agreement entered into force on 19th April 1989. Forty-four countries have ratified the Agreement and have become participants. The GSTP establishes a framework for the exchange of trade concessions among the members of the Group of 77. It lays down rules, principles and procedures for conduct of negotiations and for implementation of the results of the negotiations. The coverage of the GSTP extends to arrangements in the area of tariffs, para-tariff, non-tariff measures, direct trade measures including medium and long-term contracts and sectoral agreements. One of the basic principles of the Agreement is that it is to be negotiated step by step improved upon and extended in successive stages The current round of GSTP negotiations, also known as ?São Paulo Round? was launched in 2004 with 22 participating countries, on the occasion of the UNCTAD XI Quadrennial Conference in Sao Paulo in Brazil. At the end of the negotiations, Ministerial Modalities were adopted on 2 December, 2009 wherein Ministers agreed to modalities based on a tariff reduction of at least 20% on at least 70% of all dutiable tariff-lines. Members who were in the process of their WTO accession namely, Algeria and Iran were to be given specific flexibilities. The modalities on market access adopted by the Ministers are as under: Across-the-board, line-by-line, linear cut of at least 20% on dutiable tariff lines; --Product coverage to be at least 70% of dutiable tariff lines; Product coverage shall be 60% for participants having more than 50% of their national tariff lines at zero duty level; Tariff cuts shall be made on the MFN tariffs applicable on the date of importation. Alternatively, participants may choose to apply the cuts on the MFN tariffs applicable on the date of conclusion of the Third Round; The Negotiating Committee shall also consider proposal for revision of the GSTP rules of origin. Based on these modalities, intensive negotiations were held in 2010 for finalisation of the schedules of Members. During this period, Cuba, Egypt, India, Indonesia, Korea, Malaysia, Mercosur and Morocco submitted their schedules and bilateral negotiations were held to finalise the schedule. It is significant to note that India unilaterally offered a tariff reduction of 25% on 77% of its tariff lines for Least Developed Countries (LDCs). A Ministerial Meeting of the GSTP Negotiating Committee was held on 15 December, 2010 in Foz do Iguacu, Brazil for signing of the "Final Act Embodying the Results of the Sao Paulo Round" and the "Sao Paulo Round Protocol on the Agreement on GSTP". The Ministers or Head of the Delegations of Members who have submitted their final schedules namely Cuba, Egypt, India,
Indonesia, Korea, Malaysia, Mercosur and Morocco would be signing the two documents. India was represented by H.E. Mr. B.S. Prakash, Ambassador of India to Brazil.
Source: http://www.eepcindia.org/
CUSTOMS REGULATIONS ? Customers presence is not required for Customs clearance ? Used household goods and personal effects in reasonable quantities may be imported dutyfree if owned for more than six months ? If two shipments are sent, the second shipment must arrive no later then six months after the first ? Shipments are physically inspected DUTIABLE/RESTRICTED ITEMS ? New items less then six months old (Commercial Invoice required) ? Food and beverages ? Electronic and electrical items are dutiable (load near container door for easy access) ? Antiques ? Portable phones must be approved by the Ministry of P.T.T. ? Medicine (permit from Ministry of Health required) ? Weapons and ammunition (hunting permit and firearm acquisition certificate required). Only smooth-barreled hunting weapons are permitted. ? Books, records and cassettes and compact disks o A list must be provided stating the title and name of author for each item o These items will be viewed by the Ministry of Information before a censorship visa is granted. Place any dutiable/restricted items near container doors for easy access. PROHIBITED ITEMS ? Moroccan currency ? Pornographic and politically sensitive material ? Narcotics and drugs ? Walkie-talkies ? Alcoholic beverages and tobacco products ? Explosives PETS
?
Health Certificate, dated not more than 14 days before departure, is required
Source: restricted items - customs regulation in morocco.docx
DOING BUSINESS PROFILE,M OROCCO
TOPIC RANKINGS DB 2011 Rank DB 2010 Rank Change in Rank 82 76 -6 Starting a Business 99 1 Dealing with Construction Permits 98 124 123 -1 Registering Property 89 87 -2 Getting Credit 154 165 11 Protecting Investors 124 122 -2 Paying Taxes 80 75 -5 Trading Across Borders 106 106 No change Enforcing Contracts 59 68 9 Closing a Business Sources: http://www.doingbusiness.org/data/exploreeconomies/morocco
THE GLOBAL ENABLING TRADE INDEX 2010, M OROCCO
Source:http://www3.weforum.org/docs/WEF_GlobalEnablingTrade_Report_2010.pdf
M AJOR TRADING PARTNERS OF MOROCCO (2008)
Others 23%
Others 25%
Pakistan 2% US 4% Brazil 5% India 7%
Export s
EU 27 59%
Import
Russian Federation 5% US 5% EU 27 52% China 6% Saudi Arabia 7%
350,000.00 300,000.00 250,000.00 200,000.00 150,000.00 100,000.00 50,000.00 0.00 2005-2006 2006-2007 2007-2008 149,165.73 126,414.05 103,090.53 185,735.24 251,654.01
303,696.31
288,372.88
185,295.36 163,132.18
178,751.43
India's Total Export India's Total Import
2008-2009
2009-2010
MOROCCO’S EXPORT TO INDIA (MILLION DIRHAM)
PRODUCTS Phosphoric Acid Phosphates Natural And Chemical Fertilizers Scrap, Waste, Scrap Iron And Steel Waste And Scrap Copper Alloy Or Not Lead Ore Hides And Skins Crude Lead Cotton Fabrics Plants And Parts Of Plants Agar Algae Son And Cables For Electricity Liege Gross Developed And SemiParts Pr Passenger 2009 4 457.9 642.1 628.5 33.3 24.3 14.4 10.4 8.4 6.2 5.6 1.5 1.2 1.1 1 0.6
MOROCCO’S IMPORT FROM INDIA (MILLION DIRHAM)
PRODUCTS Gas Fuels And Oils Oils Radio Receivers And Television Cameras Son Of Synthetic Fibers, Weaving For Artificial Son Of Cotton Weaving Passenger Chemicals Plastic Artificial Drugs Domestic Refrigerators Tractors Tobacco Synthetic Fibre Disinfectants Petroleum Gas And Other Hydrocarbons Pumps And Compressors Cotton Fabrics Fabrics Of Synthetic Fiber And Artificial Miscellaneous Machinery Tubes And Pipes Of Iron And Steel Colouring Matters Garments Manufactured Spices Pneumatic Tyres, Inner Tube Car Indus Pr Piston Motors And Other Engines Hides And Skins Parfumeries Household Hardware Son, Bar, Sheet Piling, Iron And Steel Profiles 2009 497 351 309 203 184 138 132 96.4 92.6 70.9 55.4 51.1 49.5 48.4 38.3 36.3 36 31 27.6 22 21.1 20.3 20.3 20.2 18.8 15.4 15.1 14.8
M OROCCO’S IMPORT (WEIGHT & VALUE )
Morocco‘s Import
Product
2008
Weight (Kg) Value (MN DH)
2009
Weight (Kg) Value (DH)
08 - 09
Weight(%) Value(%)
FOOD, BEVERAGES AND TOBACCO ENERGY AND LUBRICANTS PRODUCTS CRUDE ANIMAL AND PLANT GROSS PROCEEDS OF MINERAL ORIGIN HALF PRODUCTS FINISHED GOODS FOR AGRICULTURAL EQUIPMENT FINISHED GOODS INDUSTRIAL EQUIPMENT CONSUMPTION OF FINISHED PRODUCTS OR INDUSTRIAL TOTAL
8477827068 16074884678 2228308892 3583704968 6566706146
31863608479 72714895721 12647169952 14037448434 69488682712
7147663083 16799838787 2052299722 2706597694 6534264496
24253367680 54171842761 10442219495 3180303905 53636758399
15.7 4.5 7.9 24.5 0.5
23.9 25.5 17.4 77.3 22.8
63969579 799506321 953267471 19869 38748194992
3670294660 67986978745 53524512926 108651574 326042243203
69366799 771545661 1068763636 286 37150340164
3260235179 63510409187 52681076948 51984697 265188198251
8.4 3.5 12.1 98.6 4.1
11.2 6.6 1.6 52.2 18.7
Source : http://www.oc.gov.ma/EVOLUTIONS/EVOL_GU/EVOL_GU.asp
ENGINEERING GOODS (MOROCCO PERSPECTIVE)
Morocco is a fairly stable economy with continuous growth over the past half-a-century. It is considered liberal economy governed by the laws of supply and demand. The economic system of the country presents several facets. It is characterized by a large opening towards the outside. Bilateral trade between India and Morocco was to the tune of US$583.88 million during 2005-06 showing an increase of 23.02% over previous year and the figures for 2006-07(April-December) touched US$500.00 million. As far as India engineering export to Morocco is concerned, it is showing an increase of 36.47% during 2005-06 over the performance in previous year and 23.00 % increase during 2006-07 over the performance during 2005-06. Inspite of continuous growth in India.s engineering export to Morocco, our share remains less than one percent i.e. 0.63% of total engineering imports into Morocco. Hence, there is good scope for enhancing India.s engineering export to Morocco. M AJOR OPPORTUNITIES IN M OROCCO Morocco with an economy which is considered relatively liberal, has sought in recent years to create an environment more favourable to the development of industrial activities, mainly in subcontracting. It has clocked steady yearly growth in the region of 4%-5% from 2000 to 2007 and estimated GDP for 2007 is US$ 75.12 billion. Morocco's industrial sector, accounting for around 25% of GDP, has diversified its technical capacities and increased its know-how significantly, presenting an offer today of subcontracting and particularly an attractive market of capital goods and industrial supplies, with emergence of industrial clusters in advanced and demanding sectors such as automotive, aerospace, electronics, mechatronics as well as in more traditional sectors such as mechanical engineering, metallurgy, plastics which have experienced a remarkable expansion.
Source: India Pavilion at SISTEP, 2009, Morocco.pdf, Page No. 1.EEPC.
LIST OF POTENTIAL PRODUCTS 1. Complete Vehicles (Cars, Trucks, Buses etc.) 2. Automobile Components and Accessories 3. Pipes, Tubes and Hollow Profiles of Iron and Steel & Fittings thereof 4. Flat Rolled Products of Iron & Steel 5. Hot Rolled Bars and Rods of Steel 6. Stranded Wire, Ropes and Cables 7. Table/Kitchenware and other domestic articles of Iron & Steel 8. Electrical Machinery & Equipment including Transformers, Static Converters etc. 9. Other Industrial Machinery having individual functions 10. Pumps and Accessories 11. IC Engine and Parts 12. Refrigerators, Freezers and other Refrigerating & Freezing Equipment 13. Medical and Surgical Instruments 14. Laboratory Equipment 15. Bearings 16. Hand Tools
17. Industrial Fasteners 18. Tractors 19. Machinery (particularly agricultural, food processing and printing) 20. Dish Washing Machines, Grinding Machines and Machines for filling, closing, sealing, labeling boxes, bags/containers etc.
Source: Engineering Export Info-Bulletin, Vol. 9, Issue No. 37. Page No. 11 Delegation Profile Algeria & Morocco.pdf.
PRODUCTS IN FOCUS Metal: 1. Machine tools and equipment 2. Metal surface treatment & finish equipment 3. Welding machines and additional materials 4. Machines and equipment for fine mechanics and optics 5. Metal processing (machining, cutting, special machines, forging, foundry, boiler making, sheet metal, semi-finished products, etc.) M ATERIALS AND COMPONENTS FOR MECHANICAL ENGINEERING: 1. 2. 3. 4. 5. 6. 7. 8. Metallurgical semi-products, forgings, pressings, castings, and work pieces Connecting materials fittings Industrial fasteners Steel and tube structures Vessels and tanks Seals and bearings Auto components Lubricating technology
M ACHINERY AND ACCESSORIES FOR: 1. Packing and printing 2. Material handling 3. Vehicle manufacturing and automotive technology 4. Automation technology 5. Environmental technology 6. Plastics & rubber processing 7. Auto components 8. Lubricating technology 9. Chemical industry 10. Lubricants, oils, coating compositions 11. Cements 12. Adhesives & chemicals for industrial products.
Source: India Pavilion at SISTEP, 2009, Morocco.pdf, Page No. 1-2. EEPC
SISTEP 2009 SISTEP is a major exhibition for subcontracting, procurement and partnership, bringing together suppliers, purchasers and service providers. It is organized by the Federation of Metallurgical, Mechanical, Electrical & Electronic Manufacturers Association (FIMME) of Morocco and National Stock Exchange of Subcontracting & Partnership (BNSTP) of Morocco. Morocco provides a get-way to the North African and European Union Markets due to geographical proximity and free trade agreements with the EU, the U.S., the Maghreb countries, Saudi Arabia, the UAE, West African Economic and Monetary Union (UEMOA), Turkey, Egypt and Jordan. For 16 years, the exhibition showcases SISTEP of outsourcing to the Maghreb. By joining forces with Reed Exhibitions, the world's leading organizer of trade shows, and the BNSTP FIMME to endow the experience of an international group and its specific experience that gives the organization MIDEST, No. 1 worldwide exhibitions of industrial subcontracting, which recently celebrated its 40 years of service to industry professionals. SISTEP MIDEST be held simultaneously at MIMA living within the emerging events industry. The ambition of emergence industry part of a larger movement to transform the conomy and industry in Morocco. On February 13, 2009 has been signed a National Pact for the Emergence of Industrial. His goal: to create, by 2015, 220,000 jobs and redraw the industrial landscape of the country. The Pact has also established seven core businesses of Morocco which are the sectors driving growth and key investment priority: offshoring, automotive, electronics, aerospace, textiles and leather, agro-industry, processing of seafood ENGINEERING CONTRACTS
One Can get Information of Major Engineering Contradts from dgmarket.com
Country Morocco Morocco Morocco Morocco Morocco Morocco Morocco Morocco Morocco Morocco Morocco Morocco Notice Title List of signed contracts Services incidental to agricultural production Type ca rfp Published Feb 1, 2011 Feb 1, 2011 Feb 1, 2011 Jan 19, 2011 Jan 18, 2011 Jan 18, 2011 Jan 6, 2011 Nov 30, 2010 Nov 30, 2010 Oct 18, 2010 Aug 2, 2010 Mar 22, 2010 Nov 25, 2011 Mar 2, 2011 Deadline Mar 15, 2011 Mar 15, 2011
MA-Rabat: ENPI — monitoring of the EU programme to support pin sector-based agricultural policy in Morocco Drinking-water distribution rfp Works for complete or part construction and civil engineering work pp General Procurement Notice pp
Construction work pin MA-Rabat: Morocco - Rabat: Strengthening of Management Unit pin for Second National Rural Roads Programme (PNRR2) (EIB) Water distribution pin Construction work MA-Ouarzazate Concentrated Solar Power AVIS GENERAL DE PASSATION DES MARCHES pin pin pin
Source: http://www.dgmarket.com/
ENGINEERING GOODS (INDIAN PERSPECTIVE)
In 2008, India?s goods export touched USD182 billion (CAGR of 23% over 2004–2008), with its engineering exports contributing 21.49% of its total exports of goods, reaching USD43.13 billion (a CAGR of 30% over 2004-2008). However despite the high growth achieved in the recent years, India?s engineering export share is still lower than other major India-like countries like Brazil, China, Russia, Mexico and Thailand. It indicates that India has not been able to completely exploit its multitude of advantages in terms of engineering skills, a burgeoning domestic market, an established raw material base and availability of a large pool of skilled labor. Ernst & Young was commissioned to conduct a study to chart a growth path for engineering exports from India for the period 2010-2014 and to identify initiatives that have to be undertaken by the government, EEPC India and the engineering exporters to achieve the desired growth. The study sets an achievable aspiration of tripling India?s engineering exports by 2014 to reach a size of USD110 billion. To achieve this aspiration, Indian engineering exports would have to show an annual growth rate of 22-25% in the period 2010-2014. India ranks 30th with a 0.8% share of world engineering exports in 2008. This low position is primarily attributable to three factors: 4. Low export-to-GDP ratio ((export-to-GDP ratio of 15% vis-à-vis 27% for other Indialike countries) 5. Low engineering-to-export ratio (engineering export-to-total export ratio of 24% vis-àvis 30% for other India-like countries) 6. Low technology intensity of engineering export (share of high and medium technology engineering exports - 62% for India vis-à-vis 71% for other India-like countries To realize this aggressive but achievable aspiration, concerted effort needs to be put in by the government, the council and exporters. The key imperatives for India include 4. Enhancing the alignment and effectiveness of trade drivers, 5. Boosting the competitiveness of the Indian engineering industry and facilitating upward movement along the value chain, 6. and strengthening enablers for growth by clearing infrastructural and procedural bottlenecks. These estimations and imperatives for the future growth of Indian engineering exports have been distilled from Ernst & Young‘s comprehensive analysis of previous year‘s trade data (2004–2008) at the product and market levels, substantiated and supplemented by insights from exporters, industry experts and secondary sources. GLOBAL ENGINEERING EXPORTS When compared to non-engineering exports, engineering exports have grown at a relatively lower CAGR of 12.7%.Germany is still the top engineering exporter with a share of 15% and is faced with strong competition from China which has become the second largest exporter in the world.
India‘s emergence as a low-cost manufacturing hub has aided the strong growth of engineering exports from the country. During 2004–2008, India leapfrogged Australia, South Africa, Ukraine and Malaysia to become the 30th largest exporter of engineering goods in the world. A key determinant of every country‘s export performance is its export product portfolio in terms of the technology* used in its products, e.g., High Technology (HT), Medium Technology (MT), Low Technology (LT) and Resource- based (RB). India is ranked below most India-like countries on the technology intensity of its engineering exports, which indicates their low level of value addition as compared to such exports from other India-like countries. However, the share of technologyintensive products1 (HT and MT) in India‘s engineering exports has increased from 50% in 2004 to 68% in 2008, indicating upward movement along the value chain. PRODUCT ANALYSIS: INDIAN ENGINEERING EXPORTS The entire set of 1655 engineering products have been mapped by their past export share and growth performance from a global and Indian perspective. Based on their performance in India‘s
exports vis-à-vis that in the world‘s exports, engineering products have been classified into the Core, Leader, High-Potential and Striver categories The Core, Leader and High-Potential framework helps us to evaluate our relative strengths. While the country‘s performance in the Core product category has been strong, it has not performed well in High-Potential products. On the other hand, competition is less in Leader products, and consequently, India‘s relative performance is stronger in this category. EXPORT PERFORMANCE Exports during June, 2010 were valued at US $ 17745 million (Rs. 82632 crore) which was 30.4 per cent higher in dollar terms (27.1 per cent higher in Rupee terms) than the level of US $ 13606 million (Rs.64996 crore) during June, 2009. Cumulative value of exports for the period April-June
2010 was US $ 50777 million (Rs 231743 crore) as against US $ 38396 million (Rs. 187218 crore) registering a growth of 32.2 per cent in Dollar terms and 23.8 per cent in Rupee terms over the same period last year. ENGINEERING EXPORTS DOWN BY 15.74 % DURING MARCH 2010 According to the provisional data available from DGCI&S up to March 2010, India‘s exports of engineering goods have posted a negative growth of -15.74% In Rs.Cr. (-18.42% In US $ Mln. ) during the financial year 2009-10 in comparison to the same period in the previous fiscal. The provisional data indicate that exports of engineering goods from India have reached Rs 155152.07 Cr (US $ Mln. 32718.7) (As per to R.B.I. data of Exchange Rate) up to March 2010. In the month of March 2010 Exports of Engineering goods were to the tune of Rs. 16316.17 Cr. (US $ Mln. 3586.76). ENGINEERING EXPORTS MAY TOUCH $52 BILLION THIS FISCAL PTI,Feb 18, 2011, 01.44pm IST NEW DELHI: India's engineering exports may touch $52 billion in value terms during the current fiscal as the shipments have surpassed the projected target of $42 billion, largely on increasing demand from the US and Latin American markets. "We expect the engineering export to touch USD 52 billion mark in the current financial year as it has touched USD 45 billion mark in the first 10 months of 2010-11," the Engineering Exports Promotion Council (EPCH) Executive Director R Maitra said. He added there is a good demand for engineering goods such as machineries, hand tools and machine tools from markets like the US, Middle East and Latin America. Source : http://articles.economictimes.indiatimes.com/2010-08-22/news/27614575_1_engineering-exportsdependence-on-traditional-markets-heavy-engineering-goods
IN COMPARISON TO CUMULATIVE EXPORT PERFORMANCE IN 2008-09 What’s up: Non-ferrous metals, Aluminum other than products. What’s down: Transport equipment, Machinery & instruments, Manufactures of metals, Primary & semi-finished iron & steel, Ferro alloys, Iron & steel bar/rods, Machine tools, Residual engineering items, Mica.
Sr. No. Thrust Identified Thrust Product Products (Existing / New) Total (India’s Engineering Exports) Total (India’s Thrust Product Exports) India’s Thrust Product Exports as % of India’s Engineering Exports Total (World Engineering Imports) India's Exports as % of World Engineering Imports Product Category Product/ Product Sub-category 2004-05 2005-06 2007-08 2009-10
13,296 4,822 36% 2,899,118 0.46%
15,542 6,178 40% 3,006,385 0.52%
20,488 8,946 44% 3,232,973 0.63%
27,415 13,019 47% 3,476,639 0.79%
Source: UNCTAD PCTAS Database for 1998-2002, EEPC 2003, AFF Estimates, A. F. Ferguson & Co.Management Consultancy Division.
EXPORT VALUE AND VALUE ADDITION M ATRIX FOR INDIA’S ENGINEERING EXPORT
Source: India’s engineering export value based on EEPC data for 2003-04 (estimates)exe-summary-startegy-paper.pdf, page no. 14. Note: (I) Numbers in circles above represent re-classified group of categories as detailed below; (1) Tractors and Agriculture Equipment; (2) Electric Power Equipment and Parts, Wires and Cables and T. L. Towers; (3) Wagons/ Coaches and Locomotives, Coastal Vessels and Ships, Air-crafts and Aerospace Equipment; (4)Commercial Vehicles (Passenger Cars, Trucks and Buses); (5) Two/ Three Wheelers; (6) Other Capital Goods (Heating/ Cooling Equipment, Other Structur es, Other Industrial Machinery, Freight Containers, Machine Tools); (7) Steel Pipes and Tubes, Ropes and Wires, Bolts/ Nuts and Screws, Electrodes , Railway Track Material; (8) Industrial/ Sanitary Casting, Forgings; (9) Prime Iron and Steel (including Pig Iron); (10) Other Iron and Steel Items (Bright Bars, SS Utensils, Razor Blades, Steel furniture, Hollowware, Other Steel Products NOS, Ferro Alloys; (11) Aluminium Metals and Products thereof; (12) Other Non-Ferrous Metals and Products thereof'; (13) Auto Parts; (14) Bicycle and Parts; (15) Hand/ Cutting Toolsand Files; (16) Engines, Compressors and Mechanical Pumps; (17) Other Consumer Durables (ElectricFans and Parts, Mica an d Mica Products, Office Equipment, Dry/ Storage Batteries, Sewing Machines/Needles, Electric Manufactured NOS, Scientific/ Surgical Instruments, Miscellaneous Manufactured Articles; (18) Management and Technical Services (II) Scale represented above for India’s engineering exports is non-linear.
ENGINEERING GOODS IN FTP 2009-2014
In the last five years India‘s exports witnessed robust growth to reach a level of US$ 168 billion in 2008-09 from US$ 63 billion in 2003-04. Our share of global merchandise trade was 0.83% in 2003; it rose to 1.45% in 2008 as per WTO estimates. Our share of global commercial services export was 1.4% in 2003; it rose to 2.8% in 2008. India‘s total share in goods and services trade was 0.92% in 2003; it increased to 1.64% in 2008. On the employment front, studies have suggested that nearly 14 million jobs were created directly or indirectly as a result of augmented exports in the last five years The short term objective of our policy is to arrest and reverse the declining trend of exports and to provide additional support especially to those sectors which have been hit badly by recession in the developed world. We would like to set a policy objective of achieving an annual export growth of 15% with an annual export target of US$ 200 billion by March 2011. In the remaining three years of this Foreign Trade Policy i.e. upto 2014, the country should be able to come back on the high export growth path of around 25% per annum. By 2014, we expect to double India‘s exports of goods and services. The long term policy objective for the Government is to double India‘s share in global trade by 2020. The Government seeks to promote Brand India through six or more ?Made in India‘ shows to be organized across the world every year. In the era of global competitiveness, there is an imperative need for Indian exporters to upgrade their technology and reduce their costs. Accordingly, an important element of the Foreign Trade Policy is to help exporters for technological upgradation. Technological upgradation of exports is sought to be achieved by promoting imports of capital goods for certain sectors under EPCG at zero percent duty. Market Diversification Weaker demand in developed economies, triggered by falling asset prices and increased economic uncertainty has pulled down the growth of India‘s exports to developed countries. There are no clear signals as to when the markets in developed countries would revive. To insulate Indian exports from the decline in demand from developed countries, in this Policy focus is on diversification of Indian exports to other markets, specially those located in Latin America, Africa, parts of Asia and Ocenia. To achieve diversification of Indian exports, following initiatives have been taken under this Policy. 1) Focus Market Scheme 2) Market Linked Focus Product Scheme: There has been a significant increase in the outlay under ?Market Linked Focus Product Scheme‘by inclusion of more markets and products. This ensures support for exports to all countries in Africa and Latin America
ENGINEERING TRADE BY TRADE BLOCKS
The analysis of engineering product imports by various trade blocks and India‘s export relation with them (in respect of engineering products) were used in supporting the finding of Thrust Product and Thrust Market analysis. ASEAN In the ASEAN context, the following observations deserve consideration: Marginal Indian Presence In 2003, India‘s engineering exports are just over 1% of the total ASEAN engineering imports from outside the block. Intra-ASEAN trade In 2003, the intra-ASEAN trade stood at only US $ 32 Bn compared to ASEAN‘s imports of US $ 107 Bn from the rest of the world. This signifies that there exists significant potential for exports/trade in the region. Therefore, it is critical that India gives serious consideration to trade arrangements with ASEAN. NAFTA In the NAFTA context, the following observations deserve consideration Marginal Indian Presence In 2003, India‘s engineering exports was 0.49% of the total NAFTA engineering imports from outside the block. Intra-NAFTA trade In 2003, NAFTA‘s within block imports accounted for 46% of its total imports. Thus, NAFTA in itself is a significant market. This free trade area is indeed a challenging entry barrier to any geography looking at trade opportunity. Its imports from outside the block accounted for one-sixth of the world imports. India‘s share at 0.26% of this presents the need for growth. Product Export Opportunity Automobile Parts, Instruments All Types, Electric Power Equipment Parts, Prime Iron and Steel make up for close to 31% of India‘s engineering exports to NAFTA. The following product categories present opportunities for growth owing to the marginal presence in import basket of NAFTA. 3 Industrial Castings 3 I.C. Engines and Parts 3 Commercial Vehicles: NAFTA‘s imports from outside the block stood at 20.5% in 2002,while India‘s exports were negligible. European Union (EU) In the context of EU, the following observations deserve consideration Marginal Indian Presence In 2003, India‘s engineering exports accounted for 0.71% of the total EU engineering imports from outside the block. This marginal presence could be increased by focus on thrust products. Intra-EU trade In 2003, EU‘s within block imports accounted for 67% of its total imports. This much magnitude of free trade area is indeed a challenging entry barrier to any geography looking at trade opportunity here. Thus, it is important that India focuses on thrust products to increase market share. EUROPEAN UNION (EU) In the context of EU, the following observations deserve consideration: - % of Marginal Indian Presence In 2003, India‘s engineering exports accounted for 0.71% of the total EU engineering imports from outside the block. This marginal presence could be increased by focus on thrust products. % of Intra-EU trade in 2003, EU‘s within block imports accounted for 67% of its total imports. This much magnitude of free trade area is indeed a challenging entry barrier to any geography looking at trade opportunity here. Thus, it is important that India focuses on thrust products to increase market share.
INDIAN ENGINEERING SECTOR: NEED FOR MORE FOCUS
The engineering industry is the largest segment of the Indian industrial sector. It accounts for 3 per cent of India‘s GDP with a 30.5 per cent weight in the index of industrial production (IIP); 29.9 per cent share of total investment; and 62.8 per cent share in foreign collaborations. Engineering exports are one of the largest foreign exchange earners for the country and account for over 20 per cent of India‘s total exports with around 35 per cent of the engineering exports contributed by the micro, small, and medium enterprises (MSME) sector. India‘s export of engineering goods grew at 25.2 per cent (CAGR) during 2000-01 to 2007-08. In 2008-09, the growth moderated to 18.7 per cent and in 2009-10 it declined by 19.6 per cent because of global recession, with its share in total exports falling to 18.2 per cent. In the first half of 2010-11, there was a robust growth of 46.0 per cent partially due to base effect and partially due to global recovery following stimulus measures. The performance of principal categories of engineering items export shows that in 2009-10, all the major categories of engineering goods had negative growth. In the first half of 2010-11, all the major categories like machinery, iron and steel, and other engineering goods registered high growth with the major sub-categories like transport equipment, primary and semi-finished iron and steel, non-ferrous metals and manufactures of metals registering whopping growths of 61.8 per cent, 65.0 per cent, 61.5 per cent, and 40.3 per cent respectively. Only one major sub-category, i.e. machinery and instruments registered moderate growth of 10.5 per cent (see Table 1) EXPORT PERFORMANCE OF DIFFERENT ENGINEERING GOODS
Share in India’s Total Exports(%) Engineering Categories 2008-09 2009-10 2009-10 (Apr.Sept.) 12.5 0.2 5.7 6.7 1.9 0.4 1.5 5.1 0.4 0.3 1.0 3.3 0.1 19.5 2010-11 (Apr. Sept.) 13.3 0.1 4.8 8.3 2.3 0.4 1.9 6.2 1.0 0.3 1.3 3.6 0.1 21.8 Growth Rate (%) 2009-10 2010-11 (Apr. Sept.) -13.3 -26.4 -13.3 -12.9 -39.2 -34.2 -40.4 -21.7 -43.1 11.3 5.4 -27.2 -5.9 -19.6 37.7 -1.2 10.5 61.8 63.9 59.1 65.0 59.8 229.4 63.5 61.5 40.3 37.6 46.0
1) Machinery a) Machine Tools b) Machinery & Instruments c) Transport Equipment 2) Iron & Steel a) Iron & Steel Bar Rods, etc b) Primary & Semi-finished Iron & Steel 3) Other Engineering Items a) Ferro Alloys b) Aluminium other than Products c) Non-ferrous Metals d) Manufacture of metals e) Residual Engineering Items To tal Engineering Exports
12.2 0.2 5.9 6.1 3.2 0.6 2.6 6.4 0.8 0.3 1.1 4.1 0.1 21.8
11.0 0.2 5.3 5.5 2.0 0.4 1.6 5.2 0.5 0.3 1.2 3.1 0.1 18.2
Source: DGCI&S The major markets for Indian engineering exports are the USA, Singapore, UAE, UK, China, Germany, and Italy. Notably, while there was a fall in growth of India‘s engineering exports to most of the markets in 2009-10, its engineering exports to China grew by over 62 per cent. With a 0.8 per cent share of world engineering exports in 2008, India ranks 30th—below all comparable countries— in the global engineering exports market. This low position is primarily attributable to three factors: 1) Low exports- to-GDP ratio: exports-to-GDP ratio of 15 per cent for India vis-à-vis 27 per cent for comparable countries
2) Low engineering-to-total exports ratio: engineering exports to total exports ratio of 24 per cent for India vis-à-vis 30 per cent for comparable countries 3) Low technology-intensity of engineering exports: share of high and medium technology products in engineering exports is 62 per cent for India vis-à-vis 71 per cent for comparable countries. Given India‘s current low share of world engineering exports and the significant scope for improvement in competitiveness, there is potential for achieving higher growth in this major sector of world trade. Source – Page No 166 , echap-07 - International Trade.pdf
Trade Policy Measures
Market and Product Diversification and Expansion of Markets: Additional benefit of 2 per cent bonus, over and above the existing benefits of 5 per cent / 2 per cent under the FPS allowed for about 135 existing products, which have suffered due to recession in exports. Major sectors include all handicrafts items, silk carpets, toys and sports goods (all of which were earlier eligible for 5 per cent benefits); leather products and leather footwear, handloom products, and some of engineering items including bicycle parts and grinding media balls (all of which were earlier eligible for 2 per cent benefit). 256 new products added under the FPS (at eight-digit level), which became entitled for benefits at 2 per cent of FOB value of exports to all markets. Major sectors / product groups are engineering, electronics, rubber and rubber products, other oil meals, finished leather, packaged coconut water, and coconut shell worked items. The services negotiations at the WTO have been rejuvenated after the G-20 Meeting. Substantive interest has been evinced by all members to intensify the negotiations to make use of the limited window of opportunity (2011) to conclude the negotiations. As a part of the plurilateral process (where more than two countries are involved), 22 plurilateral groups have been formed at the WTO in service sectors/ modes. India is the coordinator of the plurilateral requests in Mode 1 (cross-border supply) and Mode 4 (Movement of Natural Persons) - the core areas of its interest in the services negotiations. India is also co-sponsor of plurilateral requests in computer and related services (CRS) and architectural, engineering and integrated engineering services.(pg 182)
Trade Policy Reforms : Some Challenges for the Medium and Long Term Challenge of real diversification of India’s exports: While India has diversified its export basket as well as export markets over the years, substantial diversification in tune with world demand has not taken place. This can be seen by matching India‘s exports with the top 100 imports of the world at the six-digit HS level. The exercise based on PCTAS data 2010(data for 2008) shows that India‘s presence in these top items of world demand is negligible except for a few items such as diamonds and jewellery, oil cakes, t-shirts, mens/boys trousers, flat rolled iron products, and maize (corn). There are many electronic, electrical, and engineering items (the three Es) in the top 100 imports of the world where India‘s presence is negligible.
EXPORT OF ENGINEERING GOODS & SERVICES DURING 2008-09 TO 2009-10
SL. A B C D GROUP-WISE EXPORT CAPITAL GOODS CONSUMER DURABLES NON-FERROUS METALS THEREOF TOTAL A. CAPITAL GOODS 2 - 3 wheeler Aircraft & Spares Boiler & Parts Cement Mill Machinery Coastal Vessels & Ships Commercial Vehicles Cranes, Lifts & Winches Electric Power Equipments & Parts Electric Wires & cables Fencing Structures Food Processing Machinery & Parts Freight Containers Heating & Cooling Equipments Knitting Machinery Machine Tools Other Chemical Plant Other Construction Machinery Other Industrial Machinery Sugar Machinery & Parts Textile Jute Mill Machinery Tractors & Agricultural Equipments Transmission Line Towers & Parts Wagons Coaches & Locos TOTAL OF "A" & PRODUCTS 3535.49 13464.57 41582.49 2008-09 487.71 1402.18 418 2 3715.56 3050.2 155.67 3669.83 416.1 400.3 257.44 14.98 332.21 14.11 375.15 763.25 668.14 1147.5 25.38 121.96 576.51 185.3 44.67 18244.15 3460.85 8640.14 33738.65 2009-10 589.09 1005.04 376.19 4.54 2554.31 3565.38 137.86 3222.59 287 354.65 271.09 6.67 283.06 8.23 276.51 738.04 739.81 798.32 14.91 109.99 481.87 158.78 29.38 16013.31 -2.11 -35.83 -18.86 Growth % 20.78 -28.32 -10 127 -31.25 16.89 -11.44 -12.19 -31.02 -11.4 5.3 -55.47 -14.79 -41.67 -26.29 -3.3 10.72 -30.5 -41.25 -9.81 -16.42 -14.31 -34.22 -12.22 2008-09 18244.15 6338.28 2009-10 16013.31 5624.35 Growth % -12.22 -11.26
PRIMARY IRON & STEEL & ITEMS THEREOF
B.
CONSUMER DURABLES Accumulator Air Compressor Automobile Parts Bicycle & Parts Cutting Tools Dry Batteries Electric Fan & Parts Electric Manufacturers N.O.S. Hand Tools I.C. Engine & Parts Instruments All Types Misc. Manufacturers N.O.S Office Equipments Prime Mica & Mica Products Pumps Sewing Machines and Needles etc. Stainless Steel Utensils Steel Files TOTAL OF "B" NON-FERROUS THEREOF METALS & PRODUCTS
2008-09 106.08 152.34 1808.84 209.3 207.92 15.74 144.03 344.72 196.48 1067.79 1011.71 146.3 56.46 236.51 390.36 26.14 189.64 27.92 6338.28
2009-10 93.07 107.21 1517.22 148.76 186.14 63 130.41 285.68 149.45 919.45 1034.83 139.57 60.44 204.46 341.51 28.44 192.18 22.53 5624.35
Growth % -12.26 -29.62 -16.12 -28.92 -10.48 300.25 -9.46 -17.13 -23.94 -13.89 2.29 -4.6 7.05 -13.55 -12.51 8.8 1.34 -19.31 -11.26
C.
2008-09 1165.18 2370.31 3535.49
2009-10 1042.08 2418.77 3460.85
Growth % -10.56 2.04 -2.11
Aluminium & Products Thereof Other Non Ferrous Metal & Products TOTAL OF "C"
D.
PRIMARY IRON & STEEL & ITEMS THEREOF Bolts & Nuts (Fasteners) Bright Bars Electrodes Ferro Alloys Ferrous Holloware Ferrous industrial castings Other Steel Products N.O.S Prime Iron & Steels Railway Track Materials (Fasteners) Razor Blades Sanitary Castings Steel Forgings Steel Furniture Steel Pipes & Tubes Steel Wire Steel Wire Ropes Wire Nails Nettings & Stranded Wires
2008-09 334.84 519.51 30.97 1546.81 422.41 639.78 819.06 5235.44 9.5 45.47 605.82 548.58 40.72 2275.32 237.44 61.53 91.37
2009-10 246.93 182.59 23.22 880.41 400.75 521.35 597.53 3282.63 6.48 50.14 440.02 354.86 34.55 1344.15 167.91 37.58 69.04
Growth % -26.25 -64.85 -25.02 -43.08 -5.13 -18.51 -27.05 -37.3 -31.79 10.27 -27.37 -35.31 -15.15 -40.92 -29.28 -38.92 -24.43
TOTAL OF "D"
13464.57
8640.14
-35.83
Source: http://www.eepcindia.org/export-statistics-dollar.asp
EXPORT PERFORMANCE M ONITOR
Export Performance of Principal Commodities: for March - 2010 Cumulative % change Exports over (09-10) 2008-09 47193.05 45325.81 26296.59 13640.72 10318.06 4142.87 3477.68 2643.73 1330.36 651.00 132.20 155152.07 -8.00 -9.96 -24.25 -37.35 11.45 -39.77 -30.54 13.22 -22.76 -2.39 -2.91 -15.74 (Figures in Rs cr) %change in % change in March-10 March 10 over over March 09 February- 10 42.93 24.62 21.58 8.90 23.49 5.25 89.75 21.19 124.73 15.30 15.36 39.35 25.09 29.65 34.92 23.75 131.76 108.03 76.94 151.73 102.93 46.88 77.50 23.76
Principal Commodity Transport equipment Machinery & instruments Manufactures of metals Primary & semi-finished iron & steel Non-ferrous metals Ferro alloys Iron & steel bar/rods Aluminium other than products Machine tools Residual engineering items Mica Grand Total
Source: DGCI&S Provisional Data, Statistics Department, EEPC INDIA Head Office – July 2010 Release Page No. 2
TOP DESTINATIONS: 2009 – 10 Export performance to Top 20 Destinations for March 2010
Cumulative Exports 09- 10 15857.54 10359.46 9545.43 7309.14 6880.53 6606.47 5509.68 4672.88 3615.65 3473.83 3405.90 3319.29 2950.41 2778.49 2751.75 2718.79 2607.21 2567.29 2337.45 Exports March 10 2182.61 1200.63 1092.78 574.79 453.25 623.14 511.75 434.65 268.10 253.46 327.61 349.87 419.41 315.02 491.58 229.20 200.13 236.18 240.68 %change March‘10 over Feb'10 34.54 204.78 91.74 -0.55 -12.32 18.97 25.19 58.37 10.91 45.66 40.81 57.54 53.39 10.68 100.19 0.58 -14.81 315.97 17.25 %change March‘10 over March‘ 09 40.30 65.34 38.74 -7.20 -44.57 -29.99 52.67 168.70 24.04 24.23 56.11 25.26 180.43 14.31 341.35 -32.60 1.07 29.70 68.69
Importing Country
% change over 08-09
Rank 08-09
Rank 09-10
USA SINGAPORE UAE UK CHINA P RP GERMANY ITALY MALAYSIA INDONESIA NETHERLAND FRANCE SAUDI ARAB KOREA RP NIGERIA SRI LANKA DSR IRAN BANGLADESH PR NEPAL THAILAND
-31.81 -10.72 -31.22 -13.57 67.71 -20.01 -6.13 -39.66 42.06 -30.61 -1.41 -45.28 -6.35 -11.85 5.80 -5.06 10.67 41.72 -19.12
1 3 2 4 11 5 8 6 18 9 12 7 14 13 17 16 20 29 15
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19
SOUTH AFRICA
2302.69
4.32
266.84
22
20
35.65
127.24
Source: DGCI&S Provisional Data, EEPC Member Returns, Statistics Department, EEPC INDIA Head Office– July 2010 Release Page No. 3
TOP 5 DESTINATIONS : PRODUCT PERFORMANCE
Destinations Substantial Growth USA Heavy Decline NON-FERROUS METALS MANUFACTURES OF METALS ALUMINIUM OTHR THAN PRDCTS PRMRY & SEMI-FNSHD IRON & STEEL FERROUS ALLOYS PRIMARY & SEMI-FNSHD IRON & STEEL RESIDUAL ENGINEERING ITEMS MICA ALUMINIUM OTHR THAN PRDCTS MACHINE TOOLS IRON AND STEEL BAR/ROD,ETC. &FERROUS ALLOY PRIMARY & SEMI-FINSHED IRON & STEEL FERROUS ALLOYS
Singapore
UAE
NON-FERROUS METALS MACHINERRY AND INSTRUMENTS ALUMINIUM OTHR THAN PRODCTS
UK
TRANSPORT EQUIPMENTS MACHINE TOOLS
FERROUS ALLOYS,NON-FERROUS METALS,PRIMARY & SEMI-FINSHD IRON & STEEL ALUMINIUM OTHR THAN PRDCTS
China P RP
Source: DGCI&S Provisional Data, EEPC Member Returns, Statistics Department, EEPC INDIA Head Office – July 2010 Release, Page no. 4.
ALUMINIUM OTHR THAN PRDCTS NON-FERROUS METALS MACHINE TOOLS MACHINERRY AND INSTRUMENTS
TRANSPORT EQUIPMENTS PRMRY & SEMI-FNSHD IRON & STL
Govt targets $120-bn engineering exports by 2015 PTI,Feb 10, 2011, 05.45pm IST NEW DELHI: The government on Thursday said it has set an ambitious target of $120-billion engineering exports by 2015 and emphasised on the need to align policies in that direction. Commerce and Industry Minister Anand Sharma said the country's engineering exports have already reached $40 billion and is expected to touch $50 billion by the end of the current financial year. "We have remained mindful of the fact that we need to align government policies with the ambitious target of tripling India's engineering exports of $120 billion by 2015," Sharma said. The minister was speaking at the Eco-Products International Fair 2011 and International Engineering Trade Fair here. Source : http://articles.economictimes.indiatimes.com/2011-02-18/news/28615519_1_forgings-and-fastenersdependence-on-traditional-markets-engineering-goods
RECOMMENDATION
A key set of imperatives are defined to achieve India?s ambition to almost triple its engineering exports to USD110 billion by 2014. These imperatives cover the entire set of initiatives that need to be undertaken by the government, EEPC India and exporters. Following table depicts the recommendations.
Particulars Exporters Thrust products Striver Products
? Aggressively target big and tough markets to achieve high growth o Big Markets –Comparatively low effort as there is marginal Indian presence o Tough Markets –Comparatively higher effort as India has a negligible presence ? Target niche markets to maintain the existing levels of growth as lower effort is required due to India?s significant presence in these markets ? Focusing on thrust products can enhance the growth prospects
EEPC INDIA
?
Leverage MDA/MAI schemes to enhance growth ? Ensure the selection of thrust products for all relevant events in their thrust markets ? Enhance the publicity of High-Potential products in trade fairs and INDEEs ? Extend the FPS to HighPotential products on a priority basis ? Initiate the TUFS for manufacturers of HighPotential products ? Lower HT+MT imports to enable domestic companies to move up the value chain ? Lower exports in RB products if they offer value added manufacturing opportunities
? Focus on providing informational assistance by identifying relevant trade fairs for participation ? Initiate market study/surveys to enable exporters to effectively target the identified thrust markets ? Launch an aggressive campaign to improve the export orientation of the SME exporters
Government
? Extend the FPS for all the products for the next 5 years to significantly increase their world share ? Remove anti-dumping/ subsidy duties on imported raw materials for cost competitiveness ? Initiate the TUFS for product groups with dominant SME presence ? Enable cheaper credit for SMEs present in these products so as to help them achieve technology and product enhancement
CHANGING SHARE OF I NDIA ’S T HRUST P RODUCTS EXPORTS I N FUTURE
2.42 The share of Thrust Products in India‘s Engineering Products exports is estimated at US$ 4.82 Bn (36%) in 2004-05. With the targeted growth of 15% p.a. in India‘s overall engineering products exports, the share of thrust products is estimated to increase to US$ 13.02 Bn (47%) by 2009-10. Exhibit 2.12 shows the changing share of Thrust Products exports in future. Considering the optimistic potential for exports this share is expected to increase to 52% by year 2009-10.
Exhibit 2.12 Estimated Changing share of Thrust Products Exports as per Target Growth Rate
Products
2004-05
2005-06 2007-08 6.18 8.95
2009-10 13.02
Estimated Thrust Products Exports from 4.82 India (US$ Bn) Estimated total Engineering Products Exports from India (US$ Bn) 13.30 % share of thrust Products Exports 36%
15.54 40%
20.49 44%
27.42 47%
Source: UNCTAD PCTAS Data analysis, EEPC Data 2003, AFF Estimates
Therefore greater focus on exports of thrust products in thrust markets is required vis-à-vis the current approach, i.e. exporting identified thrust products to identified thrust markets with a focus on increasing penetration/ share in thrust product imports of these markets to achieve the overall exports target growth rate. It is important to note that thrust products exports to thrust markets are characterised by a number of factors associated with identified products like; Weight of products- High weight of product means higher freight costs. This leads to geographical limitations for product exports. For example, for metal exports like copper and aluminium, India would have greater competitive advantage in Asian markets vis-àvis Europe and Americas. Standards: Product related standards/ regulations can be a non-tariff barrier for exports of engineering products to a particular country. For example, high level of energy efficiency in electrical products is a key barrier for exports to developed countries. Technology- high technology products are typically demanded by developed economies, which are large markets for such products, while low technology products have relatively limited market size with high degree of competition Based on above considerations, engineering exports in certain thrust markets/ non-thrust markets may be relatively more competitive vis-à-vis other markets and hence, international marketing strategy should be more product and market specific. While increasing the focus on thrust markets, the current markets that are not part of thrust markets (mostly, developing countries) could be also be focussed upon, given that relatively low effort is required to increase exports in these markets as these markets have similar market conditions and product profile as that in India, viz. African countries (like Kenya, South Africa, etc.), SAARC
countries (Nepal, Bangladesh, Sri Lanka, Bhutan), Latin America (key exporting nations are Mexico, Brazil). However, it should be noted that most of these markets do not have significant share of world imports of engineering products.
Engineering Goods Drive Export Arecent strategy paper put out by the department of commerce had targeted doubling India‘s merchandise exports within three years to about $450 billion by 2013-14.The worlds second-fastest growing economy exported goods worth $179 billion in 200910,4% lower than the year before. If global commodity prices moderate quickly with better supply response, it will help reduce inflation pressure faster than expected and keep current account deficit within manageable levels, wrote Tanvee Gupta Jain and Chetan Ahya of Morgan Stanley in a comment on latest trade numbers. We expect export growth to remain strong. This, we believe,will help to some extent in offsetting the slower-than expected domestic demand growth, the note added. Total exports during April-February 2010-11 were valued at $208.2 billion while imports added to $305.3 billion, up 21.2%.Trade deficit for the first 11 months was $97 billion, much lower than initially estimated. The growth in exports was driven by the engineering goods sector, which saw an increase of 81% during April-February to $52.7 billion.Gems & jewellery, petroleum, oil & lubricants,electronics,plastics and chemicals also posted high export growth, as India‘s attempt to diversify its markets aft er the financial crisis yielded good results. Several experts,however,are not very optimistic on India maintaining a 30% export growth next year. A number of Asian economies have lifted rates sharply to combat inflation, which will affect demand, while the US and Europe are still not firmly on their feet. Rising prices of crude oil and other commodities could dampen demand further. Expecting an over 30% growth in exports in the future could be optimistic as typically we are exporting conventional goods and global economy and trade is projected to slow down a bit, said Madan Sabnavis, chief economist at rating agency CARE. The free trade agreements signed with the Southeast Asian countries and recent forays into markets in Africa and South America could be the saving grace in the next fiscal, said Ajay Sahai, Director-general of exporters lobby FIEO. Source : Economic Times ,11th March 2011 - Pg No 19
TRADE POLICY AND PROMOTION India has benefited less than other India-like countries from the proliferation of bilateral and regional trade agreements – comparatively higher tariff rates apply for Indian exports. Further, some of its export competitors have availed reduction or complete removal of tariffs for their exports, which has resulted in a decline in the competitiveness of exports from India vis-à-vis its competitors. India has been able to avail preferential treatment for only a small percentage of its exports till now, mainly due to the following reasons: 1. Narrow focus on regional integration: Most of India‘s trade agreements that became operationalized till as recently as 2007 were with SAARC countries. 2. Nature of trade agreements: Most of India‘s agreements have been preferential trade agreements that cover only a small cross-section of goods. Hence, if India wants to improve its export prospects, it needs to ensure preferential market access for its engineering exports by (1) negotiating trade agreements with some of its bigger exports markets and by (2) broadening the scope of the agreements by negotiating for complete FTAs/ CECAs. PROMOTIONAL EVENTS BY EEPC INDIA EEPC India conducted promotional activities in 45 different countries (majority of which are the thrust markets) during the period 2005–2009, Engineering exports to these countries have
been promoted through different events such as INDEE, participation in international trade fairs, trade delegations, BSMs and catalogue shows. EEPC India has also been active in the Indian pavilion of various international trade fairs, to promote Indian engineering exports. It has been observed that generally there is an increase in India‘s market share in most markets where EEPC India has conducted events over the past four years. We have defined a key set of imperatives to achieve India‘s ambition to almost triple its engineering exports to USD110 billion by 2014. These imperatives cover the entire set of initiatives that need to be undertaken by the government, EEPC India and exporters. These imperatives recognize the need for differential action across the thrust and striver products to boost the Indian engineering exports while ensuring inclusive growth of all the sub sectors in the engineering sector. Taking a balanced view, a set of discrete initiatives for thrust and striver products have been identified as given below: India has traditionally lagged behind in its engineering exports, since most SME players have not achieved economies of scale or the requisite technological capabilities required to be competitive in the global export market. To rectify this situation, the government and EEPC India will need to take concrete measures, which will have to be supplemented by the initiatives of individual exporters. The government needs to facilitate economies of scale in the engineering sector by initiating policy-level measures to improve the saleability of engineering SEZs in the developer and user community and also attract higher levels of FDI in the engineering sector. These measures will need additional stimulus in the form of labor reforms to amend the existing archaic laws to meet the needs of current market realities, and also enhance the quality and quantity of manpower. While labor reform initiatives have to be taken by the government, improvement in the quality and quantity of manpower can be only achieved by the active participation of the government, EEPC India and individual exporters in various manpower development initiatives. The government should set up a skill development fund to impart training in areas where technology upgradation is being initiated to ensure the enhancement the productivity and quality levels. EEPC should take the lead in enhancing the skill levels in the engineering sector by identifying clusters where it is a necessity as well as developing a training plan so as to quickly implement it across the length and breadth of the country. While FDI will definitely help improve the technological capabilities in India, certain other important initiatives such as centralized mapping of the R&D activity happening in the engineering sector, incentivizing commercialization of indigenously developed technology, marketing of the developed technologies to ensure sustainability of R&D, enhancing industry-academia-central R&D institution interactions need to be taken up on a priority basis by the government. Additionally, an enhancement of the tax incentives would further boost R&D in the engineering sector. EEPC India should take the lead in the promoting green technology by spreading awareness on carbon mitigation measures and energy saving concepts in the engineering sector. This is
a major imperative going forward as green technology will be seen as differentiator in the global arena and the reduction in engineering sector‘s carbon emissions will decide whether India meets its voluntary carbon reduction targets by 2020. Infrastructural and procedural inadequacies have long been pointed out as sources of competitive disadvantage in terms of costs and timelines for Indian exports. Hence, these issues need to be acted on by the government at the earliest, so that Indian engineering exports can realize their full potential in the next five years. Greater autonomy for state governments with respect to port projects is also an imperative to accelerate capacity additions. While implementations of port connectivity projects by rail or road are steps in the right direction, last-mile connectivity to various engineering clusters across the country is still inadequate. Since a number of these projects are not taken up due to financial non-viability, the government needs to bundle them with other financially lucrative projects to ensure a gap-free infrastructure for exporters. The government needs to simplify several customs procedures by reducing the number of requisite procedures or by initiating the process of self-certification for status-holders. In addition, it should undertake other relevant technological initiatives to reduce the overall transaction time and related costs.
TECHNOLOGICAL UPGRADATION
The government should extend the Technology Upgradation Fund Scheme (TUFS) to the High-Potential and Striver product categories to combat increasing technological obsolescence in them. The TUFS should be first geared towards High-Potential products and later towards Strivers to ensure an immediate boost to engineering exports while enabling higher employment generation at the same time. To usher in the next phase of export growth, India needs to move up in the value chain of export goods. This objective is sought to be achieved by encouraging technological upgradation of our export sector. A number of initiatives have been taken in this Policy to focus on technological upgradation; such initiatives include: a. EPCG Scheme at zero duty has been introduced for certain engineering products, electronic products, basic chemicals and pharmaceuticals, apparel and textiles, plastics, handicrafts, chemicals and allied products and leather and leather products. b. The existing 3 % EPCG Scheme has been considerably simplified, to ease its usage by the exporters. c. To encourage value added manufacture export, a minimum 15 % value addition on imported inputs under Advance Authorisation Scheme has been stipulated. d. A number of products including automobiles and other engineering products have been included for incentives under Focus Product, and Market Linked Focus Product Schemes. e. Steps to encourage Project Exports shall be taken
SUPPORT TO STATUS HOLDERS The Government recognized ?Status Holders‘ contribute approx. 60% of India‘s goods exports. To incentivise and encourage the status holders, as well as to encourage Technological upgradation of export production, additional duty credit scrip @ 1 % of the FOB of past export shall be granted for specified product groups including leather, specific sub sectors in engineering, textiles, plastics, handicrafts and jute. This duty credit scrip can be used for import of capital goods by these status holders. The imported capital goods shall be subject to actual user condition. EXPORT OF SPARES Warranty spares (whether indigenous or imported) of plant, equipment, machinery, automobiles or any other goods, (except those restricted under ITC (HS)) may be exported along with main equipment or subsequently but within contracted warranty period of such goods subject to approval of RBI. M ARKET ACCESS INITIATIVE Under MAI scheme, Financial assistance is provided (MAI) for export promotion activities on focus country, focus product basis. Financial assistance is available for Export Promotion Councils (EPCs), Industry and Trade Associations (ITAs), Agencies of State Government, Indian Commercial Missions (ICMs) abroad and other national level institutions/eligible entities as may be notified. A whole range of activities can be funded under MAI scheme. These include, amongst others, - Testing charges for engineering products abroad, COMMON FACILITY CENTRES Government shall promote establishment of Common Facility Centres for use by home-based service providers, particularly in areas like Engineering & Architectural Design, Multi-media operations, Software developers etc., in State and District level towns, to draw in a vast multitude of home-based professionals into services export arena. The Status Holders of the following Sectors shall be eligible for this Status Holders Incentive Scrip: 1. Leather Sector (excluding finished leather); 2. Textiles and Jute Sector; 3. Handicrafts; 4. Engineering Sector (excluding Iron & Steel, Nonferrous Metals in primary or intermediate forms, Automobiles & two wheelers, nuclear reactors & parts and Ships, Boats and Floating Structures; 5. Plastics; and 6. Basic Chemicals (excluding Pharma Products).
ZERO DUTY EPCG SCHEME Zero duty EPCG scheme allows import of capital goods for pre production, production and post production (including CKD/SKD thereof as well as computer software systems) at zero Customs duty, subject to an export obligation equivalent to 6 times of duty saved on capital goods imported under EPCG scheme, to be fulfilled in 6 years reckoned from Authorization issue-date. The scheme will be available for exporters of engineering & electronic products, basic chemicals & pharmaceuticals, apparels & textiles, plastics, handicrafts, chemicals & allied products and leather & leather products; subject to exclusions as provided in HBPv1. Validity period for import of capital goods and provision for extension in export obligation period will be as separately provided in the HBPv1. All other provisions pertaining to concessional 3 % duty EPCG scheme under this Chapter, to the extent they are not inconsistent with the above provisions of zero duty EPCG scheme, shall be applicable to the zero duty EPCG scheme also. The zero duty EPCG scheme will be in operation till 31.3.2011 .
PROCURING/M ANUFACTURING GOODS FOR EXPORT & THEIR INSPECTION B Y GOVERNMENT AUTHORITIES OF INDIA. I.Procuring / Manufacturing Goods Once you are ready with the infrastructure for exporting goods and have obtained necessary finance, you should proceed to procure the goods for export. Procuring the goods should be done with extreme care and caution as to the quality and cost. However, procuring the raw materials etc. and manufacturing the goods for export will need extra efforts on your part. If you are an established exporter, you can have the facility of procuring raw materials under the Duty Exemption Scheme.
II.Compulsory Quality Control & Preshipment Inspection
An important aspect about the goods to be exported is compulsory quality control and preshipment inspection. Under the Export(Quality Control and Inspection) Act, 1963, about 1000 commodities under the major groups of Food and Agriculture, Fishery, Minerals, Organic and Inorganic Chemicals, Rubber Products, Refractoriness, Ceramic Products, Pesticides, Light Engineering, Steel Products, Jute Products, Coir and Coir Products, Footwear and Footwear Products / Components are subject to compulsory pre-shipment inspection. At times, foreign buyers lay down their own standards / specifications which may or may not be in consonance with the Indian standards. They may also insist upon inspection by their own nominated agencies. These issues should be sorted out before confirmation of order. Specific provisions have also been made for compulsory inspection of textile goods. Products having ISI Certification mark or Agmark are not required to be inspected by any agency. These products do not fall within the purview of the export inspection agencies network. The Customs Authorities allow export of such goods even if not accompanied by any pre-shipment inspection certificate, provided they are otherwise satisfied that the goods carry ISI Certification or the Agmark. Depending upon the nature of products, goods meant for export are inspected for quality in the following manner: Consignment to Consignment Inspection Each individual consignment is inspected by the Export Inspection Agency, Commodity Board and certificate of inspection is issued. The application for inspection for goods has to be submitted well in advance before the expected date of shipment of the consignment. Inspection of the consignment is generally carried out either at the premises of the exporter, provided adequate facilities exist therein for inspection, or at the port of shipment. The export inspection agency has a right to exercise supervision of inspected consignment(s) at any place or time.
The application should be made in duplicate in the new prescribed form 'Intimation for Inspection' as per standardised pre-shipment export documents to the nearest office of the respective Export Inspection Agency along with the following documents : Particulars of the consignment intended to be exported. A crossed cheque/draft for the amount of requisite inspection fees or an Indian Postal Order. Copy of the Commercial Invoice. Copy of letter of credit. Details of packing specifications. Copy of the export order/contract, indicating inter alia the buyer's requirement that goods are strictly according to the prescribed specifications, or as per samples etc. After satisfying itself that the consignment of exportable goods meets the requirements stipulated in the export contract/order, the inspection agency issues, generally within four days of receipt of intimation for inspection, the necessary certificate of inspection to the exporter in the prescribed proforma in five copies. The certificate is issued in the standardised form which is aligned pre-shipment export document. (Three copies for exporter, original copy for customs use, the second copy for the use of the foreign buyer and the third copy for the exporter's use, fourth copy for Data Bank, Export Inspection Council, New Delhi and the fifth copy is retained with the agency for their own office record).
IN-PROCESS QUALITY CONTROL (IPQC) Certain products like chemicals or engineering goods are subject to this control. The inspection is done at various stages of production. The exporter has to get his unit registered as "Export Worthy" and keep record of processing and production. Inspection by the officers of Export Inspection Agency is done from time to time. The certification of inspection on the end-products is then given without in-depth study at the shipment stage. Under this system, export is allowed on the basis of adequacy of in-process quality control and inspection measures exercised by the manufacturing units themselves. The certificates of inspection in favor of the units approved under the scheme are issued by the Export Inspection Agencies (EIAs) in the normal course. However, these units are kept under surveillance by the EIAs and random spot checks of the consignments are carried out by them. Units approved under this system of in-process quality control may themselves issue the certificate of inspection, but only for the products for which they have been granted IPQC facilities. However, these units have the option either to get the certificate from the Export Inspection Agencies (EIAs) or issue the same themselves. Consequently, the manufacturer exporters of products approved under the IPQC have been recognised as an agency for pre-shipment inspection for export of engineering products for which they have been approved by the Export Inspection Agencies at Bombay, Calcutta, Cochin, Delhi and Madras. SELF CERTIFICATION SCHEME Large manufacturers/exporters, export houses/tradingp 7 3 houses are allowed the facility of Self-Certification on the theory that the exporter himself is the best judge of the quality of his products and will not allow his reputation to be spoiled in the international market by compromising on quality. The industrial units having proven reputation and adequate testing facilities have to apply to the Director (Inspection and Quality Control), Export Inspection Council of India, 11th Floor, Pragati Tower, 26 Rajendra Place, New Delhi-110008. They are granted a certificate valid for a period of one year, allowing them self-certification facility. The facility is available to manufacturers of engineering products, chemical and allied products and marine products. During this period the exporter can issue a certificate signed by himself or by a person authorised by him. The certificate has to indicate the number and date of EIA's reference for registration under Self-Certification Scheme. It has to be issued in the aligned format as per new standardised pre-shipment documents. The approval of an industrial unit under this scheme is notified in the Gazette of India and the exporter has to pay a lump sum fee to the export inspection agencies depending upon his export turnover. Minimum Quality Norms prescribed by the Export Inspection Council should be maintained and achieved for the grant of facility under Self-Certification Scheme
M ARKET RESEARCH
As mentioned earlier to effectively implement the engineering export strategy and penetrate thrust markets, market research (country specific and including market surveys as considered relevant) should be undertaken through professional/ experienced agencies in this domain as an initial step for international marketing in identified thrust products and their thrust markets to make market intelligence available to the exporters. Structured and focused information on thrust products and thrust markets would help the exporters to direct their efforts to develop market specific products and penetrate these markets more efficiently. B RAND PROMOTION AND PUBLICITY As indicated earlier, India has met with limited success in the field of brand promotion and publicity for engineering exports. Brand promotion/ publicity is desired at individual thrust product level as well as India as a supplier of high-quality exporter of engineering products. If we consider the optimistic potential rate of growth of Engineering products exports from India, then share of Consumer Durables product group is expected to increase over the strategy period term (2005-06 to 2009-10). Keeping above in mind, International marketing strategy should be targeting to increase awareness/ visibility of thrust products in thrust markets through focused activities like signature visits/ delegation from thrust markets to reputed Indian engineering product manufacturers, aggressively participating in large exhibitions, arranging road shows in thrust markets, etc. However, to make these events effective, experienced/ professional agencies with wide experience in event management activities should be appointed. KEY SUPPORT ELEMENTS FOR SUCCESSFUL STRATEGY IMPLEMETNATION The following have been identified as key support elements for successful implementation and execution of India‘s engineering export strategy. Their role has been detailed in the report.Infrastructure: - The entire spectrum of infrastructure has been covered under:? ? ? ? ? ? ? ? Ports Roads Rails Power Special Economic Zones (SEZs) Technology Improvement and Capacity Enhancement Domestic and foreign investments in manufacturing Exploit the potential for Outsourcing of engineering products ? Export Finance
ROLE OF VARIOUS BODIES
CENTRAL GOVERNMENT The central government is the chief responsible body that can promote export growth in the near future. It is critical for the central government to play a key role in the following areas: FOREIGN TRADE POLICY The New Foreign Trade policy announced by the UPA government in 2004 for the first time integrated trade policy with the process of the country‘s economic development. The following strategies have been spelt out in the policy document: ? ? ? ? Procedures simplification Deregulation Reduction in transaction costs Facilitating the development of India as a global hub for manufacturing, trading and services
The Government should see to it that the benefits of these policies and strategies are available to the exporters through effective implementation of the same. The issue of policy on Labor reforms does not impart flexibility to exporters of engineering products. It is important that the GOI documents a clear-cut policy on this issue. This would encourage exporters and other manufacturers to commit effort and resources to improve performance. The competitiveness of the exports from India depends on the availability of raw material at internationally competitive prices. Therefore, it is necessary to have a ?Raw Material Policy? that will ensure the supply of raw material to exporters at competitive prices. This measure has become all the more important given the significant rise in input costs in the form of rise in steep prices of pig iron etc. over the last couple of years. In the year 2003-04, 31% of the total engineering exports came from Small Enterprises. The foreign trade policy should research and make available WTO compatible export incentives to SME‘s. This obviously should be in line with India‘s WTO commitments. TRADE AGREEMENTS The Central Government should ensure that the industry has meaningful representation in formulation and negotiations of Trade agreements with partnering countries/ Trade Blocks. Trade agreements should be planned with a larger perspective rather than signing them on a one to one basis. With this understanding, the Central Government could strategise and hasten the process towards becoming members of important trade blocks such as ASEAN with an objective of increasing exports of Engineering Products
INFRASTRUCTURE India needs very large investments in infrastructure, both social and economic, rural and urban to step up the rate of GDP growth to 7% to 8% p.a. The economy must therefore absorb very large investment in infrastructure over the next decade for us to be able to increase our growth rate. A large part of this needs to come from foreign direct investment. The government over the years has assigned industry status to infrastructure. Commitment of funds to infrastructure has increased with time. The infrastructure issues range from ports, rail, roads, power, etc. All this is important not only from the point of view of reducing transaction costs, but also from the point of view of promoting a positive image of India abroad to do business. Discussion with the exporters revealed that if issues related to documentation and infrastructure were sorted out, the transaction costs could come down by 10%-15%. Infrastructure issue is critical to almost all exporters. The team of EEPC could work with the central and state government to direct efforts productively towards infrastructure development. EEPC would need to proactively undertake making presentations/ conducting workshops to relevant bodies to make them aware/ sensitise them on the need for significant enhancement in availability of quality infrastructure, availability of critical materials, etc. needed by the exporters to achieve the target of doubling the engineering products exports in the next five years. In power sector alone in order to sustain an annual growth rate of over 7% p.a. an estimated capacity addition over 10,000 MW per year is needed Creating and operationalising port based SEZs with world class infrastructure and attracting FDI in Thrust Products manufacturing for exports in the SEZs is very important The government can arrange focussed road shows for attracting the export oriented foreign investment in Thrust Product categories and promotion of SEZs. FOREIGN DIRECT INVESTMENT FDI has a significant role to play in the development of an export-oriented economy. The success of China‘s exports is a pointer in this direction. As discussed above for the development of manufacturing and infrastructure to support the growth in GDP and exports India needs very large investments and much of this must come in as Foreign Direct Investment. The central government could have a FDI roadmap to prepare foreign investors in identified thrust product categories in advance of the emerging investment potential in India. The government has a role to play in making India attractive destination for FDI and create an environment conducive to the growth of spirit of adventure and enterprise. As an example, the Indian bureaucracy continues to slow down things. According to a World Bank ?Investment Climate Assessment? report published last year (2004), it takes about 89 days to secure all the permits needed to start a business in India compared with 41 days in China. This shows that there is a need to simplify procedure and time taken to process the FDI related matters. The potential growth of outsourcing by foreign companies is a sign of the confidence of the foreign investors in India and it needs to pick up momentum.
SECTORAL POLICIES The following sectors of the country require a long-term policy document that outlines with specific measurable results – for example 2010 vision document. Sectors that need to be covered include; Steel – (e.g. to target over 100 Mn Tonnes of annual consumption at end of next 10 to 15 years) Automobile Power Shipping: -In order to have complete control on exports from India, the importance of a National Carrier and a Shipping Line cannot be underestimated. A national carrier shipping policy will impart leverage to Indian exporters by reducing dependence on multinational shipping lines. At the moment, most of the trade happens through feeder vessels. With a shipping line policy in place, the Central Government could then develop a mother vessel policy to improve the volume of Indian exports. Along with the Sectoral Policies, the Government should establish research institutions for thrust product categories. An example in case is the dearth of institutions like Automobile Research Association of India (ARAI) and the test facilities. The domestic automobile industry is already facing shortage of test facilities for testing and certification. INDIA PROMOTION This is an extremely critical responsibility that is under the onus of the Central Government. The government is doing its part in enabling this aspect. INDIAN EMBASSIES / TRADE MISSIONS ABROAD The Government should encourage Indian Embassies / Trade Missions in Thrust markets abroad to be more responsive to the request by exporters for information, help and required assistance, especially by the SMEs. TAXATION Introduction of VAT will simplify the multi-level taxation structure It will also help in speeding up freight as lorries would no longer have to stop at the state borders EXCHANGE RATE MANAGEMENT This issue has been under the purview of RBI. A market-adjusted exchange rate is a reality now and encourages exporters to resort to foreign exchange instruments to manage their foreign exposure. LABOUR REFORMS Labour reforms should be viewed by the government as a means of increasing the labour productivity and should be addressed in that manner. Labour Reforms are needed in order for
India to become competitive internationally w.r.t. its competitors like China and also in attracting Foreign Direct Investments PARTNERSHIP WITH EXPORTERS In the area of project exports particularly, government could step in as a re-insurer. The government should make efforts in bringing in ?Exports‘ as focus among industry sectors INCENTIVES TO PROMOTE SMES The Government should earmark some incentives which are WTO compatible and can be provided to the SMEs, e.g. Capital Subsidy @ 1% of the exports made by the SMEs or @ 1% of the export performance made by the engineering sector for export promotion of SME products.
ENGINEERING EXPORT PROMOTION COUNCIL (EEPC)
EEPC has a critical role to play in putting in place enablers for growth of engineering exports: Executive Powers: As an apex body for promoting engineering exports, it is important for the council to have a forum to have the queries of its members answered and resolved. EEPC should be take up a proactive role in networking with government agencies and ensure that it has its say in the policy formulation at central level EEPC Experts should be involved by the Government in addressing WTO related issues and strategy Thrust Product and Market Initiative: EEPC, along with its members, could adopt focussed thrust product and market initiatives to drive export growth. The benefits could be the following: ? ? ? ? ? Business potential and customer information to exporters Awareness in thrust markets of Indian potential Dissemination of information to other members Information on product requirements in foreign markets for the benefit of exporters Exporter Related Matters
EEPC could adopt the following initiatives to help exporters: ? ? ? ? Knowledge Management of the experience of exporters for the benefit of other exporters Information dissemination to exporters on the Lines of Credit in operation and availing benefit of them Time bound grievance redressal SME Initiative
EEPC should arrange industry specific training for SMEs with focus on thrust products and markets, in areas that need improvement. Further, EEPC could also look at the possibility to represent the products of SME sector internationally. More importantly,
help should be provided in terms of market intelligence for various products in thrust markets viz. size, structure and growth, regulatory and standards related information, key competitors, products desired and key characteristics, etc. ? ? ? ? Training on export benefits / schemes, procedures and availing the benefits to SMEs. Training for the perspective and vision for SME Exporters Regional Meetings The regional meeting is an important forum to recognize the issues facing exporters.
EEPC could put in place a mechanism to tap and resolve all major issues in a time bound manner. A dedicated team in EEPC with the Chairman as the Head could ensure that the concerns and ideas of engineering exporters are taken care of Foreign Offices. Currently, EEPC has local/ regional presence through its four international offices in following countries, viz. USA, Germany, Singapore and Nigeria. However, EEPC should aim at increasing local presence in thrust markets by setting up offices in the identified thrust markets or at least regional offices catering to a group of thrust markets. It is suggested that EEPC should examine the feasibility of establishing a local office in the following key markets; ? ? ? ? ? ? ? ? ? ? ? America Canada Mexico Europe United Kingdom France Asia China Japan Korea Malaysia
EEPC foreign offices should be accessible to small and medium exporters. Apart from disseminating the market and product information these offices can provide other important information such as availability of cheaper (lower prices than that from India) raw materials from foreign markets, local standards, etc. Joint Sessions and co-operation with other Councils and Industry Associations. Joint meetings and sessions of EEPC with various export councils and other Industry Associations will help in co-ordination of export promotion and acquiring learning from other councils. This would not only avoid duplication, but also lead to improved productivity in export related matters.
Annual study of the thrust markets‘ regulations and business practices in the engineering segment. This shall provide valuable inputs in the formulation of relevant Indian policies for export promotion and also enable dissemination of useful information to Indian exporters One stop-shop for engineering firms interested in investing in India. EEPC could help firms find Indian partners and advise then on investment opportunities. Operate Business Support Centers ? ? ? To provide companies with free office space for a limited for buyer-seller transactions, during trade and factory visits, etc. To provide cost-effective commercial intelligence to members. Web – based trade tie-up promotion program will help match Indian and foreign firms with similar interests.
Operate foreign offices as mentioned earlier; ? ? ? ? ? ? ? ? ? ? ? For international services to Indian members To facilitate trade measures. Educate international firms of business customs and practices in the Indian market. Liaison with other trade promotion councils in the Thrust Markets that are involved with supporting industries in developing nations to enhance their exports. Promote and review Foreign Direct Investment in different engineering sectors. Support import of world-class capital goods for the engineering sector. Assist foreign subsidiaries of Indian companies to grow their share in the global engineering market. Seek and activate involvement of various commercial attaches of Government of India in foreign countries for effectiveness in trade promotion. Organize international exhibitions in thrust markets and arrange participation of Indian engineering companies in similar events overseas. Undertake trade missions primarily for SME‘s Operate Buyer Service Centers where buyers visiting India can receive assistance in business meetings with Indian companies and collect information on Indian engineering products and suppliers.
BIBLIOGRAPHY
Federation of Indian Export Organisations Search and Establish Contact with Indian Exporters [Online] // http://www.fieo.org/. February 2011. February 28, 2011. http://www.fieo.org/searchProducts_fieo.php?searchTypeProducts=1&searchStringProducts=engineering&x=0&y =0. A. F. Ferguson & Co, Strategy Paper for Growth of Engineering Exports (2005-06 to 2009-10) [Online] // Engineering Export Promotion Council. - 2006. - February 14, 2011. - http://www.eepcindia.org/download/exesummary-startegy-paper.pdf. Advameg Inc. Culture of The United Kingdom of Morocco [Online] // www.everyculture.com. - 2011. - March 7, 2011. - http://www.everyculture.com/Ma-Ni/The-United-Kingdom-of-Morocco.html#ixzz1FtY6bY4q. Advameg Inc. Morocco - Social development [Online] // Encyclopedia of the Nations. - 2011. - March 7, 2011. http://www.nationsencyclopedia.com/Africa/Morocco-SOCIAL-DEVELOPMENT.html . Data Monitor, [Online] // Ebscohost. - February 26, 2011. - http://www.search.ebscohost.com. dgMarket Tenders in Morocco [Online] // dg Market Tenders Worldwide. - 2011. - February 28, 2011. http://www.dgmarket.com/. EEPC INDIA Archive Bulletin [Online] // Engineering Export Promotion Council. - February 28, 2011. - March 6, 2011. - http://www.eepcindia.org/bulletin/b20110228/FI0913.pdf. EEPC INDIA Delegation Profile Algeria & Morocco [Online] // Engineering Export Promotion Council. - November 2007. - March 3, 2011. - www.eepcindia.org/eventattach/MPEDALGERIA&MOROCCO0937.pdf. EEPC INDIA Driving into the future : An exports perspective [Online] // Engineering Export Promotion Council. 2010. - February 14, 2011. - http://www.eepcindia.org/download/summary-startegy-paper-auto-Comp-20102014.pdf. EEPC INDIA Export Performance Monitor [Online] // Engineering Export Promotion Council. - July 2010. - 19 January 2011. - http://www.eepcindia.org/epm/EPM0710.pdf. EEPC INDIA Export Statistics , EXPORT OF ENGINEERING GOODS & SERVICES DURING 2008-09 TO 2009-10 [Online] // Engineering Export Promotion Council. February 2011. March 3, 2011. http://www.eepcindia.org/export-statistics-dollar.asp. EEPC INDIA Global System of Trade Preferences (GSTP) [Online] // Engineering Export Promotion Council. October 26, 2005. - February 14, 2011. - www.eepcindia.org/bilateral/doc15.pdf. - ISSN 0971-9776. EEPC INDIA India Pavilion at SISTEP 2009 [Online] // Engineering Export Promotion Council. - August 2009. - March 3, 2011. - www.eepcindia.org/eventattach/CIR-SISTEP-2009-300909-031009.pdf. Embassy of the Kingdom of Morocco Morocco - India Relations [Online] // Embassy of the Kingdom of Morocco. 2009. - February 21, 2011. - http://www.moroccoembassyin.org/morocco-india.html.
Ernst & Young Engineering the Future : An Export Perspective Ernst & Young Report [Online] // Engineering Export Promotion Council. - 2009. - February 14, 2011. - http://www.eepcindia.org/download/summary-startegy-paperengg-exports-2010-2014.pdf. International Labour Organization Decent Work Pilot Programme [Online] // International Labour Organization (ILO). 2011. March 7, 2011. http://www.ilo.org/public/english/bureau/dwpp/download/morocco/countrybriefmo.pdf. Ministry of External Affairs Foreign Relation [Online] // Ministry of External Affairs. - January 2011. - February 14, 2011. - http://meaindia.nic.in/meaxpsite/foreignrelation/morocco.pdf. Ministry of Finance Economic Survey [Online] // Indian Budget. - February 28, 2011. - February 28, 2011. http://indiabudget.nic.in/es2010-11/echap-07.pdf. Movers.com Customs Regulations - Morocco [Online] // http://www.movers.com/. - 2011. - February 21, 2011. http://www.movers.com/international_movers/customs-regulations/morocco.html. Nimetis Network [Online] // Investing http://www.investinginmorocco.co.uk/index.html. in Morocco. 2010. February 28, 2011. -
Office Des Changes [Online] // MOROCCO EXCHANGES / MAJOR PARTNERS. - February 2011. - February 24, 2011. http://www.oc.gov.ma/EchangesBilateraux/echanges.asp. The Central Intelligence Agency (CIA) The World Factbook [Online] // Central Intelligence Agency. - March 8, 2011. - February 28, 2011. - https://www.cia.gov/library/publications/the-world-factbook/geos/mo.html. The Economist Intelligence Unit Limited Ebsco Host [Online] // Country Report Morocco Nov, 2009. - November 2009 . - March 3, 2011. - www.eiu.com. - ISSN 0269-6126. The Office of Electronic Information, Bureau of Public Affairs Bureau of Near Eastern Affairs, Morocco [Online] // The U.S. Department of State. January 26, 2010. February 24, 2011. http://www.state.gov/r/pa/ei/bgn/5431.htm. The World Bank Group Doing Business [Online] // Business Reforms in Morocco. - 2011. - February 28, 2011. http://www.doingbusiness.org/reforms/overview/economy/morocco. The World Bank Group Ease of Doing Business in Morocco [Online] // http://www.doingbusiness.org/. - 2011. February 26, 2011. - http://www.doingbusiness.org/data/exploreeconomies/morocco. The World Bank Group http://data.worldbank.org/country/morocco [Online] // http://data.worldbank.org/. 2011. - March 3, 2011. - http://api.worldbank.org/datafiles/MAR_Country_MetaData_en_EXCEL.zip. The World Bank Group Private Sector At-a-Glance Tables [Online] // www.worldbank.org. - March 26, 2010. February 26, 2011. - http://data.worldbank.org/data-catalog/private-sector-at-a-glance. United Nations Development Programme Morocco – Crisis Poverty and Social Impact Analysis [Online] // United Nations Development Programme. - 2011. - March 3, 2011. - http://content.undp.org/go/cmsservice/stream/asset/?asset_id=2636781.
Wikia Moroccan Political and Legal System [Online] // http://internationalbusiness.wikia.com/. - 2011. - March 8, 2011. - http://internationalbusiness.wikia.com/wiki/Moroccan_Political_and_Legal_System. Wikia Morocco Legal System Weaknesses [Online] // http://internationalbusiness.wikia.com/. - 2011. - March 8, 2011. - http://internationalbusiness.wikia.com/wiki/Morocco%27s_Legal_system_%28Weaknesses%29. Wikipedia Science and technology in Morocco [Online] // http://en.wikipedia.org. - February 2011. - March 10, 2011. - http://en.wikipedia.org/wiki/Science_and_technology_in_Morocco. World Economic Forum The Global Enabling Trade Report 2010 [Online] // http://www.weforum.org/. - May 19, 2010. - February 23, 2011. - http://www3.weforum.org/docs/WEF_GlobalEnablingTrade_Report_2010.pdf. WorldTradeLaw.net Bilateral and Regional Trade Agreements Notified to the WTO [Online] // www.worldtradelaw.net. - 2007. - February 14, 2011. - http://www.worldtradelaw.net/fta/ftadatabase/ftas.asp.
doc_318301919.pdf
A RESEARCH REPORT . ON POSSIBLE THRUST AREAS OF INDIAN EXPORT AND THRUST PRODUCT TO BOOST THE INDIAN EXPORTS
2011
Engineering Goods in
GROUP MEMBERS PRIYANKA BIYANI - 070 ATIT SANGHAVI – 078 MEHUL SHAH - 097 ASHWIN GADA - 113 NAVIN TODI - 124 SANTOSH PATHAK - 129
GROTH PROSPECT & THRUST AREA OF INDIAN EXPORTS
BY CELESTA TO PROF CAJETAN D’SOUZA 3/13/2011
ACKNOWLEDGEMENT
Apart from our efforts, the success of any project depends largely on the encouragement and guidelines of many others. We take this opportunity to express our gratitude to the people who have been instrumental in the successful completion of this project. We would like to show our greatest appreciation to Prof. Cajetan D‘Souza. We can‘t say thank you enough for his tremendous support and help. We feel motivated and encouraged every time we attend his lecture. Without his encouragement and guidance this project would not have materialized. The guidance and support received from all the members who contributed and who are contributing to this project, was vital in completion of the project. We are grateful for their constant support and help.
TABLE OF CONTENTS
KINGDOM OF MOROCCO .................................................................................................................... 9
Country Snapshot ................................................................................................................................................................. 10 PESTEL ANALYSIS ................................................................................................................................................................ 12 Political Analysis: ................................................................................................................................................................. 12 Political Pressure & Leaders............................................................................................................................................ 13 Elections and Government Makeup ................................................................................................................................ 13 Domestic politics .............................................................................................................................................................. 13 Government ..................................................................................................................................................................... 14 Leadership and Political Officials.. .................................................................................................................................. 14 Social Problems and Control. .......................................................................................................................................... 15 Military Activity .............................................................................................................................................................. 15 Military branches: ........................................................................................................................................................... 15 Economic Analysis: .............................................................................................................................................................. 17 Economic Performance .................................................................................................................................................... 17 Business Reforms in Morocco .......................................................................................................................................... 21 Policy trends..................................................................................................................................................................... 21 Fiscal policy...................................................................................................................................................................... 22 Monetary policy ............................................................................................................................................................... 22 International assumptions ............................................................................................................................................... 22 Economic growth ............................................................................................................................................................. 23 Inflation ........................................................................................................................................................................... 24 Exchange rates ................................................................................................................................................................. 24 External sector ................................................................................................................................................................. 25 Investment by Sector in Budget 2010, Morocco............................................................................................................... 25 Annual Data And Forecast .............................................................................................................................................. 26 Quarterly Data ................................................................................................................................................................. 27 Key Issues ........................................................................................................................................................................ 28 Prospects .......................................................................................................................................................................... 29 Social Analysis ...................................................................................................................................................................... 30 Demography..................................................................................................................................................................... 30 Linguistic Affiliation. ....................................................................................................................................................... 30 People ............................................................................................................................................................................... 31 Symbolism. ....................................................................................................................................................................... 32 Classes and Castes............................................................................................................................................................ 32 Symbols of Social Stratification. ...................................................................................................................................... 32 Social Welfare and Change Programs ............................................................................................................................. 33 Nongovernmental Organizations and Other Associations ............................................................................................... 33
Marriage. .......................................................................................................................................................................... 33 Religious Beliefs................................................................................................................................................................ 33 Religious Practitioners. .................................................................................................................................................... 34 Rituals and Holy Places. ................................................................................................................................................... 34 Morocco's Unemployment Rate ....................................................................................................................................... 34 Technological Analysis.......................................................................................................................................................... 36 Science and technology in Morocco.................................................................................................................................. 36 National policy.................................................................................................................................................................. 36 Technopolis Project .......................................................................................................................................................... 36 Research industry............................................................................................................................................................. 37 Institutions........................................................................................................................................................................ 37 International co-operation ............................................................................................................................................... 38 Communication ................................................................................................................................................................ 38 Broadcast media:.............................................................................................................................................................. 38 Environmental Analysis ........................................................................................................................................................ 39 Morocco is divided into sixteen regions. ............................................................................................................................... 42 Tanger-Med...................................................................................................................................................................... 42 Legal Analysis ....................................................................................................................................................................... 44 Legal system ..................................................................................................................................................................... 44 Suffrage: ........................................................................................................................................................................... 44 Legislative branch: ........................................................................................................................................................... 44 Judicial branch: ............................................................................................................................................................... 45 Corruption in Morocco .................................................................................................................................................... 45 Morocco's Legal system (Weaknesses) ............................................................................................................................. 45 Trade Relation of Morocco (Strategic Partnership) ............................................................................................................. 47 Major Trading Partners................................................................................................................................................... 47 Transnational Issues ............................................................................................................................................................. 47 International organization participation: ........................................................................................................................ 48 Major Trade Agreement of India & Morocco.................................................................................................................. 48 GSTP - General System of Trade Preferences among Developing Countries .................................................................. 48 Global System of Trade Preferences (GSTP) ................................................................................................................... 49 CUSTOMS REGULATIONS........................................................................................................................................... 50 DUTIABLE/RESTRICTED ITEMS ................................................................................................................................ 50 PROHIBITED ITEMS ..................................................................................................................................................... 50 PETS ................................................................................................................................................................................ 50 Doing Business Profile,Morocco ........................................................................................................................................... 51 The Global Enabling Trade Index 2010, Morocco................................................................................................................ 51 Major Trading Partners of Morocco (2008) ..................................................................................................................... 53 Morocco’s Export to India (Million Dirham) ................................................................................................................... 54
Morocco’s Import from India (Million Dirham) ............................................................................................................. 55 Morocco’s Import (Weight & Value ) .............................................................................................................................. 56 ENGINEERING GOODS (MOROCCO PERSPECTIVE) ................................................................................................. 57 Major opportunities in Morocco ...................................................................................................................................... 57 List of Potential Products................................................................................................................................................. 57 Products in Focus ............................................................................................................................................................. 58 Materials and components for mechanical engineering: ................................................................................................. 58 Machinery and accessories for:........................................................................................................................................ 58 SISTEP 2009 .................................................................................................................................................................... 59 Engineering Contracts ..................................................................................................................................................... 59 ENGINEERING GOODS (INDIAN PERSPECTIVE) ........................................................................................................ 60 Global engineering exports .............................................................................................................................................. 60 Product analysis: Indian engineering exports .................................................................................................................. 61 Export Performance ........................................................................................................................................................ 61 Engineering exports down by 15.74 % during March 2010 ............................................................................................ 62 Engineering exports may touch $52 billion this fiscal ...................................................................................................... 62 In comparison to cumulative export performance in 2008-09 ......................................................................................... 62 Export Value And Value Addition Matrix For India’s Engineering Export ................................................................... 63 ENGINEERING GOODS IN FTP 2009-2014 ...................................................................................................................... 64 ENGINEERING TRADE BY TRADE BLOCKS ................................................................................................................ 65 ASEAN ............................................................................................................................................................................. 65 NAFTA............................................................................................................................................................................. 65 European Union (EU) ...................................................................................................................................................... 65 Indian Engineering Sector: Need for More Focus ................................................................................................................ 66 Export Performance of Different Engineering Goods ..................................................................................................... 66 EXPORT OF ENGINEERING GOODS & SERVICES DURING 2008-09 TO 2009-10 ................................................ 69 EXPORT PERFORMANCE MONITOR........................................................................................................................ 72 TOP DESTINATIONS: 2009 – 10 ........................................................................................................................................ 73 Top 5 destinations: Product Performance ....................................................................................................................... 74 Recommendation....................................................................................................................................................................... 75 Changing Share of India’s Thrust Products Exports In Future .................................................................................. 76 Trade policy and promotion ................................................................................................................................................. 77 Promotional events by EEPC India ...................................................................................................................................... 77 TECHNOLOGICAL UPGRADATION ............................................................................................................................... 79 Support to status holders ...................................................................................................................................................... 80 Export of Spares ................................................................................................................................................................... 80 Market Access Initiative ....................................................................................................................................................... 80 Common Facility Centres ..................................................................................................................................................... 80 Zero duty EPCG Scheme...................................................................................................................................................... 81
Procuring/Manufacturing Goods For Export & Their Inspection By Government Authorities Of India. .......................... 82 In-Process Quality Control (IPQC) ...................................................................................................................................... 84 Self Certification Scheme ...................................................................................................................................................... 84 Market Research................................................................................................................................................................... 85 Brand Promotion and Publicity ............................................................................................................................................ 85 Key Support Elements For Successful Strategy Implemetnation ......................................................................................... 85 ROLE OF VARIOUS BODIES ................................................................................................................................................. 86 CENTRAL GOVERNMENT ............................................................................................................................................... 86 Foreign Trade Policy ........................................................................................................................................................ 86 Trade Agreements ............................................................................................................................................................ 86 Infrastructure ................................................................................................................................................................... 87 Foreign Direct Investment................................................................................................................................................ 87 Sectoral Policies ................................................................................................................................................................ 88 India Promotion ............................................................................................................................................................... 88 Indian Embassies / Trade Missions abroad...................................................................................................................... 88 Taxation ........................................................................................................................................................................... 88 Exchange Rate Management ............................................................................................................................................ 88 Labour Reforms ............................................................................................................................................................... 88 Partnership with Exporters.............................................................................................................................................. 89 Incentives to Promote SMEs ............................................................................................................................................ 89 Engineering Export Promotion Council (EEPC) .................................................................................................................. 89 Works Cited...................................................................................................................................... Error! Bookmark not defined.
EXECUTIVE SUMMARY
Morocco, officially the Kingdom of Morocco, is a country located in North Africa. It has a population of nearly 33 million and an area of 710,850 km², and also primarily administers the disputed region of the Western Sahara. It is a part of the Maghreb region, besides Tunisia, Algeria, Mauritania and Libya, with whom it shares cultural, historical, and linguistic ties. Morocco is a constitutional monarchy with an elected parliament. The King of Morocco holds vast executive powers, including dissolving parliament at will. Executive power is exercised by the government but more importantly by the king himself. Legislative power is vested in both the government and the two chambers of parliament, the Assembly of Representatives and the Assembly of Councillors. The political capital is Rabat, and the largest city is Casablanca; other large cities include Marrakesh, Tetouan, Tangier, Salé, Fes, Agadir, Meknes and Oujda. The population is a mix of Arabs and Berbers speaking a dialect of Maghrebi Arabic with many regional dialects. Berber-speaking Moroccans can be divided in three main dialectal groups: the Riffians, the High-Atlas Imazighen and the Middle-Atlas Imazighen inhabitants. Morocco is divided into 16 administrative regions (further broken into provinces and prefectures); the regions are administered by Walis (governors) appointed by the King. Morocco's macroeconomic performance since the start of 2001 has been relatively strong, with an average growth rate of 5% over 2001–04. This was mainly due to the good performance of the country‘s primary sector, with agriculture and phosphate mining particularly strong. In 2005, the momentum slowed down, with economic growth at 1.7%, primarily due to a contraction in the primary sector of around 18%. The economy recovered from the fall in performance in 2006 and recorded a growth rate of 6.7%. The economy grew at a CAGR of 4.7% over 2001–06, with growth in 2007 expected to have been 2.2% and the CAGR for 2007–11 expected to be 2.1%. Linked to such poverty are serious social problems, including an illiteracy rate of nearly 50 per cent, one of the highest in the Arab world. Despite an expansion in health care services, Morocco still trails Tunisia, Jordan and Egypt in the ratio of doctors to population. Those living in the countryside are especially deprived. About 45 per cent of rural homes were still without drinking water in 2003 and 38 per cent were without electricity. More than a quarter of rural homes were more than 10 kilometers from a health centre. Although about 1,500 kilometers of rural roads are being built each year, almost half the rural population is without a road that can be used throughout the winter. Moreover, following steady progress over a number of years, neo-natal and infant mortality rates rose between 1997 and 2004. Although the death rate of mothers before and during birth of children remained unchanged during this period, it compares poorly with that of neighboring Tunisia. Science and technology in Morocco has significantly developed in recent years. The Moroccan government has been implementing reforms to encourage scientific research in the Kingdom. While research has yet to acquire the status of a national priority in Morocco, the country does
have major assets that could transform its R&D sector into a key vehicle for development. The industry remains dominated by the public sector, with the universities employing 58% of researchers. Morocco‘s own evaluation of its national research system – carried out in 2003 – revealed that the country has a good supply of well trained high quality human resources and that some laboratories are of very high quality. Morocco‘s trade is heavily slanted towards the EU, with which it ratified an Association Agreement in 2000, paving the way for a gradual elimination of tariff and non-tariff barriers to trade. Phosphates and related products are Morocco‘s largest single export earners. Around three fourths of Morocco‘s exports are destined for EU markets. France‘s long-standing relationship with Morocco is reflected in its 21% share of Morocco's total exports, while Spain (20%) and the UK (5%) are the other major European export destinations. Italy and Germany each have a 5% share of Morocco's exports. Morocco has started to make its presence felt in the Asian markets with the recent rise in exports to India standing at 4% in 2006. On the import side, the EU market accounts for 56% of Morocco's total imports. France and Spain again dominate, with 18% and 14% shares, respectively. Italy, with a 6% share, closely follows Saudi Arabia, which has a 7% share. Germany has a 6% share in the Morocco's imports. Among the Asian countries, China has gained a 7% share of Morocco's total imports. India ranks 30th with a 0.8% share of world engineering exports in 2008. This low position is primarily attributable to three factors: 1. Low export-to-GDP ratio ((export-to-GDP ratio of 15% vis-à-vis 27% for other Indialike countries) 2. Low engineering-to-export ratio (engineering export-to-total export ratio of 24% vis-àvis 30% for other India-like countries) 3. Low technology intensity of engineering export (share of high and medium technology engineering exports - 62% for India vis-à-vis 71% for other India-like countries To realize this aggressive but achievable aspiration, concerted effort needs to be put in by the government, the council and exporters. The key imperatives for India include 1. Enhancing the alignment and effectiveness of trade drivers, 2. Boosting the competitiveness of the Indian engineering industry and facilitating upward movement along the value chain, 3. and strengthening enablers for growth by clearing infrastructural and procedural bottlenecks. These estimations and imperatives for the future growth of Indian engineering exports have been distilled from Ernst & Young‘s comprehensive analysis of previous year‘s trade data (2004–2008) at the product and market levels, substantiated and supplemented by insights from exporters, industry experts and secondary sources.
KINGDOM OF MOROCCO Morocco is a constitutional monarchy on the northwest coast of Africa. It has a mostly Arab
population, although like other North African Arab states its society has a largely secular and moderate Islamic outlook. Morocco has strong cultural and trading links with Europe, particularly France (the former colonial power) and Spain (its close neighbor across the straits of Gibraltar). However, as a moderate Muslim state, it is also a close and useful ally of the US. Following a decade of low and erratic growth, Morocco's economic situation has picked up since 2001. A series of economic and political reforms have helped to breathe life into the moribund economy, assisted by a stable monetary and fiscal environment. However, substantial economic challenges remain. Around one third of the population is under 15, and youth unemployment in urban areas tops 30%. Illiteracy is widespread, and rates of poverty remain high, particularly in rural areas, where public services are often meager and inadequate, even by national standards. The economy remains relatively undiversified, as it is reliant on agriculture, phosphate production and low-end manufacturing such as textiles. The transition to a more open and pluralistic political system, spearheaded by the relatively young King Mohammed VI, has been the most encouraging development in Morocco in recent years. The 2002 parliamentary elections were widely perceived as Morocco‘s most fair and open to date. Although the monarch retains a decisive role in the political sphere and political parties remain relatively fractured, Morocco‘s transition to a stable and effective democratic system is now entrenched. The pace of economic reform in Morocco has been somewhat slower, held back by political infighting, as well as genuine concerns about protecting the most vulnerable citizens from the vagaries of economic change. This is particularly difficult when the social safety net is almost absent; rates of poverty are already high, and the risk of creating supporters for militant Islamist groups is ever-present. In reality, Morocco has largely avoided the schisms of other Muslim and Arab states, preserving its Mediterranean tradition of practicing a relatively laidback and inclusive form of Islam. Although terrorist attacks in the business capital of Casablanca in the spring of 2003 shattered this image; broadly speaking, support for militants remains low. International investors, particularly in the more risk-averse climate of recent years, might be tempted to shy away from Morocco for fear of the threat of Islamic-fundamentalist militancy that has swept across much of the globe. However, as the country increasingly embraces democracy and the economy is successively liberalized and becomes more integrated with the economies of its EU neighbors, those who look behind the headlines are likely to be pleasantly surprised. Source: (Data Monitor, )29439003.pdf (Page No. 4-5) (Ebsco Host)
COUNTRY SNAPSHOT
Official name: Local long form: Local short form: Independence: Currency: Languages: Form of state: Land area: Kingdom of Morocco Al Mamlakah al Maghribiyah Al Maghrib 2 March 1956 (from France) Dirham (Dh) = 100 centimes Arabic (official); Berber languages; French and Spanish are also used. Constitutional monarchy 710,850 sq km (including the disputed territory of Western Sahara, which covers 252,120 sq km) 31,600,000 (mid-2008 IMF estimate) Population in '000 (mid-2004 census) Casablanca 2,950 Rabat (capital) & Sale 1,398 Fes 954 Marrakesh 844 Tangier 704 Kenitra 573 Warm on the coast, hot inland
Population: Main towns:
Climate:
Weather in Rabat: Hottest month, August, 18-28°C (average daily minimum and maximum); coldest month, January, 8-17°C; driest month, July, 1 mm average rainfall; wettest month, December, 86 mm average rainfall Measures: Metric system. Some local measures are also used Time: Fiscal year: Flag description: GMT January 1st-December 31st Red with a green pentacle (five-pointed, linear star) known as Sulayman's (Solomon's) seal in the center of the flag; red and green are traditional colors in Arab flags, although the use of red is more commonly associated with the Arab states of the Persian gulf; the pentacle represents the five pillars of Islam and signifies the association between God and the nation; design dates to 1912 Based on French and Islamic law and French legal procedure
Legal system:
National legislature: Bicameral system, consisting of a directly elected 325-seat lower House of Representatives and a 270-seat upper Chamber of Advisers indirectly elected by an electoral college National elections: Last elections: June 2009 (municipal); September 2007 (House of Representatives). Next elections: 2012 (House of Representatives) King Mohammed VI There are 39 provinces and eight urban prefectures; real provincial power is in the hands of governors appointed by the Ministry of the Interior The king appoints the prime minister, who chooses a Council of Ministers, which is then approved by the king; a new prime minister was appointed in September 2007, and a new government was approved shortly afterwards Loyalist: Rassemblement national des independents; Union constitutionnelle; Mouvement populaire (entered government in July 2009); Alliance nationale; Parti de l'authenticité et de la modernité (left the government in June 2009). Left and centre-left: Union socialiste des forces populaires; Parti Istiqlal; Parti du progrès et du socialisme; Gauche socialiste unifiée. Islamist: Parti de la justice et du développement. The country‘s largest Islamist movement is the banned al-Adl wal-Ihsane (Justice and Charity) Abbas el-Fassi Mohand Laenser
Head of state: Administration:
Executive:
Political parties:
Prime minister: Minister of state:
Source: (Data Monitor, )
PESTEL ANALYSIS POLITICAL ANALYSIS:
Morocco is divided into 16 administrative regions (further broken into provinces and prefectures); the regions are administered by Walis (governors) appointed by the King. The Moroccan Constitution provides for a monarchy with a Parliament and an independent judiciary. Ultimate authority rests with the King. The King presides over the Council of Ministers; appoints the prime minister following legislative elections; appoints all members of the government taking into account the prime minister's recommendations; and may, at his discretion, terminate the tenure of any minister, dissolve the Parliament, call for new elections, or rule by decree. The King is the Commander in Chief of the military and holds the title of Amir al-Mou'minin, the country's religious leader. Since the constitutional reform of 1996, the bicameral legislature consists of a lower chamber called the Chamber of Representatives, which is directly elected, and an upper chamber, the Chamber of Counselors, whose members are indirectly elected through various regional, local, and professional councils. The councils' members themselves are directly elected. Parliament's powers, though limited, were expanded under the 1992 and 1996 constitutional revisions to include budgetary matters, approval authority, and establishment of commissions of inquiry to investigate the government's actions. The lower chamber of Parliament may dissolve the government through a vote of no confidence. Parliamentary elections were held in November 2002 and were considered largely free, fair, and transparent. At that time, King Mohammed VI formed a government appointing then- Interior Minister Driss Jettou as Prime Minister. Cabinet level positions were drawn from most major parties in the coalition. Following the 2002 elections, King Mohammed VI highlighted several goals toward which the new government should work: expanded employment opportunities, economic development, meaningful education, and increased housing availability. To meet the King's objectives, the Jettou government embarked on a series of initiatives and reforms, which Jettou laid out in his early days as Prime Minister. Jettou emphasized that modernization and revitalization of the country's infrastructure (roads, trains, communications, water, etc.) and national economy (support for Moroccan businesses, preparations for competition, modernization of modes of production, etc.), were necessary to further development progress in Morocco. In order to create employment opportunities, the government is promoting investment in the tourism, industrial, fishing, and service industries, and is ameliorating, restructuring, and modernizing the education system. Parliamentary elections were held in September 2007. Abbas El Fassi was designated to form a new government. Source: (The Office of Electronic Information, Bureau of Public Affairs, 2010) On the political front, Morocco has been moving steadily towards a pluralistic democracy under its liberal-minded monarch Mohammed VI. The September 2002 parliamentary elections were judged to be Morocco‘s freest yet. The administration took up where its predecessor left off, promoting greater economic and political liberalization. Despite the moves towards democracy, the monarch has retained a decisive political voice. However, at present, the politicians and king share the same liberalizing and western-leaning instincts. The most recent parliamentary elections were held in
September 2007, when Abbas El Fassi was appointed as the prime minister to form the new government. Relations with the EU and US are largely good, although 2002 saw an ugly territorial dispute with Spain over a small Mediterranean island, Perejil, which is claimed by both countries. The US attack on Iraq and the continued occupation remain unpopular within Morocco, although the authorities continue to toe the Washington line with respect to the ?war‘ on terrorism. Morocco's relations with its Arab neighbors are hindered by Algeria‘s support for the independence of Western Sahara, a sparsely inhabited coastal territory to the south that Morocco continues to claim as its own following its annexation in 1976. An UN-brokered ceasefire in 1991 has stopped the fighting between Morocco and the independence forces, although a lasting solution still seems out of reach. The discovery of substantial oil deposits off the coast of the disputed territory is unlikely to facilitate a resolution to the stand-off. POLITICAL PRESSURE & LEADERS Democratic Confederation of Labor or CDT [Noubir AMAOUI]; General Union of Moroccan Workers or UGTM [Abderrazzak AFILAL]; Moroccan Employers Association or CGEM [Hassan CHAMI]; National Labor Union of Morocco or UNMT [Abdelslam MAATI]; Union of Moroccan Workers or UMT [Mahjoub BENSEDDIK] ELECTIONS AND GOVERNMENT M AKEUP Morocco is officially a democratic constitutional monarchy. Since the accession of the have accelerated. However, the monarch continues to have a decisive voice in politics. For the most part his influence has been positive, as he has promoted modernization, political pluralism and good government. However, the monarch faces mounting internal criticism from both left and right. Liberals question his commitment to civil liberties, particularly since a leading journalist was jailed in May 2003 for defaming the king. Meanwhile, Islamists have attacked his pro-US stance and modernizing tendencies. In fact, particularly in the build up to the US attack on Iraq, the prowestern stance of the king and his government became increasingly unpopular. However, widespread revulsion at the recent terrorist attacks in Casablanca means that this anger is probably unlikely to build into broad-based support for Islamic terror groups. The parliamentary elections held in September 2002 were widely regarded as the most free and fair in Morocco‘s history. Furthermore, there was an additional women-only list to boost female political representation in the lower house of parliament. Elections for the lower house are held every five years. Members of the upper house, the Assembly of Councilors, are elected by local councils and professional groups, with elections held every nine years. Driss Jettou, the prime minister appointed after the 2002 elections. hails from the Socialist Union of People‘s Forces (USFP). The 31-strong cabinet took in USFP and Independence Party members, and maintained the reformist and modernizing agenda of the previous USFP-Independence coalition. The most recent elections, held in September 2007, had a very low voter turnout of 37%, which is the lowest in Morocco's history. The USFP lost a quarter of its seats and was replaced by the Istiqlal party, while the leader of the Istiqlal party, Abbas El Fassi, became the prime minister. He is in the process of forming a coalition government with four other parties. The political outlook for the economy remains stable under the new government, as the king is the most important figure in the political system. Source: (Data Monitor, )Ebsco Host - 29439003.pdf, Page No. 6-7. DOMESTIC POLITICS The political scene will remain broadly stable in 2010-11, under the rule of the king, Mohammed VI, but there will be sporadic social unrest over economic inequalities and widespread disaffection with the formal political process. The monarch and his coterie of advisers will maintain their
dominance over policymaking and are unlikely to take significant steps towards further democratization. Parliament and the political parties within it are therefore expected to remain relatively weak. Morocco‘s particular version of proportional representation tends to result in a fragmented elected chamber, and at present the 325 seats in the House of Representatives are divided between 21 parties, none of which has a strong power base. The king is believed to be relatively well liked, but tight restrictions will remain on public criticism of the monarchy. Moreover, widespread poverty and rising urban unemployment could lead to further protests, calling for increased government support and wage rises. These developments will prompt further state investment in housing and infrastructure. The legislative agenda will continue to be set largely by the king who will increasingly focus on judicial reform and decentralization (the latter as part of efforts to devolve power in the disputed territory of Western Sahara)"and the makhzen (the monarch‘s inner circle). There are likely to be tensions within the four-party ruling coalition, which is led by Parti Istiqlal, as the parties hold different viewpoints and compete for influence. The Parti de l‘authenticité et de la modernité (PAM) recently left the coalition, to be replaced by the rightwing Mouvement populaire, but PAM will continue to build political support. The majority of Moroccans are likely to give more weight to religious and social groups than to formal political parties. The Islamist-leaning Parti de la justice et du development (PJD) will face challenges in trying to build popular support while also improving its relations with the political establishment. Although the PJD won the second-largest number of seats in the 2007 parliamentary election, it is not included in the ruling coalition, reflecting the tensions between it and the other parties and the concerns of the political elite about empowering a religious group. The PJD's limited progress within the parliamentary system could prompt some of its supporters to turn instead to the country‘s biggest Islamist movement, al-Adl wal-Ihsane (Justice and Charity), which opposes the monarchy and therefore is not legally recognised as a political party. To forestall support for anti-government Islamist groups including the minority that espouse violence the government will continue to promote a state sanctioned, politically quiescent interpretation of Islam. There is an ongoing risk of violent attacks by militant Islamists on government and Western targets, although these attacks do not present a systemic threat. There is a risk that Moroccan militants may pool resources with groups that have been held responsible for attacks elsewhere in the region and in Europe. Government The Kingdom of Morocco developed a constitutional monarchy based on Islamic law and French and Spanish civil law systems soon after receiving independence. The three branches of the government are the executive, the legislative, and the judicial. The executive branch includes the chief of state—the hereditary position held for life by the king—the prime minister, and a council of ministers, who are appointed by the king. The legislative branch consists of a bicameral parliament with a Chamber of Counselors and a Chamber of Representatives. The 270 members of the Chamber of Counselors are selected by local councils, professional organizations, and labor syndicates for nine-year terms. The 325 members of the Chamber of Representative are elected by popular vote for six-year terms. A judicial branch, consisting of a Supreme Court of Judges, is presided over by the monarch. Administration is further divided into thirty-seven provinces. Provincial governors are appointed by the king and answer to the central government. Leadership and Political Officials. The successor to Mohammed V, the first king of the independent Morocco, was his son Hassan II. Upon taking the throne in 1961, Hassan II agreed to
recognize the Royal Charter proclaimed by his father, which outlined steps for establishing a constitutional monarchy. Ruling for more than thirty-eight years, King Hassan II was one of the longest serving monarchs in the entire Arab world. In July 1999, King Hassan II died of heart failure at the age of seventy. Mohammed VI, the thirty-five-year-old son of Hassan II, took the throne in 1999 and became the eighteenth king of the Alaouite dynasty. In Morocco today there are an abundance of political parties, most of which belong to one of two major groupings. The National Entete is the coalition of rightist political parties that was created in 1993 by the National Popular Movement, the Social Democratic Movement, and the Constitutional Union. The Democratic Bloc, the opposition or leftist coalition created in 1992, comprises the Istiqlal Party, the Socialist Union of Popular Forces, the Party of Progress and Socialism, and the Organization of Democratic Popular Action. There are about a dozen Islamic fundamentalist political parties. These groups are not legal although they are unofficially tolerated. Several independent parties also exist. Relations between the king and the many parties have often been stormy, resulting in several attempts at restructuring political control. Social Problems and Control. The first constitution in 1962 favored a strong monarchy, subordination of all other political institutions to it, and minimal influence from political parties. This constitution was not well accepted and was followed by a period of civil unrest and student riots. In June 1965 the king responded by invoking a state of emergency and assumed all legislative and executive powers. A new government was created with no political parties. In July 1970 the state of emergency ended when the king submitted to referendum a new constitution with an even stronger monarchy. Following the political changes, two unsuccessful military coup attempts took place, one in 1971 and one in 1972. The king responded with another constitution, which increased the number of directly appointed parliamentary representatives. In the early 1990s opposition parties once again began calling for democratization of Morocco's political institutions. The king responded with yet another constitution, this time integrating the opposition parties to a greater degree than ever before. Nevertheless, requests for integration from the opposition have still not been met entirely. Military Activity The Moroccan Royal Armed Forces include the Army, Navy, Air Force, Gendarmerie, and Auxiliary Forces. The king is the commander in chief of all armed forces. In 1997–1998, military expenditures were about US $1.36 million, or 3.8 percent of the national gross domestic product. Since the mid-1970s the Moroccan military has been involved in the ongoing war with the Western Sahara guerilla group, the Polisario. Military branches: Royal Armed Forces (Forces Armees Royales, FAR): Royal Moroccan Army (includes Air Defense), Royal Moroccan Navy (includes Coast Guard, Marines), Royal Moroccan Air Force (Al Quwwat al Jawyiya al Malakiya Marakishiya; Force Aerienne Royale Marocaine) (2010) Military service age and obligation: 18 years of age for voluntary military service; service obligation - 18 months (2010) Manpower available for military service: Males age 16-49: 8,167,760, Females age 16-49: 8,599,418 (2010 est.)
Manpower fit for military service: Males age 16-49: 6,960,026, Females age 16-49: 7,307,491 (2010 est.) Manpower reaching militarily significant age annually: Male: 300,262, Female: 298,227 (2010 est.) Military expenditures: 5% of GDP (2003 est.), Country Comparison to the world: 16 Source: (Advameg Inc., 2011)
ECONOMIC ANALYSIS:
Morocco‘s economy stagnated for much of the 1990s, held back by a series of droughts that impacted upon the still-dominant agricultural sector. However, manufacturing and services continued to grow steadily. Since 2000, the economy has recorded stronger growth, based on improved weather conditions, strong export growth and liberalizing policy moves. Macroeconomic policy has provided for a bedrock of relative fiscal and monetary stability by delivering declining budget deficits and low inflation. A small and well-managed devaluation of the Moroccan currency in 2001 also helped to promote export demand. Morocco's macroeconomic performance since the start of 2001 has been relatively strong, with an average growth rate of 5% over 2001–04. This was mainly due to the good performance of the country‘s primary sector, with agriculture and phosphate mining particularly strong. In 2005, the momentum slowed down, with economic growth at 1.7%, primarily due to a contraction in the primary sector of around 18%. The economy recovered from the fall in performance in 2006 and recorded a growth rate of 6.7%. The economy grew at a CAGR of 4.7% over 2001–06, with growth in 2007 expected to have been 2.2% and the CAGR for 2007–11 expected to be 2.1%. Reform programs have suffered the effects of a political logjam, and the pace of privatization and liberalization has not been as rapid as could have been hoped for. The Jettou administration prioritized further reform, particularly as the political reform agenda that took up much of policy-makers‘ energy in the late 1990s was largely complete by the start of his leadership. Liberalization should provide a further boost to investment and exports, particularly given Morocco‘s improving access to the EU and US markets. This should help to drive down a cripplingly high level of unemployment, which is concentrated on the young. In 2009 Morocco was ranked among the top thirty countries in the off shoring sector. Morocco opened its doors to off shoring in July 2006, as one component of the development initiative Plan Emergence, and has so far attracted roughly half of the French-speaking call centre‘s that have gone offshore so far and a number of the Spanish ones. According to experts, multinational companies are attracted by Morocco's geographical and cultural proximity to Europe, in addition to its time zone. In 2007 the country had about 200 call centre‘s, including 30 of significant size, that employ a total of over 18,000 people. The country's currency, the dirham, is now fully convertible for current account transactions; reforms of the financial sector have been implemented; and state enterprises are being privatized. The major resources of the Moroccan economy are agriculture, phosphates, and tourism. Sales of fish and seafood are important as well. Industry and mining contribute about one-third of the annual GDP. Morocco is the world's third-largest producer of phosphates (after the United States and China), and the price fluctuations of phosphates on the international market greatly influence Morocco's economy. Tourism and workers' remittances have played a critical role since independence. The production of textiles and clothing is part of a growing manufacturing sector that accounted for approximately 34% of total exports in 2002, employing 40% of the industrial workforce. The government wishes to increase textile and clothing exports from $1.27 billion in 2001 to $3.29 billion in 2010. ECONOMIC PERFORMANCE Morocco‘s economy performed poorly in the 1990s due to slow growth in its major export markets and a series of droughts (six in 10 years) that hit the key agricultural sector. Historically, the agricultural sector has been the key driver of improved economic performances, followed by the construction and mining sectors. Average GDP growth
over the course of the decade was slightly over 2% per year, barely sufficient to keep pace with the rapid population growth. As a result, poverty and unemployment rates increased sharply. However, a more reformist policy stance from the late 1990s onwards—initially focused on the political sphere, but increasingly active in the area of economic policy—has helped to improve the macroeconomic environment. Real GDP growth in 2001 picked up to around 5%, from a mere 1% in 2000, while growth in 2002 was around 4.6%. The improved growth in performance since 2001 has occurred against a backdrop of low and stable inflation, and a slight easing in unemployment in 2002, although the unemployment rate remained cripplingly high at 11.6%. A predominantly Muslim Arab nation, the tourism industry was hit badly in the wake of the September 11 attacks on the US and the subsequent global developments. A series of suicide bombings in Morocco‘s business capital Casablanca in May 2003 has had a further negative impact upon the region's tourism industry. Private transfers—largely remittances from Moroccans working overseas—are a key source of foreign currency. In 2002, net private transfers were equivalent to almost half of Morocco‘s total earnings from merchandise exports. The introduction of euro notes and coins in 2001 provided a big boost to recorded transfers, as Moroccans at home and overseas converted cash holdings in the Eurozone‘s various soon-to-be obsolete national currencies into Moroccan dirhams. However, the slowdown of transfers in 2002 was negligible, suggesting a sustained trend of repatriating foreign earnings, indicative perhaps of a growing faith in investment opportunities and the general financial environment in Morocco. The economy continued to perform well in 2003 and 2004. Output growth accelerated to 6% in 2003, driven by a particularly strong performance in the dominant agricultural sector. In 2004, growth fell back to 4.4% as the one-off effect of the strong harvest in 2003 diminished. However, improved investment growth and the relatively expansive fiscal position continued to drive the economy forward. Reflecting the impact of robust domestic demand on imports, the external current account surplus moderated somewhat, from more than 3.5% of GDP in 2003, to a little over 1% of GDP in 2004. During 2005, growth in the agriculture sector was not as substantial as in other sectors. The primary sector contracted by around 18%, while non-agricultural activities continued the trend displayed in the previous year, growing at 5.2%. The growth in the tourism sector, with tourist arrivals increasing by 5.5%, came on the back of several positive changes in 2004 involving the liberalization of the air transport and closer co-ordination with foreign tour operators. Exports increased by 7.4%, mainly driven by a more than 16% rise in exports of phosphates and their derivatives. Imports soared even higher by 14.2%, primarily as a result of increases in oil prices globally and increased purchases of foodstuffs. The trade deficit in 2005 amounted to almost 19% of GDP. The unemployment rate was at 10.2%, mainly due to the lack of job opportunities in rural areas, where unemployment rose from 3.2% in 2004 to 3.6% in 2005. The urban unemployment rate was almost the same as 2004 at 18.3%. Economic growth in 2006 was at one of the highest levels seen in this decade at 6.7%, as the agricultural sector recovered from a relatively poor performance in 2005. The IMF has said that Morocco needs to sustain real GDP growth at around 6% if it is to be able to address its socioeconomic issues. In 2007, Morocco was expected to experience a drop in the rate of growth on account of a decline in agricultural output.
The high cost of imports, especially of petroleum imports, Communicati is a major problem. Another on, 15 Industry, 8.8 chronic problem is unreliable Transport & rainfall, which produces drought Storage, 3.9 or sudden floods; in 1995, the country's worst drought in 30 Banking & years forced Morocco to import Financial Services, 1.4 grain and adversely affected the economy. Another drought Agriculture, F Minerals & orestry, Fishi occurred in 1997, and one in Minning, 0.5 ng, 63.2 1999–2000. Reduced incomes Energy, 4.5 due to drought caused GDP to Business & fall by 7.6% in 1995, by 2.3% in Other 1997, and by 1.5% in 1999. Services, 0.7 During the years between Tourism, 0.2 TPR, 2 drought, good rains brought GDP CONTRIBUTION BY SECTOR IN %- 2007 bumper crops to market. Good rainfall in 2001 led to a 5% GDP growth rate. Morocco suffers both from unemployment (9.6% in 2008), and a large external debt estimated at around $20 billion, or half of GDP in 2002. Population below poverty line: 15% (2007 est.) Labor force - by occupation: Agriculture: 44.6% Industry: 19.8% Services: 35.5% (2006 est.) Labor force: 11.63 million (2010 est.) Country Comparison to the world: 43 by
Unemployment rate: 9.8% (2010 est.) Country Comparison to the world: 109 9.1% (2009 est.) Household income or consumption percentage share: Lowest 10%: 2.7% Highest 10%: 33.2% (2007) Central bank discount rate: 3.31% (31 December 2009) Country Comparison to the world: 112 3.32% (31 December 2008) Stock of narrow money: $67.33 billion (31 December 2010 est) Country Comparison to the world: 40 $64.58 billion (31 December 2009 est) Stock of domestic credit: $93.21 billion (31 December 2010 est.) Country Comparison to the world: 53 $91.83 billion (31 December 2009 est.)
Commercial bank prime lending rate: 6.5% (31 December 2008)
Stock of broad money: $108.7 billion (31 December 2009) Country Comparison to the world: 51 $99.5 billion (31 December 2008)
Agriculture - products: Industries: Barley, wheat, citrus fruits, grapes, vegetables, phosphate rock mining and processing, food olives; livestock; wine processing, leather goods, textiles, construction, energy, tourism Industrial production growth rate: 4.4% (2010 est.) Country Comparison to the world: 76 Electricity - production: Electricity - consumption: 19.78 billion kWh (2008 est.) 20.78 billion kWh (2007 est.) Country Comparison to the world: 71 Country Comparison to the world: 68 Electricity - imports: 3.429 billion kWh (2009 est.) Oil - production: Oil - consumption: 4,053 bbl/day (2009 est.) 187,000 bbl/day (2009 est.) Country Comparison to the world: 97 Country Comparison to the world: 57 Oil - exports: Oil - imports: 17,420 bbl/day (2007 est.) 195,800 bbl/day (2007 est.) Country Comparison to the world: 92 Country Comparison to the world: 45 Oil - proved reserves: Natural gas - proved reserves: 100 million bbl (1 January 2010 est.) 1.501 billion cu m (1 January 2010 est.) Country Comparison to the world: 70 Country Comparison to the world: 96 Natural gas - production: Natural gas - consumption: 60 million cu m (2008 est.) 560 million cu m (2008 est.) Country Comparison to the world: 81 Country Comparison to the world: 94 Natural gas - exports: Natural gas - imports: 0 cu m (2008 est.) 500 million cu m (2008 est.) Country Comparison to the world: 91 Country Comparison to the world: 59 Exports - partners: Imports: Spain 22.02%, France 20.22%, India 4.91%, $34.19 billion (2010 est.) Italy 4% (2009) Country Comparison to the world: 54 $30.55 billion (2009 est.) Reserves of foreign exchange and gold: Debt - external: $24.57 billion (31 December 2010 est.) $22.69 billion (31 December 2010 est.) Country Comparison to the world: 38 Country Comparison to the world: 70 $23.58 billion (31 December 2009 est.) $21.12 billion (31 December 2009 est.) Stock of direct foreign investment - at home: Stock of direct foreign investment - abroad: $42.19 billion (31 December 2010 est.) $1.047 billion (31 December 2010 est.) Country Comparison to the world: 57 Country Comparison to the world: 72 $40.72 billion (31 December 2009 est.) $1.333 billion (31 December 2009 est.)
B USINESS REFORMS IN M OROCCO Doing Business 2011 Protecting Investors: Morocco strengthened investor protections by requiring greater disclosure in companies‘ annual reports. Doing Business 2010 Getting Credit: Access to credit was strengthened with a new private credit bureau that began operating in March 2009 in Morocco. Doing Business 2009 Getting Credit: The right of borrowers to inspect data on their creditworthiness was guaranteed, increasing their ability to control the accuracy of the information used by financial institutions in assessing their risk profiles. Paying Taxes: The corporate income tax rate was reduced from 35% to 30%, effective 2008. Trading Across Borders: Document requirements for importing and exporting were simplified, reducing the time to import by 1 day. Doing Business 2008 Dealing with Construction Permits: The time needed to obtain new licenses for construction firms was reduced by 10 days, by establishing a one-stop shop in Casablanca to provide better communication between the relevant agencies. Registering Property: The property registration process was complicated by adding the requirement to check several tax agencies, rather than just one, in order to obtain a tax clearance certificate. The reform is being implemented nationwide, and adds three procedures to the process of transfer. Trading Across Borders: A new risk-based inspections system was introduced, causing the time to export to decrease by 2 days, and import by 4 days. Source: (The World Bank Group, 2011) POLICY TRENDS The government is aware that its popular support will largely depend on its success in dealing with social and economic exclusion and will maintain high social spending on slum clearance, rural infrastructure, education and health. However, given limited resources, an inefficient bureaucracy and widespread nepotism and corruption, addressing the shortcomings of the country‘s infrastructure will prove difficult. The government, in its development plan, Emergence II, has retained its target of 6% annual average real GDP growth over the long term but has cut its job creation target. The government is also committed to building 150,000 housing units a year until 2013. These targets still look overambitious, particularly given the weak global economy and the vulnerability of GDP growth to shocks that affect agricultural output. The government‘s efforts to attract more private investment
and thus reduce unemployment and poverty will prove challenging at a time when there is little growth in the developed world. Priority sectors for foreign direct investment are textiles, electronic components, offshore services and tourism (a particularly labour-intensive sector). Another key policy issue will be upgrading agriculture and fisheries, under the Maroc Vert and Halieutis plans, respectively. There will be increasing investment in the energy sector, with a focus on alternative energy sources to alleviate the country‘s dependence on imports. State utilities will also be rationalised, with water and electricity providers to merge. FISCAL POLICY The Economist Intelligence Unit estimates that the fiscal account moved into deficit in 2009 and forecasts that the deficit will widen in 2010 before stabilising in 2011, given the projections of the draft 2010 budget. However, the shortfall (excluding privatisation earnings) in 2010 will, at 4.3% of GDP, be manageable but above the government‘s projection of 4% of GDP. Tax penetration is increasing as both compliance and the tax base have improved, but tax receipts declined in 2009 and will rise only modestly over the forecast period, as private consumption, customs duties and corporate profits grow slowly and the tax rate cuts mandated in the 2010 budget take effect. Nevertheless, the strong revenue base built up in 2007-08 will stand Morocco in good stead. A sharp fall in subsidy costs in 2009 (because of weaker commodity prices) was offset by higher public-sector wages and extensive infrastructure spending. Subsidy spending will rise modestly in 2010, and other components of spending particularly wages will remain a burden. Reforming the subsidy system is a priority for the government as large rises in global Commodity prices can be a serious drain on the public finances, but this will be politically difficult given widespread poverty. The government plans to spend heavily in 2010, although overall spending growth should ease in 2011. M ONETARY POLICY With the economy growing more slowly, inflation falling and credit conditions tightening, Bank alMaghrib (the central bank) will maintain its policy rate at 3.25%. Although the central bank will move cautiously, it is likely to be concerned about the negative impact of weakness in the euro zone on investment and exports. Weakening property prices may also prompt a further Lowering of interest rates (particularly as inflation remains muted), given that the recession and subsequent sluggish recovery in the euro zone will bite into European demand for second homes in Morocco. Interest rates will only start to rise from late 2010 at the earliest. The central bank will also use other tools to improve liquidity; reserve requirements were lowered to 6% from 8% in March. INTERNATIONAL ASSUMPTIONS We expect the euro area economy to grow slowly in 2010-11, at an average of 0.7% a year, having contracted by 4.1% in 2009. The weak outlook for European growth poses significant risks to Morocco‘s economy, since the euro zone is its main export market and provides employment for some 2.5m Moroccan expatriates. Inward investment from Europe will be sluggish because of volatility on international capital markets, although Morocco could see some benefits if European firms relocate to Morocco to lower costs. We expect world GDP (measured using purchasing power parity exchange rates) to expand by an average of 3.8% a year in 2010-11. Policy interest rates have been cut sharply and are unlikely to be raised until late 2010 at earliest in most major economies, but heightened uncertainty in world financial markets makes it likely that the spreads of money market interest rates over government bond yields will remain elevated in 2010-11. Oil
prices will be higher in 2010-11 (averaging around US$80/b) than they were in 2009, but still lower than in 2008; weaker world commodity prices will help to contain Morocco‘s subsidy bill
.
ECONOMIC GROWTH
We expect the Moroccan economy to grow by 4.1% in 2010 and 4.4% in 2011 as the impact of modest recovery in global demand for goods and services is offset by weaker agricultural performance. Morocco experienced a strong finish to 2009 (output grew by 7.8% year on year in the fourth quarter), with the agricultural sector expanding strongly and industry also growing, albeit after contracting in the first half of the year. Despite the recessions in Morocco‘s key export markets, real GDP growth for the whole year was 5.2% (according to supply-side data). Morocco will continue to face risks associated with its dependence on rain-fed agriculture, which typically accounts for some 15% of GDP but employs 42% of the workforce, with the result that changes in agricultural output can have a significant effect on private consumption. Agriculture‘s contribution to GDP will stagnate or fall in 2010-11, as flooding has ruined some crops, and over the longer term the non-agricultural sector‘s role will gradually increase as manufacturing develops and construction expands on the back of government housing and infrastructure projects, partly offsetting contraction in private-sector tourism developments. Private consumption growth will be more muted in 2010-11 than in 2008-09, reflecting weaker agricultural performance, although government public works, particularly in tourism, should generate some new jobs. Given that the equivalent of 20% of the domestic workforce is employed in Europe, the volatile economic conditions in the euro area are likely to feed into modest household consumption growth in Morocco. Remittances from Moroccans employed abroad, mostly in Europe, are equivalent to 8-9% of Morocco‘s GDP and are a crucial source of funds for household consumption. Investment growth is likely to be slower than in previous years owing to a weak global economy. However, government consumption growth will be higher as the state seeks to boost infrastructure provision. Export performance, although improving, will be constrained by competition from lower-wage countries and by weak European demand. Import growth should also be moderate as consumer demand growth will be weaker than in 2007-08 because of higher international commodity prices and a weaker Moroccan dirham. INFLATION As world and local food prices have fallen, consumer price inflation has also declined in Morocco; we estimate that it averaged just 1.2% in 2009. Inflation has been generally low in recent years, largely because of extensive government subsidies and the managed exchange rate, but also because of deficiencies in the way inflation is recorded; reforms to the latter may lead to a temporary spike in official inflation. The real cost of living may have increased more rapidly in recent years than government data suggest. Nonetheless, the risk of a wage-price spiral is limited given that the subsidy system will remain in place and commodity import prices will rise only modestly. The depreciation of the dirham against the US dollar will be a concern for monetary authorities, with subsidies for imports likely to continue to drag on public finances. Harvest results (and global prices) will determine food prices in 2010-11, with inflation increasing if wheat production is low and the country is required to import grain, but we expect inflation to average 2.5% over the two-year period. EXCHANGE RATES Moroccan dirham (MAD) per US dollar - 8.3619 (2010), 8.0571 (2009), 7.526 (2008), 8.3563 (2007), 8.7722 (2006). The current exchange-rate regime is a tightly managed float against a euro dominated basket of currencies. Despite opposition from exporters, Bank al-Maghrib argues that this system has been useful in anchoring the economy and keeping inflation low. The authorities aim to introduce a fully floating currency at an unspecified date, probably beyond the forecast period. In 2010-11, however, the dirham will move roughly in line with the euro, and will be
vulnerable to further pressure should global financial sentiment weaken. From an average of Dh8.06:US$1 in 2009, it will depreciate to Dh8.11:US$1 in 2010, before weakening to Dh8.24:US$1 in 2011. Morocco will also try to maintain competitiveness within the euro area. EXTERNAL SECTOR We expect Morocco‘s current account to remain in deficit throughout the forecast period, as higher energy prices and a weaker dirham hurt the terms of trade. The trade deficit is expected to widen in 2010-11, to an average of US$20bn, because of higher oil prices and restrictive tariffs on food imports. The trade and income deficits will be balanced by surpluses on the services and current transfer‘s accounts which will both widen in 2010-11, having shrunk in 2009 owing to weakening tourism demand and lower workers‘ remittances from Moroccan workers in Europe. The current-account deficit is forecast to widen to 6.5% of GDP in 2010, before narrowing to 4.9% of GDP the following year, reflecting stronger services and current transfer‘s surpluses. Source: 51232927.pdf, Page No. 5-9 (Ebsco Host) INVESTMENT BY SECTOR IN BUDGET 2010, M OROCCO
55 50 45 40 35 30 25 20 15 10 5 0 51
Dh bn
11
10
11
7
5.2
4.1
3.2
2.2
2.1
2
0.8
0.6
0.4
Source:Ministry of Finance & Economics
Source: 45586823.pdf, Page no. 12-13. (Ebsco Host)
ANNUAL DATA AND FORECAST
ANNUAL DATA AND FORECAST GDP Nominal GDP (US$ m) Nominal GDP (Dh bn) Real GDP growth (%) Expenditure on GDP (% real change) Private consumption Government consumption Gross fixed investment Exports of goods & services Imports of goods & services Origin of GDP (% real change) Agriculture Industry Services Population and income Population (m) GDP per head (US$ at PPP) Recorded unemployment (av; %) Fiscal indicators (% of GDP) Central government budget revenue Central government budget expenditure Central government budget balance Public debt Prices and financial indicators Exchange rate Dh:US$ (av) Exchange rate Dh:€ (av) Consumer prices (av; % change) Producer prices (av; % change) Stock of money M1 (% change) Stock of money M2 (% change) Money market rate (av; %) Current account (US$ m) Trade balance Goods: exports fob Goods: imports fob Services balance Income balance Current transfers balance Current-account balance External debt (US$ m) Debt stock Debt service paid Interest International reserves (US$ m) Total international reserves
a b
2005a 59,524 527.7 2.2 2.3 3.5 7.4 13.3 9.6 -13.5 4.9 6.3 30.5 3,547 11.0 25.3 30.3 -5.0 69.9 8.87 11.04 1.0 9.1 14.3 14.0 2.8 -8,204 10,690 -18,894 4,253 -383 5,283 949 16,174 2,728 590 16,467
2006a 65,642 577.4 7.8 6.9 2.9 9.7 11.6 8.2 25.3 4.9 5.2 30.9 3,904 9.7 26.8 28.9 -2.1 66.6 8.80 11.04 3.3 6.0 16.2 17.0 2.6 -9,757 11,926 -21,683 5,316 -477 6,233 1,315 17,270 2,109 618 20,791
c
2007a 75,114 615.4 3.2 3.8 4.4 14.3 5.2 15.0 -20.8 6.0 6.1 31.2 4,095 9.8 27.4 27.2 0.2 63.7 8.19 11.21 2.0 1.7 19.1 16.1 3.3 -14,170 15,146 -29,316 6,749 -404 7,601 -224 18,577 2,503 676 24,716
2008a 88,880 688.8 6.2 9.4 4.8 11.7 -1.1 10.9 16.3 3.3 4.1 31.6 4,385b 9.5 29.5 29.1 0.4 55.6b 7.75 11.39 3.8 17.9 7.9 10.8 3.4 -19,497 20,330 -39,827 6,722 -522 7,638 -5,659 20,154b 3,078b 758b 22,717
2009 b 92,624 747.2 4.0 6.7 5.2 5.0 -10.0 -2.0 26.0 1.7 1.0 32.0 4,563 9.0 25.3 26.3 -1.0 53.5 8.07 11.28 2.0 -7.0 5.6 6.4 3.1 -15,997 15,361 -31,357 6,449 -390 6,914 -3,023 20,278 2,979 782 22,342
2010c 101,915 799.9 3.8 4.0 3.8 4.2 3.5 4.0 -1.0 4.3 4.6 32.3 4,752 9.8 24.5 26.8 -2.3 51.7 7.85 11.16 2.7 2.0 8.4 8.7 3.3 -17,436 16,692 -34,129 6,683 -220 7,167 -3,807 20,779 2,780 662 23,267
2011c 107,453 853.4 4.3 4.5 3.6 5.0 4.9 5.0 3.0 3.9 5.0 32.7 4,972 9.6 24.6 26.7 -2.2 50.7 7.94 11.10 2.3 4.0 9.4 9.7 3.1 -17,564 18,292 -35,856 6,966 -148 7,516 -3,231 21,329 2,766 636 24,346
Actual Economist Intelligence Unit Estimates Economic Intelligence Unit Forecasts Source: IMF, International Financial Statistics
QUARTERLY DATA
Quarterly data Central government finance (Dh bn) Revenue (excl privatisation) Expenditure Balancea Employmentb & prices Labour force ('000) Unemployment ('000) Unemployment rate (%) Consumer prices (2000=100) Consumer prices (% change, year on year) Phosphate rock (US$/tonne) Financial indicators Exchange rate Dh:US$ (av) Exchange rate Dh:€ (av) Deposit rate (av; %) Discount rate (end-period; %) Money market rate (av; %) M1 (end-period; Dh bn) M1 (% change, year on year) M2 (end period; Dh bn) M2 (% change, year on year) Moroccan All Shares Index (MASI; Dec 31st 1991=1,000; end-period) Sectoral trends Industrial production indices (2000=100) Mining Energy Manufacturing Phosphates production ('000 tonnes) Tourism, visitors ('000) Foreign trade(Dh m) Exports fob Imports cif Trade balance Foreign reserves (US$ m) Reserves excl gold (end-period)
a
2007 4 Qtr 35,237 40,964 -5,727 10,963 1,064 9.7 106.7 1.7 98.3 7.79 11.30 3.73 3.25 3.68 519.83 19.1 644.96 16.1
2008 1 Qtr 54,409 42,842 11,567 11,274 1,078 9.6 106.9 2.4 234.4 7.58 11.36 3.70 3.25 3.32 522.98 16.0 649.48 12.8
2 Qtr 45,764 50,982 -5,218 11,340 1,033 9.1 109.7 4.6 367.5 7.32 11.43 3.83 3.25 3.21 533.52 13.1 675.89 13.9
3 Qtr 42,225 40,079 2,146 11,298 1,123 9.9 110.1 4.2 409.2 7.56 11.36 3.90 3.31 3.33 539.76 9.4 693.91 12.3
4 Qtr 40,276 48,062 -7,786 11,156 1,078 9.9 110.9 3.9 371.3 8.45 11.10 4.23 3.50 3.33 560.89 7.9 714.67 10.8
2009 1 Qtr 48,110 36,769 11,341 11,326 1,090 9.6 111.0 3.8 193.3 8.50 11.09 3.90 3.44 3.40 555.47 6.2 715.10 10.1
2 Qtr 43,675 54,030 -10,355 11,450 911 8.0 110.5 0.7 113.3 8.20 11.18 3.97 3.25 3.21 562.37 5.4 725.42 7.3
3 Qtr n/a n/a n/a n/a n/a n/a 110.6 0.5 90.0 7.88 11.27 n/a n/a n/a n/a n/a n/a n/a
12,695
14,684
14,191
12,488
10,984
10,402
11,589
10,765
106.3 108.0 113.5 6,649 1,002 30,139 -70,384 -40,245 24,123
135.3 100.8 109.7 6,965 946
104.2 102.2 119.2 6,980 1,104
106.6 107.5 110.9 7,226 1,128
96.7 101.9 108.7 4,652 1,034 27,954 -71,568 -43,614 22,104
105.7 107.3 108.8 1,847 909 25,555 -59,662 -34,107 21,612
84.4 103.4 102.5 4,799 1,193 28,978 -68,213 -39,235 21,244
n/a n/a n/a n/a 1,114 29,110 -65,610 -36,500 n/a
35,275 39,628 39,228 -70,852 -82,793 -87,257 -35,577 -43,165 -48,029 25,669 26,456 24,157
Excluding balance of Special Treasury Accounts; b Active population aged over 15. Sources: IMF, International Financial Statistics; Direction de la statistique, Bulletin Statistique; Haut commissariat au plan; Repères Statistiques; Casablanca Stock Exchange.
KEY ISSUES A key problem facing the Moroccan economy is the continuing dominance of the agricultural sector. Much of the sector is rooted in low-productivity, traditional production, and output remains highly seasonal and susceptible to poor weather conditions. Most of the output variability recorded during the 1990s was a result of big swings in agricultural output, which, in turn, was due to a series of severe droughts. Achieving diversification into more specialized areas of agricultural production, manufacturing and tourism are key objectives for the Moroccan authorities. Morocco's strong export performance in recent years points to some progress towards economic diversification, largely due to improved access to the lucrative and nearby EU market. However, progress in this area will be hampered by a lack of available skills, as well as the continued effects of the 2003 Casablanca bombing and wider regional instability on tourism and investor confidence. Although agriculture accounts for only one sixth of output, it absorbs almost half of Morocco's labor force. This illustrates the extremely low level of labor productivity in the sector, but it also reflects the high levels of unemployment and the lack of other employment opportunities that force many Moroccans to eke out a meager existence on the land. Urban unemployment stands at around 18% and for the young, the rate is 34%. With around one third of the population presently under 15 years of age, labor market conditions are likely to become worse before they improve. Structural impediments, including a rigidly enforced minimum wage and restrictive hiring and firing laws, contribute to the unemployment problem. However, the poor economic performance of the 1990s and the resultant low levels of investment and job creation are the key problems. At 51.7%, Morocco's literacy rate has compounded the problem by limiting the skills that are available to investors. However, in recent years, the situation has been improved by a renewed focus on school enrolment, particularly of girls, who have traditionally been underrepresented. In time, this should deliver a step-change in education indicators. The reform to the labor code that was completed in 2003 has also helped to remove some structural impediments to growth. The financial sector is generally sound and has benefited from improved standards of regulatory and supervisory oversight in recent years. However, some structural problems remain, including the continued presence of a number of state-owned specialist development banks that are technically insolvent. The ratio of bad loans to equity is also relatively high. The comparatively low level of financial development and the sector‘s lack of integration with global financial markets reduce its exposure to potentially destabilizing shocks. However, as the external environment continues to be liberalized and as the sector itself is opened up to greater competition, the risk of financial sector instability creating wider macroeconomic imbalance is likely to increase. The main industries in Morocco are tourism, phosphate mining and processing, food processing, textiles, leather goods, construction and handicrafts. However, Morocco also has a huge, illegally operating cannabis industry. Although the industry has not come under the global scanner as yet, the country‘s desire to have closer ties with the stringent economies of the EU will translate into greater efforts to dismantle this illegal trade. The country is endowed with two thirds of the world‘s phosphate reserves. This puts it in a higher league than its other major competitors such as China, Russia and the US. Although it employs only 2% of the population, the phosphate mining industry is responsible for half of the nation‘s income. The country has good infrastructure to support an active oil and gas exploration and production industry. The roads, airports, seaports, pipelines and refineries are equipped with the latest amenities that are equal to European or North American standards.
The greatest challenge for the government is the ongoing risk of suicide bombings by militant Islamist groups. Indeed, several such attacks occurred in the first half of 2007. The government is also trying to push ahead on economic reforms aimed at tackling the problem of unemployment and infrastructure, but the success of these changes would be dependent upon the progress made on bureaucracy constraints, financial rigidities and structural weaknesses in the economy. PROSPECTS Morocco faces some daunting problems. Poverty, illiteracy and unemployment rates are high, particularly in urban areas. As a result, there is evidence of growing support for the radical Islamist message. On the other hand, partly due to the 2003 terrorist bombings in Casablanca, support for extremist groupings within the population remains relatively low. With the authorities clamping down hard on militant groups in the wake of the bombings, largely with popular support, they ought to be in a strong position to face down the extremist challenge. Overall, the political system is moving towards an embedded and stable democracy; however, it still has some way to go. Some 26 parties took part in the 2002 elections, and a wide array of factions representing disparate opinions jostle for a position in parliament. This can make it difficult to pass legislation and achieve necessary economic reforms, as witnessed under the previous administration, when the pace of reform was painfully slow. With the monarch granting more liberalized terms of trade and the central bank now commanding increased autonomy, the conditions for trade look favorable. Morocco‘s increasingly close ties with the US and Europe are another advantage, especially considering that most of its produce is absorbed by these markets. Robust export growth should continue to drive Morocco‘s economic integration with the EU economy over the medium term. The recently strong record of macroeconomic policy stability—if maintained in the face of increased liberalization and fiscal pressures—will provide the bedrock for a solid economic expansion. In the short term, the repercussions of the 2003 terrorist attacks and the fear of Islamic fundamentalism will continue to hurt tourism, and may also shake investor confidence more widely. However, over the medium to long term, Morocco‘s relative political stability and its continued journey down the path of economic reform will help to provide an investment climate conducive to further growth and development. The government is planning to achieve advances with economic reform, but progress is expected to be slow due to economic factors like the fall in agricultural output and limited resources; and non-economic factors, like inefficient bureaucracy and widespread nepotism and corruption. Morocco's economic activity will be affected by the performance of its agricultural sector. Because of periodic droughts, the CAGR of GDP is expected to be only 2.1% for the period 2007–11. This is much lower than the growth rate that is seen as necessary to have an impact upon two important problems for the economy; poverty and unemployment. The government is expected to start the liberalization of the exchange rate from late 2008, which should boost the country's export competitiveness leading to a surplus in the current account. Source: (Data Monitor, ) Ebsco Host 29439003.pdf, Page No. 11-15.
SOCIAL ANALYSIS
Al Maghrib, the Arabic name for Morocco, means "far west" or "where the sun sets." When the Arabs first arrived in northern Africa in the seventh century C.E. , Morocco was believed to be the westernmost point in the world. At that time, the Maghrib region included the countries that are today Morocco, Algeria, and Tunisia. The countries of the Maghrib share many common historical and cultural features. All have indigenous Berber populations and a strong Islamic base. Similarly, all were colonized by France, and remain largely bilingual, with both French and Arabic being spoken. Although European influence in Morocco is strong, it is still a country of distinctly Arabic tradition. The vast difference between the crude life on the streets and the hospitality and intimacy found in the home reflect the duality that is deeply ingrained in Moroccan culture. But one aspect of Moroccan life that is distinctly unified is religion. The king has declared that all citizens are born Sunni Muslims, and Islam is an important part of everyday ritual life. The Moroccan government is a constitutional monarchy, with a very powerful king. It is this mix of European and Arab influence, loyalty to the king and a strong Islamic base, that creates the uniquely Moroccan identity. Demography The current population of Morocco is approximately 30 million, half of whom are under the age of nineteen. Out of the total population, 99.1 percent are identified as Arab-Berber. The indigenous tribes who occupied much of northwestern Africa were given the generic title Berber, meaning simply non-Arab, by the Arabs. After centuries of intermingling, most Moroccans today are an Arab-Berber mix, although a few tribes in the countryside identify themselves as purely Berber. The remaining .09 percent of the population is comprised of Jews, white Europeans, and black Africans. (Demographic and other statistics presented in this article do not include Western Sahara.) Linguistic Affiliation. Moroccan Arabic is the official language of Morocco. It is spoken by roughly three-quarters of the population and differs slightly from modern standard Arabic and other dialects in grammar and vocabulary. Although half a century has passed since the French colonial period in Morocco ended, French remains the official language in business, government, and diplomacy. Before the Arabs spread their language and culture across northern Africa, Berber dialects were spoken in Algeria, Morocco, and Tunisia. Although the dialects can still be heard in some rural areas, the Berber linguistic tradition is oral rather than literary, and there is no formal alphabet or standard written form of the language. There are three main Berber dialects in Morocco. Rifan is the dialect spoken in the Rif Mountains as well as in some rural areas of eastern Morocco along the Algerian border. In the High and Middle Atlas region the dialect spoken has many names; it may be called Amazigh, Zaran, or Tamazight. In the southwestern oasis and the Anti-Atlas region, the dialect may be called Soussi, Celha, Tashelhait, or Chleuh. Spanish is widely spoken in the northern parts of the country, and English is commonly spoken to international tourists. Multi-lingualism exists to such a degree that Moroccans may switch from one language to another midsentence.
People Nationality: Noun: Moroccan(s) Adjective: Moroccan Religions: Muslim 98.7%, Christian 1.1%, Jewish 0.2% Ethnic groups: Arab-Berber 99.1%, other 0.7%, Jewish 0.2%
Languages: Arabic (official), Berber dialects, French often the language of business, government, and diplomacy Population: 31,627,428 (July 2010 est.) Population growth rate: Country Comparison to the world: 38 1.077% (2010 est.) Country Comparison to the world: 118 Age structure: Median age: 0-14 years: 28.7% (male 4,548,808/female Total: 26.5 years 4,418,768) Male: 25.9 years 15-64 years: 65.4% (male 10,009,928/female Female: 27 years (2010 est.) 10,437,103) 65 years and over: 6% (male 851,190/female 1,019,377) (2010 est.) Birth rate: Death rate: 19.4 births/1,000 population (2010 est.) 4.74 deaths/1,000 population (July 2010 est.) Country Comparison to the world: 102 Country Comparison to the world: 195 Net migration rate: Urbanization: -3.88 migrant(s)/1,000 population (2010 est.) Urban population: 56% of total population Country Comparison to the world: 192 (2008) Rate of urbanization: 1.8% annual rate of change (2005-10 est.) Sex ratio: Literacy: At birth: 1.05 male(s)/female Definition: age 15 and over can read and write Under 15 years: 1.03 male(s)/female Total population: 52.3% 15-64 years: 0.96 male(s)/female Male: 65.7% 65 years and over: 0.83 male(s)/female Female: 39.6% (2004 census) Total population: 0.97 male(s)/female (2010 est.) Infant mortality rate: Life expectancy at birth: Total: 28.61 deaths/1,000 live births Total population: 75.69 years Country Comparison to the world: 76 Country Comparison to the world: 77 Male: 33.52 deaths/1,000 live births Male: 72.63 years Female: 23.46 deaths/1,000 live births (2010 Female: 78.9 years (2010 est.) est.) School life expectancy (primary to tertiary Education expenditures: 5.7% of GDP (2008) education): Total: 10 years Country Comparison to the world: 40 Male: 11 years Female: 9 years (2006)
Symbolism. Perhaps the most famous city in Morocco is Casablanca. Port activities by the French turned this city into the economic capital of the country in the early 1900s. In 1942 the city was the site of an Allied invasion, and in 1943 it was the host city for a conference between Franklin Delano Roosevelt and Winston Churchill. But it was the 1943 Hollywood classic film Casablanca, starring Ingrid Bergman and Humphrey Bogart, that transformed the city into an international symbol of romance and wartime struggle. The black-and-white film was the 1943 Academy Award winner for best picture. Other films with quintessential images of Morocco include Lawrence of Arabia and The Jewel of the Nile. A more eastern symbol of Morocco is the Hassan II Mosque, built in Casablanca in 1993. It is one of the largest and most extravagant mosques in the Arab world. Dating back to the Alaouite Dynasty in the seventeenth century, a red flag was used as a symbol of the Moroccan state. In Rabat and Salé the flag was raised every morning and lowered every evening. When the French took control in 1912, a five-pointed linear known as Solomon's seal was placed on the flag in order to distinguish the nation's flag from others. Because green is the traditional color of Islam, the star on the flag is green. CLASSES AND CASTES. A wide gap exists between the very rich and the very poor. A strong belief in fatalism, that things are meant to be exactly as they are, and the Islamic principal of giving to those in need, lends to the acceptance of social and economic inequality. At the top level of the class system exists the monarch and royal family, members of the government, and a group of very wealthy Moroccans who do not work. They are joined by wholesale merchants and the owners of large manufacturing, industrial, or international trading companies. The upper class often claims to be Arab, although there are as few pure Arabs as there are pure Berbers remaining. An upper middle and middle class is comprised of professionals, mostly educated in Europe. Another group, called Sherfa, are those who claim descent from the prophet Muhammad. Sherfa typically do not work, and those who have no inherited wealth live off the alms of others. A relatively new class, referred to as the Muhajerin, or emigrants, is comprised of nearly 2 million Moroccans who live and work abroad, in order to send their wages back to support their families in Morocco. Many of the Muhajerin are not likely to ever return to their native country. Berber farmers in the countryside have little access to the education and social climbing available to those in larger cities. Most remain poor and are looked down upon. Jews and other foreigners generally prosper, while sub-Saharan black Africans are often discriminated against. SYMBOLS OF SOCIAL STRATIFICATION. The number of languages spoken and the proficiency acquired are primary identifiers of social class in Morocco. Well-spoken French is perceived as a characteristic of a refined, sophisticated individual. The inability to speak any French usually signifies a lack of education. Fluency in Arabic is accepted, and rather expected of any respectable individual, while those who speak only Berber dialects are looked down upon. Other symbols of status are headgear and clothing. Moroccans have occasion to wear both traditional and Western clothing, therefore it is not the style of the clothes, but rather the quality of what is being worn that symbolizes one's status. For example, the jellaba, the traditional one-piece hooded garment worn by both men and women, comes in many varieties. Those of a higher class have theirs hand made by a tailor with intricate needlework and fine fabric. The jellaba is also available at corner shops at a much lower quality. Among the rural poor a knit cap is worn, which would never be placed on the head of an upper- or middle-class man. Turbans worn by Berber men are often white while those of Arab men are
orange. A more traditional, perhaps ceremonial, hat is the fez, worn by older upper-class men. Women who wish to show that they are Islamic fundamentalist cover their heads to the hairline with a scarf or the hood of the jellaba when in public. Young women are increasingly challenging traditions such as this, some even daring to sit in public cafés and smoke cigarettes with uncovered heads. SOCIAL WELFARE AND CHANGE PROGRAMS Pressure from the French and other European governments to investigate human rights violations against the Saharawi people in Western Sahara have yielded positive results. In eagerness to be accepted as an EU member country, and to divert international attention on the issue, the Moroccan government has taken action. In 1990 King Hassan II created a Consultative Council on Human Rights, composed of representatives from the government and opposition political parties. The council made an offer to provide compensation to the victims of abusive detention and the families of the disappeared. Since King Muhammad VI came to power in 1999, sixty-eight human rights abuse cases have been settled; the council, however, has taken nearly six thousand complaints. Compensation ranged from US $100,000 to US $250,000 per claimant. Many cases remain unresolved, but the council is reacting in a slow and careful manner, attempting to prevent a backlash from conservative forces in the government. NONGOVERNMENTAL ORGANIZATIONS AND OTHER ASSOCIATIONS Most of the nongovernmental organizations (NGOs) in Morocco came to the country in the early 1990s. The monarch's opening to human rights issues resulted in an inflow of NGOs, especially those concerned with the treatment of the Saharawi people. In 1994 the monarch allowed Human Rights Watch to conduct a fact-finding investigation on violations of human rights and to publicize the results. Some of the major NGOs active in the country include the Moroccan Organization of Human Rights, the Moroccan League for the Defense of Human Rights, and the Moroccan Association of Human Rights. Amnesty International has chapters located in Casablanca, Rabat, and Marrakech, although it is not officially recognized by the central government. Marriage. Parents still have considerable influence over the choice of their children's spouse, although in some less traditional families this practice is changing. Once a person with the appropriate economic and family background has been agreed upon, the groom offers a bride-price to the family of the bride-to-be. In return, the bride's family negotiates a dowry with the groom's family, and assures them that her virginity is intact. Weddings take place during summer months, and usually last for two or three days, depending on the financial circumstances. At traditional weddings, the bride is carried to the groom on a table, ornately decorated with henna-stained hands and feet. Islamic law dictates that Muslim women must marry Muslim men; it is acceptable, however, for a Muslim man to take a non-Muslim woman as his wife. If divorce occurs, it is likely to be instigated by the man, as a divorced woman has little chance to remarry and may have a difficult time providing for herself. Religious Beliefs. Nearly 99 percent of Moroccans are Sunni Muslim. Moroccans are tolerant of the small percentage of Christians and Jews living in the country, believing they worship the same God. The five main pillars observed by Muslims are: making a public profession of faith, praying five times a day according to the position of the sun, fasting during the month of Ramadan, giving alms to those in
need, and making a pilgrimage to Mecca once in a lifetime. Moroccans have added a few unique features of their own to traditional Islam. Two of these features, whose origins are likely attributed to Berber religious practices, are Baraka and Murabitin. Baraka refers to spiritual power that manifests in the form of a blessing or good fortune, similar to the concept of good karma in Buddhism. Murabitin are the individuals who possess good Baraka, similar to the concept of sainthood in Catholicism. Baraka may rub off on individuals who spend time with Murabitin. Also, most villages and medina neighborhoods have a fortune-teller who will charge to offer a vision, provide a remedy, or put a curse on someone. When news travels that pagan practices are taking place, Muslim missionaries will travel to the area to stop them and bring the people back to Islam. Religious Practitioners. The king claims to be a descendant of the prophet Muhammad, the founder of Islam. He also holds the position of the religious head of state, and all local religious leaders are subordinate to his decisions. Rituals and Holy Places. Small dome-shaped temples are constructed for the Murabitin after their death, as they are thought to continue exuding spiritual power. Individuals seeking blessings, such as a woman who wishes to become pregnant, make pilgrimages to Murabitin temples. Muslim mosques are found nationwide. Traditionally, non-Muslim foreigners are not allowed inside mosques. The Mosque Hassan II in Casablanca, however, allows foreigners to tour some facilities. M OROCCO'S UNEMPLOYMENT RATE In the past five years, Morocco‘s unemployment rate has decreased to its lowest of 7.70 percent. As a country Morocco‘s Gross Domestic Product (GDP) is $56.72 billion, with a GDP per capita of $4,400. The country has seen GDP growth rate of 6.7%. One of Morocco‘s main focus points is to continually decrease the unemployment rate. There are a few factors that should be central in the attempt to decrease unemployment, such as: education, property rights, trade, and freedom from corruption in regards to the bureaucratic government. Agriculture is a key part to Morocco‘s economy accounting for 20 percent of the GDP, and 40 percent of the population depends directly on agriculture, but only 13.3 percent of the people work in agriculture. Morocco has also seen an increase in economic development, especially through its $3.9 billon dollar tourist industry. However, Morocco is suffering in certain fields which are closely related to unemployment. Although education is free for children between the ages of 6 through 15, many children (especially girls) do not attend school. Morocco‘s literacy rate is 52.3 percent, which indicates that almost half of the country can not read or write. Morocco has an urban unemployment rate of 33 percent. The youth of Morocco are not in school and don not possess the skill needed to work. It is reported that Morocco has a moderately high crime rate in urban areas; by targeting tourists for assaults, muggings, and thefts. Another factor with the unemployment rate has to do with Morocco‘s government which operates as a constitutional monarchy. Companies and businesses find it difficult to operate in Morocco, because of the bureaucratic structure of the government. To obtain a business license is virtually impossible. In a bureaucratic government bribery is highly encouraged. Morocco is perceived as having high corruption; it is ranked 78 out of 158 countries according to Transparency International Corruption Perceptions index. If companies are not encouraged to open up businesses, the people of Morocco will continue to be unemployed. The barrier put up by the government prohibits the idea of innovation of any sort. In regards to private property rights Morocco scores exceptionally low.
Morocco has a high tax rates, the top income tax rate is 44 percent. As a result a substantial amount of individual‘s income is withheld from them. Morocco has improved on there trade policy by signing a bilateral Free Trade Agreement (FTA) between the United States and Morocco. As these two countries work together through trade, Morocco will begin to see the benefits. Trade allows for more imports and goods to come in and out of the country. Ultimately this trade policy will lead to more jobs in Morocco. Morocco trades over 70 percent of its goods to Europe, now that they have added the United States, it will strengthen their trade market. Furthermore, Morocco unemployment rate of 7.7 percent is the lowest the country has ever seen. Morocco‘s education system, bureaucratic government and trade agreements are the factor in determining if this unemployment rate will increase or decrease.
TECHNOLOGICAL ANALYSIS
Science and technology in Morocco It has significantly developed in recent years. The Moroccan government has been implementing reforms to encourage scientific research in the Kingdom. While research has yet to acquire the status of a national priority in Morocco, the country does have major assets that could transform its R&D sector into a key vehicle for development. The industry remains dominated by the public sector, with the universities employing 58% of researchers. Morocco‘s own evaluation of its national research system – carried out in 2003 – revealed that the country has a good supply of well trained high quality human resources and that some laboratories are of very high quality. However, the greatest gap at that point of time lied in the link between research and innovation. The educational qualifications of Moroccan researchers have increased significantly since the early 1990s. The University of Al-Karaouine is considered the oldest continuously operating academic degree-granting university in the world, by the Guinness Book of Records. NATIONAL POLICY The national system of scientific and technical research in Morocco is guided by different elements, such as the pronouncements of the king, reports of special commissions, five-year plans, and the creation of a special programme for the support of research. While spending on education has hitherto been relatively high (5% of GDP and 24% of government expenditures in recent years, change has been slow in coming. A royally designated "decade of education" was kicked off in Morocco in 1999 with the publishing of the National Charter for Education and Training, a road map to sector reform. As a result, literacy for men aged 15–24 has risen from 84% in 1990 to 87% in 2008, according the World Bank, while the percentage of all students completing primary school rose from 82% to 87% over the same period. The Moroccan government‘s Five- Year Plan for 2000-2004 articulated the priority lines for research. The declared objectives of this plan were to align S&T research with socio-economic development priorities. Sectors declared as priority areas were: agriculture, fisheries, drinking water, geology, mining, energy, environment, information and telecommunications technologies, and transport. This approach highlighted the need for effective institutional coordination, which enabled different parties to work together around common priority socioeconomic objectives.In 2002, 89% of the 542 researchers in a sample comprising INRA, INRH, IAV Hassan II, ENFI, and ENA were trained to the postgraduate level, and 34% held doctorate degrees. In 2009 Morocco has announced new support for scientific research including strengthening scientific infrastructure and giving universities more power. As part of the National Education Emergency Support Programme 2009-12, the Moroccan government has signed DH12.6bn (€1.1bn) in new agreements to improve the quality of its universities. This extra investment comes as the number of students in the science and engineering fields is expected to double by 2012, along with the number of those passing the baccalaureate exam after high school, additionally the country seeks to meet its UN Millennium Development Goals by 2015. The project will range from hiring additional lecturers and raising teaching credentials to expanding general infrastructure. The government has targeted accrediting 92% of its universities as research institutions by 2012, compared to 69% in 2008. TECHNOPOLIS PROJECT In 2005 the Moroccan king launched Technopolis Rabat, with the aim of creating 12,000-15,000 high-end jobs by 2016. The first phase was completed in 2006. The science park holds separate
engineering, high-tech, colleges and R&D spaces. Several companies have started operating in the park, including Nemotek Technologie, EDS-HP, Cleanroom, Alcatel and many others. In 2009 Technopolis Oujda started construction, the first phase is to be completed in 2011. The technopolis includes four main components: ?CleanTech? industrial and logistical park, a services center (offshoring and services), a commercial platform (retail park and showrooms), and a training campus. The project is expected to create 20,000 job opportunities. Only six African countries (Morocco, Egypt, Senegal, Madagascar, Tunisia and South Africa) have initiated programmes of technology parks as an integral strategy of their sustainable development. RESEARCH INDUSTRY The private sector is the least active player in research activity in Morocco. The REMINEX Corporation(Research on Mines and Exploitation) is the most prominent research performer in the private sector, and is a subsidiary of Omnium Nord Africain, the largest privatelyowned mining group in Morocco. Nemotek Technologie is also a big private player. The most recent figures available on the number of research staff in Morocco are those provided by the Ministry of National Education, Higher Education, Professional Training and Scientific Research in its 2002-2003 annual report. According to this report, Morocco had 17 390 research staff in 2002-2003.[1] The majority (58%) were employed in the university sector. Total agricultural researcher numbers in Morocco increased gradually throughout the 1980s and 1990s, while total agricultural R&D expenditures fluctuated somewhat erratically. INSTITUTIONS Research institutions include the Scientific Institute, founded in 1920 in Rabat, which does fundamental research in the natural sciences, and the Scientific Institute of Maritime Fishing, founded in 1947, in Casablanca, which studies oceanography, marine biology, and topics related to development of the fishing industry. Nine universities and colleges offer degrees in basic and applied sciences. In 1987–97, science and engineering students accounted for 41% of college and university enrollments. Under the 2009 initiative by the Moroccan government, universities will be made financially independent from the government to make them more responsive to research needs and better able to forge links with the private sector. A total of 17 agreements were signed to develop Moroccan universities, as part of the 2009-2012 emergency program which aims at reforming the country's ailing educational system and fostering a culture of entrepreneurship in the academic community. The University of Al-Karaouine is a university located in Fes. Founded in 859, as a madrasah, the university is one of the leading spiritual and educational centers of the Muslim world. It is considered the oldest continuously operating academic degree-granting university in the world.
INTERNATIONAL CO-OPERATION The Morocco-US science and technology cooperation plan, signed in 2006 in Rabat, promotes the exchange of innovative scientific ideas, information and knowledge, skills and techniques and the training of technical experts. It also allows for joint scientific and technological projects, conferences and workshops. Apart from the S&T agreement with the United States, Morocco has S&T agreements with its regional neighbour Tunisia and countries related to its historical heritage (France, Belgium and Spain). Many Moroccan scientists received training in France or are performing research in collaboration with French scientists. In 2009 Morocco and South Korea have agreed to strengthen cooperation in the field of ICT and cyber security. Morocco also signed an agreement on scientific and technical cooperation with Turkey. In June 2009 a NASA scientific mission, including six Moroccan experts, has started a visit to Morocco with the aim of integrating Moroccan researchers into the global climate change initiative, Space Weather. COMMUNICATION Telephone system General assessment: good system composed of open-wire Telephones - main lines in use: lines, cables, and microwave radio relay links; principal 3.516 million (2009) switching centers are Casablanca and Rabat; national Country Comparison to the world: network nearly 100% digital using fiber-optic links; 45 improved rural service employs microwave radio relay; Telephones - mobile cellular: Internet available but expensive domestic: fixed-line 25.311 million (2009) teledensity is roughly 10 per 100 persons; mobile-cellular Country Comparison to the world: subscribership approached 75 per 100 persons in 2009 35 international: country code - 212; landing point for the Atlas Offshore, Estepona-Tetouan, Euroafrica, Spain-Morocco, and SEA-ME-WE-3 fiber-optical telecommunications undersea cables that provide connectivity to Asia, the Middle East, and Europe; satellite earth stations - 2 Intelsat (Atlantic Ocean) and 1 Arabsat; microwave radio relay to Gibraltar, Spain, and Western Sahara; coaxial cable and microwave radio relay to Algeria; participant in Medarabtel; fiber-optic cable link from Agadir to Algeria and Tunisia (2009) B ROADCAST MEDIA : 2 television broadcast networks with state-run Radio-Television Marocaine (RTM) operating one network and the state partially owning the other; foreign TV broadcasts are available via satellite dish; 3 radio broadcast networks with RTM operating one; the government-owned network includes 10 regional radio channels in addition to its national service (2007)
Internet country code: ma Internet hosts: 277,793 (2010) Country Comparison to the world: 61 Internet users: 13.213 million (2009) Country Comparison to the world: 29
Source: (Wikipedia, 2011)
ENVIRONMENTAL ANALYSIS
Morocco is situated on the north west of Africa and is over 446,000sq km in area. The Atlantic Ocean lies to the west and the Mediterranean to the north. The land borders of Morocco are with Algeria, and Mauritania. In the north-west Morocco is separated from Spain by the narrow Straits of Gibraltar. The capital city is Rabat on the Atlantic Coast. Casablanca, also on the Atlantic coast, is the country's chief port. The city of Fes is the spiritual and cultural centre of Morocco, famous for its ancient university. Marrakesh, an oasis at the edge of the desert, is also an important trade centre and the main city of southern Morocco. Tangier in the north, opposite Gibraltar is famous for the many writers and artists who have lived there. Along the coastline of the Atlantic lies a fertile plain which stretches to the Atlas mountains. Another mountain range, the Rif Mountains, runs west to east a short distance from the Mediterranean coast. The main rivers of Morocco are the Sebou which runs into the Atlantic and the Moulouya which runs into the Mediterranean. To the south and east lies the Sahara Desert. The Sahara is the world's largest desert and in Arabic its name means "wilderness". The desert is not entirely flat and waterless. The streams in the hills and the oases in the desert support both human and animal life. Morocco's climate varies: the north is Mediterranean and the south is subtropical. The sea and the mountains help to maintain a pleasant climate: the winters are mild and the summers are dry. Rain falls mostly in winter and the mountain peaks are covered with snow most of year. In the desert rainfall is very low and also unpredictable. The daytime temperatures are very high but the nights can be extremely cold. The natural environment reflects the wide variations of its geography and climate. In the desert regions we find the type of plants that can survive with little water; some have very deep roots, others have small leaves or spines instead. The desert animals must also survive with little water and many remain hidden during the heat of the day (like the desert fox); others, such as the gazelles, travel many miles in search of water. The mountains are often heavily wooded, with firs and cedars on the higher slopes. In winter many of the mountains are covered in snow. Here we will find typical mountain animals and birds such as eagles with some unusual species such as the Barbary Macaque - Africa's only macaque species. In the plains below the mountains where most of the country's agricultural production is to be found there are orange groves, date palms and forests of cork trees. Morocco is a very important staging point on the flight path of migratory birds which winter in Africa and spend the summer in Europe. There is a large natural bird reserve where the Moulouya River flows into the Mediterranean. The natural environment of Morocco is under pressure in a number of ways. The increasing number of tourists and the exploitation of resources such as oil and phosphates may damage the fragile desert ecosystem, while overgrazing and the spread of the desert may threaten the currently productive areas.
Geography Location Geographic coordinates Northern Africa, bordering the North Atlantic 32 00 N, 5 00 W Ocean and the Mediterranean Sea, between Algeria and Western Sahara Area: Land boundaries: Total: 446,550 sq km Total: 2,017.9 km Country Comparison to the world: 57 border countries: Algeria 1,559 km, Western Land: 446,300 sq km Sahara 443 km, Spain (Ceuta) 6.3 km, Spain Water: 250 sq km (Melilla) 9.6 km Coastline: 1,835 km Maritime claims: Land use: Territorial sea: 12 nm Arable land: 19% Contiguous zone: 24 nm Permanent crops: 2% Exclusive economic zone: 200 nm Other: 79% (2005) Continental shelf: 200 m depth or to the depth Irrigated land: 14,450 sq km (2003) of exploitation Climate Current Weather Terrain: Mediterranean, becoming more extreme in the Northern coast and interior are mountainous interior with large areas of bordering plateaus, intermontane valleys, and rich coastal plains Elevation extremes: Natural resources: Lowest point: Sebkha Tah -55 m Phosphates, iron ore, manganese, lead, zinc, Highest point: Jebel Toubkal 4,165 m fish, salt Total renewable water resources: 29 cu km Freshwater-withdrawal (2003) (domestic/industrial/agricultural): Total: 12.6 cu km/yr (10%/3%/87%) Per capita: 400 cu m/yr (2000) Environment - current issues: Natural hazards: Northern mountains geologically unstable and Land degradation/desertification (soil erosion subject to earthquakes; periodic droughts resulting from farming of marginal areas, overgrazing, destruction of vegetation); water supplies contaminated by raw sewage; siltation of reservoirs; oil pollution of coastal waters Geography - note Strategic location along Strait of Gibraltar Environment - international agreements: Party to: Biodiversity, Climate Change, Climate Change-Kyoto Protocol, Desertification, Endangered Species, Hazardous Wastes, Law of the Sea, Marine Dumping, Ozone Layer Protection, Ship Pollution, Wetlands, Whaling signed, but not ratified: Environmental Modification
Transportation
Airports: 58 (2010) Country Comparison to the world: 81 Airports - with paved runways: Total: 32 Pipelines: Gas 830 km; oil 439 km (2009)
Airports - with unpaved runways: Total: 26 2,438 to 3,047 m: 1 1,524 to 2,437 m: 7 Heliports: 1 (2010) 914 to 1,523 m: 10 Under 914 m: 8 (2010) Railways: Roadways: Total: 1,907 km Total: 57,625 km Country Comparison to the world: 74 Country Comparison to the world: 79 Standard gauge: 1,907 km 1.435-m gauge Paved: 35,664 km (includes 639 km of (1,022 km electrified) (2008) expressways) Unpaved: 21,961 km (2006) Merchant marine: Ports and terminals: Total: 30 Casablanca, Jorf Lasfar, Mohammedia, Safi, Country Comparison to the world: 84 Tangier By type: cargo 2, chemical tanker 2, container 7, passenger/cargo 15, petroleum tanker 1, roll on/roll off 3 Foreign-owned: 6 (france 4, germany 2) Registered in other countries: 5 (gibraltar 4, panama 1) (2010) Source: (The Central Intelligence Agency (CIA), 2011)
Morocco is divided into sixteen regions.
Region Chaouia - Ouardigha Doukkala - Abda Fès - Boulemane Gharb - Chrarda - Béni Hssen Grand Casablanca Guelmim - Es-Semara Laâyoune - Boujdour Sakia El Hamra Marrakech - Tensift - Al Haouz Meknès - Tafilalet Oriental Oued Lagouira Rabat - Salé - Zemmour - Zaer Souss - Massa - Draâ Tadla - Azilal MA.SM MA.TD 13 12 MO55 MO56 04 12 3,113,653 1,450,519 2,635,522 1,324,662 70,880 17,125 27,367 6,612 Agadir Béni Mellal Tanger - Tétouan Taza - Al Hoceima Taounate 16 regions 29,891,708 26,073,717 690,275 266,518 MA.TO MA.TH 01 03 MO57 MO58 16 15 2,470,372 1,807,113 2,036,032 1,719,844 11,570 24,155 4,467 9,326 Tanger Al Hoceima MA.RZ 07 MO49 10 2,366,494 1,985,602 9,580 3,699 Rabat Ed-Dahab MA.MT MA.OR MA.OL 06 04 16 MO48 MO54 13 08 01 2,141,527 1,918,094 99,367 1,903,790 1,768,691 36,751 79,210 82,900 50,880 30,583 32,008 19,645 Meknès Oujda Dakhla MA.MK 11 MO47 07 3,102,652 2,724,204 31,160 12,031 Marrakesh MA.GC MA.GE MA.LB 08 14 15 MO45 MO53 MO59 09 03 02 3,631,061 462,410 256,152 3,126,785 386,075 175,669 1,615 122,825 139,480 624 47,423 53,854 Casablanca Guelmim Laâyoune HASC MA.CO MA.DA MA.FB MA.GB ISO 09 10 05 02 FIPS MO50 MO51 MO46 MO52 St 06 11 14 05 Pop-2004 1,655,660 1,984,039 1,573,055 1,859,540 Pop-1994 1,509,077 1,793,458 1,322,473 1,625,082 Area(km.²) 7,010 13,285 19,795 8,805 Area(mi.²) 2,707 5,129 7,643 3,400 Capital Settat Safi Fès Kenitra
TANGER-M ED Tanger-Med is a cargo port located about 40 km from Tangier, Morocco. It is one of the largest ports on the Mediterranean and in Africa by capacity and went into service in July 2007. Its initial capacity was 3.5 million shipment containers. The Tangier-Med Project will contain the biggest port in Africa. The project is a strategic priority of the Moroccan government for the economic and social development of the North Morocco region. It is part of the economic policy orienting Morocco towards exports, based on eight clearly identified export sectors, with particular emphasis on the free trade agreement with the European Union to be implemented by 2012. Completion of the «Tangier-Mediterranean» project will have important economic effects in terms of jobs, creation of added value and foreign investment. Its particular position on the Straits of Gibraltar, at the crossing of two major maritime routes, and 15km from the European Union will enable it to serve a market of hundreds of millions of consumers through the industrial and
commercial free zones which will be run by well-known private operators. It will also win part of the strong growth market of container transshipment and become the leading hub for cereal transshipment, a facility which is non-existent in the north-west African region at present. The project will be implemented, coordinated and managed by TMSA, a private company with public prerogatives, operating under an agreement with the State and interacting with the different ministries involved. The port complex will have important economic effects in terms of jobs, creation of added value and foreign investment. In addition to the economic effects of the operation of the port, there will be important effects resulting from its construction, particularly through foreign investments, and others from the operation of the free zones (direct and indirect added value, direct gains, jobs and foreign investment). A draft loan contract of $180 mln to fund the expansion works of Tanger-Med port was signed in October 2008 to for building a second deepwater port, dubbed "Tangier Med II", to meet the growing demand for containers treatment at the international level in sea transport. The new port facilities, scheduled to be operational by the second half of 2012, will include two new container terminals with a total length of 2,800 m and an additional nominal capacity of 5 million containers.Final official approval for "Tangier Med II" was received on 7 January 2009, with actual construction started on 17 June 2009. In November 2010 the European Investment Bank (EIB) signed a loan of €200 million for the extension of the port. The port is expected to reach full capacity by 2015, and to operate 8 million containers, 7 million passengers, 700,000 trucks, 2 million vehicles, and 10 million MT of oil products.
LEGAL ANALYSIS
Morocco operates under a constitutional and democratic monarchy. Since Morocco is ruled under a monarchy government there are no elections of the monarchy; the monarch is hereditary. Morocco gained its independence in 1956 from France. Morocco is run by a King, Mohammed VI, who is the Supreme Representative of the Nation. The King holds the power; he guarantees that the Constitution is respected, is the country‘s religious leader, appoints the Prime Minister and has the final say over those appointed government officials. The King has the power to break up its government and is in charge of the military. The King is also responsible for overseeing that the citizens of Morocco‘s rights are protected. Under the King stands the Executive Power or commonly called the Government. The Executive Power is made up of one Prime Minister, Abbas El Fassi, and a number of Ministers. Those Ministers then make up the cabinet, which falls under the head of government and is selected by the King. The Legislative Power, or Parliament, is composed of two sections; the upper house (Chamber of Counselors) and lower house (Chamber of Representatives). The Chamber of Counselors is comprised of 270 seats and those appointed will serve a nine-year term. The Chamber of Representatives is comprised of 325 seats and each of those members will service a five-year term. The Judicial branch of the government consists of judges who have recommendations from the Supreme Court but the final decision of who will be appointed is made by the King. The legal system in Morocco is a combination of French civil law system, with courts based around the Jewish and Islamic traditions. ?There are four levels of the common law court system: Communal and district courts, courts of first instance, the Appeals Court, and the Supreme Court.? Along with these court systems there are also a number of others. Along with these court systems are a couple more such as The Special Court of Justice, administrative courts, commercial courts, and military tribunal. These are responsible for cases from corruption up to cases involving military personnel. There are other authorities in Morocco including The Constitutional Council and The Economic and Social Council. Local communities and local assemblies make up The Administrative Power of Morocco. Morocco respects human rights; however, the citizens do not have the power to change the government. The King has control over the government and the way that Morocco is ran. The government is responsible for keeping their culture and language in tact. LEGAL SYSTEM Based on Islamic law and French and Spanish civil law systems; judicial review of legislative acts in Constitutional Chamber of Supreme Court; has not accepted compulsory ICJ jurisdiction SUFFRAGE : 18 years of age; universal LEGISLATIVE BRANCH : Bicameral Parliament consists of the Chamber of Counselors (or upper house) (270 seats; members elected indirectly by local councils, professional organizations, and labor syndicates to serve nineyear terms; one-third of the members are elected every three years) and Chamber of Representatives (or lower house) (325 seats; 295 members elected by multi-seat constituencies and 30 from national lists of women; members elected by popular vote to serve five-year terms)
Elections: Chamber of Counselors - last held on 3 October 2009 (next to be held in 2012); Chamber of Representatives - last held on 7 September 2007 (next to be held in 2012) Election results: Chamber of Counselors - percent of vote by party - NA; seats by party - NA; Chamber of Representatives - percent of vote by party - NA; seats by party - PI 52, PJD 46, MP 41, RNI 39, USFP 38, UC 27, PPS 17, FFD 9, MDS 9, Al Ahd 8, other 39 JUDICIAL BRANCH: Supreme Court (judges are appointed on the recommendation of the Supreme Council of the Judiciary, presided over by the monarch) CORRUPTION IN MOROCCO Conducing business in Morocco can be quite risky due to its political system. According to The Economist, Political Stability Risk earns a rating of "C", while Government Effectiveness Risk earns a rating of a ?D?.(Risk Briefing) This shows a political system which is generally in control but not very effective. Several analysts view corruption as a major constraint to economic development. Recently, local businesses ranked corruption only third to access to financing and tax rates, as the most problematic factors to doing business in Morocco. (Morocco Country Profile) The economic scene in Morocco is dominated by two main categories. The first consists of prominent families who have established ties with the government through centuries-old relationships and alliances. This elite enjoyed protection against foreign competitors and was able to establish monopolies over the import and export of certain goods as well as public procurement contracts. It still dominates economic life today, and finds transparency and free-market policies to conflict with its interests. However, since the 1980s, a group of executives in middle-sized firms started becoming influential. This elite differentiates itself from the first with its modernist outlook and its fight to eliminate privileges and monopolies in the business world. The main organization representing this elite is CGEM (Confederation Generale des Entreprises du Maroc). Alongside CGEM, international donors, such as the World Bank, have put pressures on Morocco to address the issue of corruption. This has helped bringing corruption as taboo subject, up until 1995, to the public. As a response, the government promised a series of administrative reforms, such as subjecting all public procurement contracts above 5 million dirhams to internal audit. Due to many factors, this process is showing slow improvements over the past decade. The unemployment rate fell sharply in 2006.[4] Morocco has also made progresses in investment sector, says Doing Business 2008 report. (World Bank) Despite these reforms, monitoring organizations assert that high levels of corruptions still plague the judicial system as well as public procurement. A survey done by Transparency Maroc states that 78% Moroccan companies do not find the judicial system reliable; 59% assert that illicit payments are involved in procurement; and 95% of the Moroccan entrepreneurs polled felt that corruption was prevalent within customs. Source: http://internationalbusiness.wikia.com/wiki/Moroccan_Political_and_Legal_System M OROCCO'S LEGAL SYSTEM (WEAKNESSES) Morocco is located in Northern Africa, bordering the North Atlantic Ocean and the Mediterranean Sea, between Algeria and Western Sahara. Its population is 33,757,175 consisting of a 98.7% Muslim religion (CIA.gov). Morocco‘s government type is constitutional monarchy. It has a dual legal system consisting of secular courts based on French legal tradition, and courts based on Jewish and Islamic Traditions (nationsencyclopedia). The secular system includes communal and district courts, courts of first instance, appellate courts, and a Supreme Court. There are five
division chambers in Morocco‘s Supreme Court, the divisions include; criminal, correctional (civil) appeals, social, administrative, and constitutional. Officials may be tried in the special court of justice on charges raised by a two-thirds majority of the full Majlis. There is also a military court for cases that involve military personnel and occasionally matters pertaining to a state security. The supreme council of the Judiciary regulates the courts and is presided over by the King of Morocco (King Mohamed VI). The way the judges are appointed their position is through the advice of the council. Judges in the secular system are university-trained lawyers. Since 1965 only Moroccans are able to be appointed as judges. Arabic is the official language of the courts system (nationsencyclopedia). Morocco‘s legal system holds weaknesses towards businesses. Some of their weaknesses are that they suffer from weak trade freedom, fiscal freedom, financial freedom, labor freedom, property rights, and freedom form corruption. The average tariff rate is high, and bureaucratic practices are opaque. The judiciary and the financial sector are inefficient and subject to substantial corruption (at least in the courts) and significant political interference from the king. The labor market is highly restrictive and is amongst the 20th least free in the world. Trade freedom is at 51%, fiscal freedom 75.5%, freedom from government 83.3%, investment freedom 70%, financial freedom 40%, property rights at 30%, freedom from corruption 32%, labor freedom 41.9 %( heritage). With freedom from corruption only at 32% this is a major problem toward businesses. There have been substantial efforts over the past few years to modernize Morocco‘s legal and regulatory framework, aiming at establishing a more business friendly environment. Such efforts have been motivated in large measure by the need to bring Morocco‘s legal system up to par in light of the 1997 Association agreement with the European Union. More recently, attention has turned to another key determinant of efficiently and effectiveness of the legal and regulatory framework of the functioning of the judiciary. The judiciary has long been criticized by all stakeholders in morocco, particularly with regards to business related litigation. As I mentioned before with freedom from corruption at 32%, corruption is still perceived as significant. Morocco ranks 78th out of 158 countries in transparency international‘s corruption perceptions index for 2005(heritage). The Moroccan policy-makers now fully understand and recognize the pressing need to improve the functions of the judiciary, and significant reform efforts are already underway. Source: (Wikia, 2011)
TRADE RELATION OF M OROCCO (STRATEGIC PARTNERSHIP)
Morocco!s relations with neighbouring Algeria will remain tense, largely because of the dispute over Western Sahara, a territory that Morocco claims sovereignty over but that Algeria would like to see become an independent state. Morocco is committed to its plan for limited autonomy for the territory, whereas the Algerian-backed Polisario Front demands a referendum on selfdetermination. The UN has appointed a new special envoy for the territory, who may have some success in breaking the current deadlock, but little progress is likely to be made in resolving the long-standing dispute. Tensions between the two countries will hold back attempts to boost intra-Maghreb cooperation, including regional trade, through the Arab Maghreb Union. However, there could be some cautious bilateral co-operation on security matters. Relations with EU member states, especially Spain and France, will remain strong. Morocco is keen to play a key role in the Union for the Mediterranean and has secured "advanced status" with the EU, which could eventually mean freer access to European labour markets for Moroccan workers, although this is unlikely in 2010-11, given the poor outlook for EU growth. M AJOR TRADING PARTNERS Morocco‘s trade is heavily slanted towards the EU, with which it ratified an Association Agreement in 2000, paving the way for a gradual elimination of tariff and non-tariff barriers to trade. Phosphates and related products are Morocco‘s largest single export earners. Around three fourths of Morocco‘s exports are destined for EU markets. France‘s long-standing relationship with Morocco is reflected in its 21% share of Morocco's total exports, while Spain (20%) and the UK (5%) are the other major European export destinations. Italy and Germany each have a 5% share of Morocco's exports. Morocco has started to make its presence felt in the Asian markets with the recent rise in exports to India standing at 4% in 2006. On the import side, the EU market accounts for 56% of Morocco's total imports. France and Spain again dominate, with 18% and 14% shares, respectively. Italy, with a 6% share, closely follows Saudi Arabia, which has a 7% share. Germany has a 6% share in the Morocco's imports. Among the Asian countries, China has gained a 7% share of Morocco's total imports.
TRANSNATIONAL ISSUES
Disputes - international: Claims and administers Western Sahara whose sovereignty remains unresolved - UN-administered cease-fire has remained in effect since September 1991, but attempts to hold a referendum have failed and parties thus far have rejected all brokered proposals; Morocco protests Spain's control over the coastal enclaves of Ceuta, Melilla, and Penon de Velez de la Gomera, the islands of Penon de Alhucemas and Islas Chafarinas, and surrounding waters; both countries claim Isla Perejil (Leila Island); discussions have not progressed on a comprehensive maritime delimitation, setting limits on resource exploration and refugee interdiction, since Morocco's 2002 rejection of Spain's unilateral designation of a median line from the Canary Islands; Morocco serves as one of the primary launching areas of illegal migration into Spain from North Africa
Illicit drugs:One of the world's largest producers of illicit hashish; shipments of hashish mostly directed to Western Europe; transit point for cocaine from South America destined for Western Europe; significant consumer of cannabis INTERNATIONAL ORGANIZATION PARTICIPATION : ABEDA, AfDB, AFESD, AMF, AMU, CD, EBRD, FAO, G-11, G-77, IAEA, IBRD, ICAO, ICC, ICRM, IDA, IDB, IFAD, IFC, IFRCS, IHO, ILO, IMF, IMO, IMSO, Interpol, IOC, IOM, IPU, ISO, ITSO, ITU, ITUC, LAS, MIGA, MONUSCO, NAM, OAS (observer), OIC, OIF, OPCW, OSCE (partner), Paris Club (associate), PCA, UN, UNCTAD, UNESCO, UNHCR, UNIDO, UNMIS, UNOCI, UNWTO, UPU, WCO, WHO, WIPO, WMO, WTO Source:https://www.cia.gov/library/publications/the-world-factbook/geos/mo.html M AJOR TRADE AGREEMENT OF INDIA & MOROCCO
Agreement WTO Document Number Signatories Date of Entry into Force Mar 01, 2000 Dec 01, 1999 Jan 01, 2006 Jan 01, 2006 Date of WTO Notification
Morocco EC - Morocco EFTA - Morocco Turkey - Morocco United States Morocco India Bangkok Agreement Bangkok Agreement Accession of China India - Buthan India - Singapore India - Sri Lanka SAFTA L/4418 L/4418/Corr.1 WT/COMTD/N/19 WT/COMTD/N/28 WT/REG228 S/C/N/393 WT/COMTD/N/16 Bangladesh, India, Laos, Philippines, Jun 17, 1976 Korea, Sri Lanka, Thailand Bangladesh, India, Laos, Philippines, Jan 01, 2002 Korea, Sri Lanka, Thailand, China India, Bhutan India, Singapore India, Sri Lanka Jul 29, 2006 Aug 01, 2005 Dec 15, 2001 Nov 02, 1976 Jul 29, 2004 Jun 30, 2008 May 03, 2007 Jun 27, 2002 Apr 21, 2008 WT/REG112 WT/REG91 WT/REG209 WT/REG208 EC, Morocco Iceland, Liechtenstein, Norway, Switzerland, Morocco Turkey, Morocco United States, Morocco Nov 08, 2000 Feb 18, 2000 Feb 21, 2006 Jan 16, 2006
WT/COMTD/N/26 Bangladesh, Bhutan, India, Maldives, Jan 01, 2006 Nepal, Pakistan, Sri Lanka
GSTP - GENERAL SYSTEM OF TRADE PREFERENCES AMONG DEVELOPING COUNTRIES Algeria Argentina Bangladesh Benin Bolivia Brazil Cameroon Chile Colombia Cuba Democratic People's Republic of Korea Ecuador Egypt Ghana Guinea Guyana India Indonesia Islamic Republic of Iran Iraq Libya Malaysia Mexico Morocco Mozambique Myanmar Nicaragua Nigeria Pakistan Peru Philippines Republic of Korea Romania Singapore Sri Lanka Sudan Thailand
Trinidad and Tobago Tunisia United Republic of Tanzania Venezuela Vietnam Yugoslavia Zimbabwe
GLOBAL SYSTEM OF TRADE PREFERENCES (GSTP)
The Agreement establishing the Global System of Trade Preferences (GSTP) among Developing countries was signed on 13th April, 1988 at Belgrade following conclusion of the First Round of Negotiations. The GSTP came into being after a long process of negotiations during the Ministerial Meeting of the Group of 77, notably at Mexico City in 1976, Arusha in 1979 and Caracas in 1981. The Ministers of Foreign Affairs of the Group of 77 in New York set up the GSTP Negotiating Committee in 1982. The New Delhi Ministerial meetings, held in July 1985, gave further impetus to the GSTP negotiation process. The Brasilia Ministerial Meeting held in May 1986 launched the First Round of GSTP Negotiations. At the conclusion of the First Round in April 1988 in Belgrade, the GSTP Agreement was signed on 13 April 1988. The Agreement entered into force on 19th April 1989. Forty-four countries have ratified the Agreement and have become participants. The GSTP establishes a framework for the exchange of trade concessions among the members of the Group of 77. It lays down rules, principles and procedures for conduct of negotiations and for implementation of the results of the negotiations. The coverage of the GSTP extends to arrangements in the area of tariffs, para-tariff, non-tariff measures, direct trade measures including medium and long-term contracts and sectoral agreements. One of the basic principles of the Agreement is that it is to be negotiated step by step improved upon and extended in successive stages The current round of GSTP negotiations, also known as ?São Paulo Round? was launched in 2004 with 22 participating countries, on the occasion of the UNCTAD XI Quadrennial Conference in Sao Paulo in Brazil. At the end of the negotiations, Ministerial Modalities were adopted on 2 December, 2009 wherein Ministers agreed to modalities based on a tariff reduction of at least 20% on at least 70% of all dutiable tariff-lines. Members who were in the process of their WTO accession namely, Algeria and Iran were to be given specific flexibilities. The modalities on market access adopted by the Ministers are as under: Across-the-board, line-by-line, linear cut of at least 20% on dutiable tariff lines; --Product coverage to be at least 70% of dutiable tariff lines; Product coverage shall be 60% for participants having more than 50% of their national tariff lines at zero duty level; Tariff cuts shall be made on the MFN tariffs applicable on the date of importation. Alternatively, participants may choose to apply the cuts on the MFN tariffs applicable on the date of conclusion of the Third Round; The Negotiating Committee shall also consider proposal for revision of the GSTP rules of origin. Based on these modalities, intensive negotiations were held in 2010 for finalisation of the schedules of Members. During this period, Cuba, Egypt, India, Indonesia, Korea, Malaysia, Mercosur and Morocco submitted their schedules and bilateral negotiations were held to finalise the schedule. It is significant to note that India unilaterally offered a tariff reduction of 25% on 77% of its tariff lines for Least Developed Countries (LDCs). A Ministerial Meeting of the GSTP Negotiating Committee was held on 15 December, 2010 in Foz do Iguacu, Brazil for signing of the "Final Act Embodying the Results of the Sao Paulo Round" and the "Sao Paulo Round Protocol on the Agreement on GSTP". The Ministers or Head of the Delegations of Members who have submitted their final schedules namely Cuba, Egypt, India,
Indonesia, Korea, Malaysia, Mercosur and Morocco would be signing the two documents. India was represented by H.E. Mr. B.S. Prakash, Ambassador of India to Brazil.
Source: http://www.eepcindia.org/
CUSTOMS REGULATIONS ? Customers presence is not required for Customs clearance ? Used household goods and personal effects in reasonable quantities may be imported dutyfree if owned for more than six months ? If two shipments are sent, the second shipment must arrive no later then six months after the first ? Shipments are physically inspected DUTIABLE/RESTRICTED ITEMS ? New items less then six months old (Commercial Invoice required) ? Food and beverages ? Electronic and electrical items are dutiable (load near container door for easy access) ? Antiques ? Portable phones must be approved by the Ministry of P.T.T. ? Medicine (permit from Ministry of Health required) ? Weapons and ammunition (hunting permit and firearm acquisition certificate required). Only smooth-barreled hunting weapons are permitted. ? Books, records and cassettes and compact disks o A list must be provided stating the title and name of author for each item o These items will be viewed by the Ministry of Information before a censorship visa is granted. Place any dutiable/restricted items near container doors for easy access. PROHIBITED ITEMS ? Moroccan currency ? Pornographic and politically sensitive material ? Narcotics and drugs ? Walkie-talkies ? Alcoholic beverages and tobacco products ? Explosives PETS
?
Health Certificate, dated not more than 14 days before departure, is required
Source: restricted items - customs regulation in morocco.docx
DOING BUSINESS PROFILE,M OROCCO
TOPIC RANKINGS DB 2011 Rank DB 2010 Rank Change in Rank 82 76 -6 Starting a Business 99 1 Dealing with Construction Permits 98 124 123 -1 Registering Property 89 87 -2 Getting Credit 154 165 11 Protecting Investors 124 122 -2 Paying Taxes 80 75 -5 Trading Across Borders 106 106 No change Enforcing Contracts 59 68 9 Closing a Business Sources: http://www.doingbusiness.org/data/exploreeconomies/morocco
THE GLOBAL ENABLING TRADE INDEX 2010, M OROCCO
Source:http://www3.weforum.org/docs/WEF_GlobalEnablingTrade_Report_2010.pdf
M AJOR TRADING PARTNERS OF MOROCCO (2008)
Others 23%
Others 25%
Pakistan 2% US 4% Brazil 5% India 7%
Export s
EU 27 59%
Import
Russian Federation 5% US 5% EU 27 52% China 6% Saudi Arabia 7%
350,000.00 300,000.00 250,000.00 200,000.00 150,000.00 100,000.00 50,000.00 0.00 2005-2006 2006-2007 2007-2008 149,165.73 126,414.05 103,090.53 185,735.24 251,654.01
303,696.31
288,372.88
185,295.36 163,132.18
178,751.43
India's Total Export India's Total Import
2008-2009
2009-2010
MOROCCO’S EXPORT TO INDIA (MILLION DIRHAM)
PRODUCTS Phosphoric Acid Phosphates Natural And Chemical Fertilizers Scrap, Waste, Scrap Iron And Steel Waste And Scrap Copper Alloy Or Not Lead Ore Hides And Skins Crude Lead Cotton Fabrics Plants And Parts Of Plants Agar Algae Son And Cables For Electricity Liege Gross Developed And SemiParts Pr Passenger 2009 4 457.9 642.1 628.5 33.3 24.3 14.4 10.4 8.4 6.2 5.6 1.5 1.2 1.1 1 0.6
MOROCCO’S IMPORT FROM INDIA (MILLION DIRHAM)
PRODUCTS Gas Fuels And Oils Oils Radio Receivers And Television Cameras Son Of Synthetic Fibers, Weaving For Artificial Son Of Cotton Weaving Passenger Chemicals Plastic Artificial Drugs Domestic Refrigerators Tractors Tobacco Synthetic Fibre Disinfectants Petroleum Gas And Other Hydrocarbons Pumps And Compressors Cotton Fabrics Fabrics Of Synthetic Fiber And Artificial Miscellaneous Machinery Tubes And Pipes Of Iron And Steel Colouring Matters Garments Manufactured Spices Pneumatic Tyres, Inner Tube Car Indus Pr Piston Motors And Other Engines Hides And Skins Parfumeries Household Hardware Son, Bar, Sheet Piling, Iron And Steel Profiles 2009 497 351 309 203 184 138 132 96.4 92.6 70.9 55.4 51.1 49.5 48.4 38.3 36.3 36 31 27.6 22 21.1 20.3 20.3 20.2 18.8 15.4 15.1 14.8
M OROCCO’S IMPORT (WEIGHT & VALUE )
Morocco‘s Import
Product
2008
Weight (Kg) Value (MN DH)
2009
Weight (Kg) Value (DH)
08 - 09
Weight(%) Value(%)
FOOD, BEVERAGES AND TOBACCO ENERGY AND LUBRICANTS PRODUCTS CRUDE ANIMAL AND PLANT GROSS PROCEEDS OF MINERAL ORIGIN HALF PRODUCTS FINISHED GOODS FOR AGRICULTURAL EQUIPMENT FINISHED GOODS INDUSTRIAL EQUIPMENT CONSUMPTION OF FINISHED PRODUCTS OR INDUSTRIAL TOTAL
8477827068 16074884678 2228308892 3583704968 6566706146
31863608479 72714895721 12647169952 14037448434 69488682712
7147663083 16799838787 2052299722 2706597694 6534264496
24253367680 54171842761 10442219495 3180303905 53636758399
15.7 4.5 7.9 24.5 0.5
23.9 25.5 17.4 77.3 22.8
63969579 799506321 953267471 19869 38748194992
3670294660 67986978745 53524512926 108651574 326042243203
69366799 771545661 1068763636 286 37150340164
3260235179 63510409187 52681076948 51984697 265188198251
8.4 3.5 12.1 98.6 4.1
11.2 6.6 1.6 52.2 18.7
Source : http://www.oc.gov.ma/EVOLUTIONS/EVOL_GU/EVOL_GU.asp
ENGINEERING GOODS (MOROCCO PERSPECTIVE)
Morocco is a fairly stable economy with continuous growth over the past half-a-century. It is considered liberal economy governed by the laws of supply and demand. The economic system of the country presents several facets. It is characterized by a large opening towards the outside. Bilateral trade between India and Morocco was to the tune of US$583.88 million during 2005-06 showing an increase of 23.02% over previous year and the figures for 2006-07(April-December) touched US$500.00 million. As far as India engineering export to Morocco is concerned, it is showing an increase of 36.47% during 2005-06 over the performance in previous year and 23.00 % increase during 2006-07 over the performance during 2005-06. Inspite of continuous growth in India.s engineering export to Morocco, our share remains less than one percent i.e. 0.63% of total engineering imports into Morocco. Hence, there is good scope for enhancing India.s engineering export to Morocco. M AJOR OPPORTUNITIES IN M OROCCO Morocco with an economy which is considered relatively liberal, has sought in recent years to create an environment more favourable to the development of industrial activities, mainly in subcontracting. It has clocked steady yearly growth in the region of 4%-5% from 2000 to 2007 and estimated GDP for 2007 is US$ 75.12 billion. Morocco's industrial sector, accounting for around 25% of GDP, has diversified its technical capacities and increased its know-how significantly, presenting an offer today of subcontracting and particularly an attractive market of capital goods and industrial supplies, with emergence of industrial clusters in advanced and demanding sectors such as automotive, aerospace, electronics, mechatronics as well as in more traditional sectors such as mechanical engineering, metallurgy, plastics which have experienced a remarkable expansion.
Source: India Pavilion at SISTEP, 2009, Morocco.pdf, Page No. 1.EEPC.
LIST OF POTENTIAL PRODUCTS 1. Complete Vehicles (Cars, Trucks, Buses etc.) 2. Automobile Components and Accessories 3. Pipes, Tubes and Hollow Profiles of Iron and Steel & Fittings thereof 4. Flat Rolled Products of Iron & Steel 5. Hot Rolled Bars and Rods of Steel 6. Stranded Wire, Ropes and Cables 7. Table/Kitchenware and other domestic articles of Iron & Steel 8. Electrical Machinery & Equipment including Transformers, Static Converters etc. 9. Other Industrial Machinery having individual functions 10. Pumps and Accessories 11. IC Engine and Parts 12. Refrigerators, Freezers and other Refrigerating & Freezing Equipment 13. Medical and Surgical Instruments 14. Laboratory Equipment 15. Bearings 16. Hand Tools
17. Industrial Fasteners 18. Tractors 19. Machinery (particularly agricultural, food processing and printing) 20. Dish Washing Machines, Grinding Machines and Machines for filling, closing, sealing, labeling boxes, bags/containers etc.
Source: Engineering Export Info-Bulletin, Vol. 9, Issue No. 37. Page No. 11 Delegation Profile Algeria & Morocco.pdf.
PRODUCTS IN FOCUS Metal: 1. Machine tools and equipment 2. Metal surface treatment & finish equipment 3. Welding machines and additional materials 4. Machines and equipment for fine mechanics and optics 5. Metal processing (machining, cutting, special machines, forging, foundry, boiler making, sheet metal, semi-finished products, etc.) M ATERIALS AND COMPONENTS FOR MECHANICAL ENGINEERING: 1. 2. 3. 4. 5. 6. 7. 8. Metallurgical semi-products, forgings, pressings, castings, and work pieces Connecting materials fittings Industrial fasteners Steel and tube structures Vessels and tanks Seals and bearings Auto components Lubricating technology
M ACHINERY AND ACCESSORIES FOR: 1. Packing and printing 2. Material handling 3. Vehicle manufacturing and automotive technology 4. Automation technology 5. Environmental technology 6. Plastics & rubber processing 7. Auto components 8. Lubricating technology 9. Chemical industry 10. Lubricants, oils, coating compositions 11. Cements 12. Adhesives & chemicals for industrial products.
Source: India Pavilion at SISTEP, 2009, Morocco.pdf, Page No. 1-2. EEPC
SISTEP 2009 SISTEP is a major exhibition for subcontracting, procurement and partnership, bringing together suppliers, purchasers and service providers. It is organized by the Federation of Metallurgical, Mechanical, Electrical & Electronic Manufacturers Association (FIMME) of Morocco and National Stock Exchange of Subcontracting & Partnership (BNSTP) of Morocco. Morocco provides a get-way to the North African and European Union Markets due to geographical proximity and free trade agreements with the EU, the U.S., the Maghreb countries, Saudi Arabia, the UAE, West African Economic and Monetary Union (UEMOA), Turkey, Egypt and Jordan. For 16 years, the exhibition showcases SISTEP of outsourcing to the Maghreb. By joining forces with Reed Exhibitions, the world's leading organizer of trade shows, and the BNSTP FIMME to endow the experience of an international group and its specific experience that gives the organization MIDEST, No. 1 worldwide exhibitions of industrial subcontracting, which recently celebrated its 40 years of service to industry professionals. SISTEP MIDEST be held simultaneously at MIMA living within the emerging events industry. The ambition of emergence industry part of a larger movement to transform the conomy and industry in Morocco. On February 13, 2009 has been signed a National Pact for the Emergence of Industrial. His goal: to create, by 2015, 220,000 jobs and redraw the industrial landscape of the country. The Pact has also established seven core businesses of Morocco which are the sectors driving growth and key investment priority: offshoring, automotive, electronics, aerospace, textiles and leather, agro-industry, processing of seafood ENGINEERING CONTRACTS
One Can get Information of Major Engineering Contradts from dgmarket.com
Country Morocco Morocco Morocco Morocco Morocco Morocco Morocco Morocco Morocco Morocco Morocco Morocco Notice Title List of signed contracts Services incidental to agricultural production Type ca rfp Published Feb 1, 2011 Feb 1, 2011 Feb 1, 2011 Jan 19, 2011 Jan 18, 2011 Jan 18, 2011 Jan 6, 2011 Nov 30, 2010 Nov 30, 2010 Oct 18, 2010 Aug 2, 2010 Mar 22, 2010 Nov 25, 2011 Mar 2, 2011 Deadline Mar 15, 2011 Mar 15, 2011
MA-Rabat: ENPI — monitoring of the EU programme to support pin sector-based agricultural policy in Morocco Drinking-water distribution rfp Works for complete or part construction and civil engineering work pp General Procurement Notice pp
Construction work pin MA-Rabat: Morocco - Rabat: Strengthening of Management Unit pin for Second National Rural Roads Programme (PNRR2) (EIB) Water distribution pin Construction work MA-Ouarzazate Concentrated Solar Power AVIS GENERAL DE PASSATION DES MARCHES pin pin pin
Source: http://www.dgmarket.com/
ENGINEERING GOODS (INDIAN PERSPECTIVE)
In 2008, India?s goods export touched USD182 billion (CAGR of 23% over 2004–2008), with its engineering exports contributing 21.49% of its total exports of goods, reaching USD43.13 billion (a CAGR of 30% over 2004-2008). However despite the high growth achieved in the recent years, India?s engineering export share is still lower than other major India-like countries like Brazil, China, Russia, Mexico and Thailand. It indicates that India has not been able to completely exploit its multitude of advantages in terms of engineering skills, a burgeoning domestic market, an established raw material base and availability of a large pool of skilled labor. Ernst & Young was commissioned to conduct a study to chart a growth path for engineering exports from India for the period 2010-2014 and to identify initiatives that have to be undertaken by the government, EEPC India and the engineering exporters to achieve the desired growth. The study sets an achievable aspiration of tripling India?s engineering exports by 2014 to reach a size of USD110 billion. To achieve this aspiration, Indian engineering exports would have to show an annual growth rate of 22-25% in the period 2010-2014. India ranks 30th with a 0.8% share of world engineering exports in 2008. This low position is primarily attributable to three factors: 4. Low export-to-GDP ratio ((export-to-GDP ratio of 15% vis-à-vis 27% for other Indialike countries) 5. Low engineering-to-export ratio (engineering export-to-total export ratio of 24% vis-àvis 30% for other India-like countries) 6. Low technology intensity of engineering export (share of high and medium technology engineering exports - 62% for India vis-à-vis 71% for other India-like countries To realize this aggressive but achievable aspiration, concerted effort needs to be put in by the government, the council and exporters. The key imperatives for India include 4. Enhancing the alignment and effectiveness of trade drivers, 5. Boosting the competitiveness of the Indian engineering industry and facilitating upward movement along the value chain, 6. and strengthening enablers for growth by clearing infrastructural and procedural bottlenecks. These estimations and imperatives for the future growth of Indian engineering exports have been distilled from Ernst & Young‘s comprehensive analysis of previous year‘s trade data (2004–2008) at the product and market levels, substantiated and supplemented by insights from exporters, industry experts and secondary sources. GLOBAL ENGINEERING EXPORTS When compared to non-engineering exports, engineering exports have grown at a relatively lower CAGR of 12.7%.Germany is still the top engineering exporter with a share of 15% and is faced with strong competition from China which has become the second largest exporter in the world.
India‘s emergence as a low-cost manufacturing hub has aided the strong growth of engineering exports from the country. During 2004–2008, India leapfrogged Australia, South Africa, Ukraine and Malaysia to become the 30th largest exporter of engineering goods in the world. A key determinant of every country‘s export performance is its export product portfolio in terms of the technology* used in its products, e.g., High Technology (HT), Medium Technology (MT), Low Technology (LT) and Resource- based (RB). India is ranked below most India-like countries on the technology intensity of its engineering exports, which indicates their low level of value addition as compared to such exports from other India-like countries. However, the share of technologyintensive products1 (HT and MT) in India‘s engineering exports has increased from 50% in 2004 to 68% in 2008, indicating upward movement along the value chain. PRODUCT ANALYSIS: INDIAN ENGINEERING EXPORTS The entire set of 1655 engineering products have been mapped by their past export share and growth performance from a global and Indian perspective. Based on their performance in India‘s
exports vis-à-vis that in the world‘s exports, engineering products have been classified into the Core, Leader, High-Potential and Striver categories The Core, Leader and High-Potential framework helps us to evaluate our relative strengths. While the country‘s performance in the Core product category has been strong, it has not performed well in High-Potential products. On the other hand, competition is less in Leader products, and consequently, India‘s relative performance is stronger in this category. EXPORT PERFORMANCE Exports during June, 2010 were valued at US $ 17745 million (Rs. 82632 crore) which was 30.4 per cent higher in dollar terms (27.1 per cent higher in Rupee terms) than the level of US $ 13606 million (Rs.64996 crore) during June, 2009. Cumulative value of exports for the period April-June
2010 was US $ 50777 million (Rs 231743 crore) as against US $ 38396 million (Rs. 187218 crore) registering a growth of 32.2 per cent in Dollar terms and 23.8 per cent in Rupee terms over the same period last year. ENGINEERING EXPORTS DOWN BY 15.74 % DURING MARCH 2010 According to the provisional data available from DGCI&S up to March 2010, India‘s exports of engineering goods have posted a negative growth of -15.74% In Rs.Cr. (-18.42% In US $ Mln. ) during the financial year 2009-10 in comparison to the same period in the previous fiscal. The provisional data indicate that exports of engineering goods from India have reached Rs 155152.07 Cr (US $ Mln. 32718.7) (As per to R.B.I. data of Exchange Rate) up to March 2010. In the month of March 2010 Exports of Engineering goods were to the tune of Rs. 16316.17 Cr. (US $ Mln. 3586.76). ENGINEERING EXPORTS MAY TOUCH $52 BILLION THIS FISCAL PTI,Feb 18, 2011, 01.44pm IST NEW DELHI: India's engineering exports may touch $52 billion in value terms during the current fiscal as the shipments have surpassed the projected target of $42 billion, largely on increasing demand from the US and Latin American markets. "We expect the engineering export to touch USD 52 billion mark in the current financial year as it has touched USD 45 billion mark in the first 10 months of 2010-11," the Engineering Exports Promotion Council (EPCH) Executive Director R Maitra said. He added there is a good demand for engineering goods such as machineries, hand tools and machine tools from markets like the US, Middle East and Latin America. Source : http://articles.economictimes.indiatimes.com/2010-08-22/news/27614575_1_engineering-exportsdependence-on-traditional-markets-heavy-engineering-goods
IN COMPARISON TO CUMULATIVE EXPORT PERFORMANCE IN 2008-09 What’s up: Non-ferrous metals, Aluminum other than products. What’s down: Transport equipment, Machinery & instruments, Manufactures of metals, Primary & semi-finished iron & steel, Ferro alloys, Iron & steel bar/rods, Machine tools, Residual engineering items, Mica.
Sr. No. Thrust Identified Thrust Product Products (Existing / New) Total (India’s Engineering Exports) Total (India’s Thrust Product Exports) India’s Thrust Product Exports as % of India’s Engineering Exports Total (World Engineering Imports) India's Exports as % of World Engineering Imports Product Category Product/ Product Sub-category 2004-05 2005-06 2007-08 2009-10
13,296 4,822 36% 2,899,118 0.46%
15,542 6,178 40% 3,006,385 0.52%
20,488 8,946 44% 3,232,973 0.63%
27,415 13,019 47% 3,476,639 0.79%
Source: UNCTAD PCTAS Database for 1998-2002, EEPC 2003, AFF Estimates, A. F. Ferguson & Co.Management Consultancy Division.
EXPORT VALUE AND VALUE ADDITION M ATRIX FOR INDIA’S ENGINEERING EXPORT
Source: India’s engineering export value based on EEPC data for 2003-04 (estimates)exe-summary-startegy-paper.pdf, page no. 14. Note: (I) Numbers in circles above represent re-classified group of categories as detailed below; (1) Tractors and Agriculture Equipment; (2) Electric Power Equipment and Parts, Wires and Cables and T. L. Towers; (3) Wagons/ Coaches and Locomotives, Coastal Vessels and Ships, Air-crafts and Aerospace Equipment; (4)Commercial Vehicles (Passenger Cars, Trucks and Buses); (5) Two/ Three Wheelers; (6) Other Capital Goods (Heating/ Cooling Equipment, Other Structur es, Other Industrial Machinery, Freight Containers, Machine Tools); (7) Steel Pipes and Tubes, Ropes and Wires, Bolts/ Nuts and Screws, Electrodes , Railway Track Material; (8) Industrial/ Sanitary Casting, Forgings; (9) Prime Iron and Steel (including Pig Iron); (10) Other Iron and Steel Items (Bright Bars, SS Utensils, Razor Blades, Steel furniture, Hollowware, Other Steel Products NOS, Ferro Alloys; (11) Aluminium Metals and Products thereof; (12) Other Non-Ferrous Metals and Products thereof'; (13) Auto Parts; (14) Bicycle and Parts; (15) Hand/ Cutting Toolsand Files; (16) Engines, Compressors and Mechanical Pumps; (17) Other Consumer Durables (ElectricFans and Parts, Mica an d Mica Products, Office Equipment, Dry/ Storage Batteries, Sewing Machines/Needles, Electric Manufactured NOS, Scientific/ Surgical Instruments, Miscellaneous Manufactured Articles; (18) Management and Technical Services (II) Scale represented above for India’s engineering exports is non-linear.
ENGINEERING GOODS IN FTP 2009-2014
In the last five years India‘s exports witnessed robust growth to reach a level of US$ 168 billion in 2008-09 from US$ 63 billion in 2003-04. Our share of global merchandise trade was 0.83% in 2003; it rose to 1.45% in 2008 as per WTO estimates. Our share of global commercial services export was 1.4% in 2003; it rose to 2.8% in 2008. India‘s total share in goods and services trade was 0.92% in 2003; it increased to 1.64% in 2008. On the employment front, studies have suggested that nearly 14 million jobs were created directly or indirectly as a result of augmented exports in the last five years The short term objective of our policy is to arrest and reverse the declining trend of exports and to provide additional support especially to those sectors which have been hit badly by recession in the developed world. We would like to set a policy objective of achieving an annual export growth of 15% with an annual export target of US$ 200 billion by March 2011. In the remaining three years of this Foreign Trade Policy i.e. upto 2014, the country should be able to come back on the high export growth path of around 25% per annum. By 2014, we expect to double India‘s exports of goods and services. The long term policy objective for the Government is to double India‘s share in global trade by 2020. The Government seeks to promote Brand India through six or more ?Made in India‘ shows to be organized across the world every year. In the era of global competitiveness, there is an imperative need for Indian exporters to upgrade their technology and reduce their costs. Accordingly, an important element of the Foreign Trade Policy is to help exporters for technological upgradation. Technological upgradation of exports is sought to be achieved by promoting imports of capital goods for certain sectors under EPCG at zero percent duty. Market Diversification Weaker demand in developed economies, triggered by falling asset prices and increased economic uncertainty has pulled down the growth of India‘s exports to developed countries. There are no clear signals as to when the markets in developed countries would revive. To insulate Indian exports from the decline in demand from developed countries, in this Policy focus is on diversification of Indian exports to other markets, specially those located in Latin America, Africa, parts of Asia and Ocenia. To achieve diversification of Indian exports, following initiatives have been taken under this Policy. 1) Focus Market Scheme 2) Market Linked Focus Product Scheme: There has been a significant increase in the outlay under ?Market Linked Focus Product Scheme‘by inclusion of more markets and products. This ensures support for exports to all countries in Africa and Latin America
ENGINEERING TRADE BY TRADE BLOCKS
The analysis of engineering product imports by various trade blocks and India‘s export relation with them (in respect of engineering products) were used in supporting the finding of Thrust Product and Thrust Market analysis. ASEAN In the ASEAN context, the following observations deserve consideration: Marginal Indian Presence In 2003, India‘s engineering exports are just over 1% of the total ASEAN engineering imports from outside the block. Intra-ASEAN trade In 2003, the intra-ASEAN trade stood at only US $ 32 Bn compared to ASEAN‘s imports of US $ 107 Bn from the rest of the world. This signifies that there exists significant potential for exports/trade in the region. Therefore, it is critical that India gives serious consideration to trade arrangements with ASEAN. NAFTA In the NAFTA context, the following observations deserve consideration Marginal Indian Presence In 2003, India‘s engineering exports was 0.49% of the total NAFTA engineering imports from outside the block. Intra-NAFTA trade In 2003, NAFTA‘s within block imports accounted for 46% of its total imports. Thus, NAFTA in itself is a significant market. This free trade area is indeed a challenging entry barrier to any geography looking at trade opportunity. Its imports from outside the block accounted for one-sixth of the world imports. India‘s share at 0.26% of this presents the need for growth. Product Export Opportunity Automobile Parts, Instruments All Types, Electric Power Equipment Parts, Prime Iron and Steel make up for close to 31% of India‘s engineering exports to NAFTA. The following product categories present opportunities for growth owing to the marginal presence in import basket of NAFTA. 3 Industrial Castings 3 I.C. Engines and Parts 3 Commercial Vehicles: NAFTA‘s imports from outside the block stood at 20.5% in 2002,while India‘s exports were negligible. European Union (EU) In the context of EU, the following observations deserve consideration Marginal Indian Presence In 2003, India‘s engineering exports accounted for 0.71% of the total EU engineering imports from outside the block. This marginal presence could be increased by focus on thrust products. Intra-EU trade In 2003, EU‘s within block imports accounted for 67% of its total imports. This much magnitude of free trade area is indeed a challenging entry barrier to any geography looking at trade opportunity here. Thus, it is important that India focuses on thrust products to increase market share. EUROPEAN UNION (EU) In the context of EU, the following observations deserve consideration: - % of Marginal Indian Presence In 2003, India‘s engineering exports accounted for 0.71% of the total EU engineering imports from outside the block. This marginal presence could be increased by focus on thrust products. % of Intra-EU trade in 2003, EU‘s within block imports accounted for 67% of its total imports. This much magnitude of free trade area is indeed a challenging entry barrier to any geography looking at trade opportunity here. Thus, it is important that India focuses on thrust products to increase market share.
INDIAN ENGINEERING SECTOR: NEED FOR MORE FOCUS
The engineering industry is the largest segment of the Indian industrial sector. It accounts for 3 per cent of India‘s GDP with a 30.5 per cent weight in the index of industrial production (IIP); 29.9 per cent share of total investment; and 62.8 per cent share in foreign collaborations. Engineering exports are one of the largest foreign exchange earners for the country and account for over 20 per cent of India‘s total exports with around 35 per cent of the engineering exports contributed by the micro, small, and medium enterprises (MSME) sector. India‘s export of engineering goods grew at 25.2 per cent (CAGR) during 2000-01 to 2007-08. In 2008-09, the growth moderated to 18.7 per cent and in 2009-10 it declined by 19.6 per cent because of global recession, with its share in total exports falling to 18.2 per cent. In the first half of 2010-11, there was a robust growth of 46.0 per cent partially due to base effect and partially due to global recovery following stimulus measures. The performance of principal categories of engineering items export shows that in 2009-10, all the major categories of engineering goods had negative growth. In the first half of 2010-11, all the major categories like machinery, iron and steel, and other engineering goods registered high growth with the major sub-categories like transport equipment, primary and semi-finished iron and steel, non-ferrous metals and manufactures of metals registering whopping growths of 61.8 per cent, 65.0 per cent, 61.5 per cent, and 40.3 per cent respectively. Only one major sub-category, i.e. machinery and instruments registered moderate growth of 10.5 per cent (see Table 1) EXPORT PERFORMANCE OF DIFFERENT ENGINEERING GOODS
Share in India’s Total Exports(%) Engineering Categories 2008-09 2009-10 2009-10 (Apr.Sept.) 12.5 0.2 5.7 6.7 1.9 0.4 1.5 5.1 0.4 0.3 1.0 3.3 0.1 19.5 2010-11 (Apr. Sept.) 13.3 0.1 4.8 8.3 2.3 0.4 1.9 6.2 1.0 0.3 1.3 3.6 0.1 21.8 Growth Rate (%) 2009-10 2010-11 (Apr. Sept.) -13.3 -26.4 -13.3 -12.9 -39.2 -34.2 -40.4 -21.7 -43.1 11.3 5.4 -27.2 -5.9 -19.6 37.7 -1.2 10.5 61.8 63.9 59.1 65.0 59.8 229.4 63.5 61.5 40.3 37.6 46.0
1) Machinery a) Machine Tools b) Machinery & Instruments c) Transport Equipment 2) Iron & Steel a) Iron & Steel Bar Rods, etc b) Primary & Semi-finished Iron & Steel 3) Other Engineering Items a) Ferro Alloys b) Aluminium other than Products c) Non-ferrous Metals d) Manufacture of metals e) Residual Engineering Items To tal Engineering Exports
12.2 0.2 5.9 6.1 3.2 0.6 2.6 6.4 0.8 0.3 1.1 4.1 0.1 21.8
11.0 0.2 5.3 5.5 2.0 0.4 1.6 5.2 0.5 0.3 1.2 3.1 0.1 18.2
Source: DGCI&S The major markets for Indian engineering exports are the USA, Singapore, UAE, UK, China, Germany, and Italy. Notably, while there was a fall in growth of India‘s engineering exports to most of the markets in 2009-10, its engineering exports to China grew by over 62 per cent. With a 0.8 per cent share of world engineering exports in 2008, India ranks 30th—below all comparable countries— in the global engineering exports market. This low position is primarily attributable to three factors: 1) Low exports- to-GDP ratio: exports-to-GDP ratio of 15 per cent for India vis-à-vis 27 per cent for comparable countries
2) Low engineering-to-total exports ratio: engineering exports to total exports ratio of 24 per cent for India vis-à-vis 30 per cent for comparable countries 3) Low technology-intensity of engineering exports: share of high and medium technology products in engineering exports is 62 per cent for India vis-à-vis 71 per cent for comparable countries. Given India‘s current low share of world engineering exports and the significant scope for improvement in competitiveness, there is potential for achieving higher growth in this major sector of world trade. Source – Page No 166 , echap-07 - International Trade.pdf
Trade Policy Measures
Market and Product Diversification and Expansion of Markets: Additional benefit of 2 per cent bonus, over and above the existing benefits of 5 per cent / 2 per cent under the FPS allowed for about 135 existing products, which have suffered due to recession in exports. Major sectors include all handicrafts items, silk carpets, toys and sports goods (all of which were earlier eligible for 5 per cent benefits); leather products and leather footwear, handloom products, and some of engineering items including bicycle parts and grinding media balls (all of which were earlier eligible for 2 per cent benefit). 256 new products added under the FPS (at eight-digit level), which became entitled for benefits at 2 per cent of FOB value of exports to all markets. Major sectors / product groups are engineering, electronics, rubber and rubber products, other oil meals, finished leather, packaged coconut water, and coconut shell worked items. The services negotiations at the WTO have been rejuvenated after the G-20 Meeting. Substantive interest has been evinced by all members to intensify the negotiations to make use of the limited window of opportunity (2011) to conclude the negotiations. As a part of the plurilateral process (where more than two countries are involved), 22 plurilateral groups have been formed at the WTO in service sectors/ modes. India is the coordinator of the plurilateral requests in Mode 1 (cross-border supply) and Mode 4 (Movement of Natural Persons) - the core areas of its interest in the services negotiations. India is also co-sponsor of plurilateral requests in computer and related services (CRS) and architectural, engineering and integrated engineering services.(pg 182)
Trade Policy Reforms : Some Challenges for the Medium and Long Term Challenge of real diversification of India’s exports: While India has diversified its export basket as well as export markets over the years, substantial diversification in tune with world demand has not taken place. This can be seen by matching India‘s exports with the top 100 imports of the world at the six-digit HS level. The exercise based on PCTAS data 2010(data for 2008) shows that India‘s presence in these top items of world demand is negligible except for a few items such as diamonds and jewellery, oil cakes, t-shirts, mens/boys trousers, flat rolled iron products, and maize (corn). There are many electronic, electrical, and engineering items (the three Es) in the top 100 imports of the world where India‘s presence is negligible.
EXPORT OF ENGINEERING GOODS & SERVICES DURING 2008-09 TO 2009-10
SL. A B C D GROUP-WISE EXPORT CAPITAL GOODS CONSUMER DURABLES NON-FERROUS METALS THEREOF TOTAL A. CAPITAL GOODS 2 - 3 wheeler Aircraft & Spares Boiler & Parts Cement Mill Machinery Coastal Vessels & Ships Commercial Vehicles Cranes, Lifts & Winches Electric Power Equipments & Parts Electric Wires & cables Fencing Structures Food Processing Machinery & Parts Freight Containers Heating & Cooling Equipments Knitting Machinery Machine Tools Other Chemical Plant Other Construction Machinery Other Industrial Machinery Sugar Machinery & Parts Textile Jute Mill Machinery Tractors & Agricultural Equipments Transmission Line Towers & Parts Wagons Coaches & Locos TOTAL OF "A" & PRODUCTS 3535.49 13464.57 41582.49 2008-09 487.71 1402.18 418 2 3715.56 3050.2 155.67 3669.83 416.1 400.3 257.44 14.98 332.21 14.11 375.15 763.25 668.14 1147.5 25.38 121.96 576.51 185.3 44.67 18244.15 3460.85 8640.14 33738.65 2009-10 589.09 1005.04 376.19 4.54 2554.31 3565.38 137.86 3222.59 287 354.65 271.09 6.67 283.06 8.23 276.51 738.04 739.81 798.32 14.91 109.99 481.87 158.78 29.38 16013.31 -2.11 -35.83 -18.86 Growth % 20.78 -28.32 -10 127 -31.25 16.89 -11.44 -12.19 -31.02 -11.4 5.3 -55.47 -14.79 -41.67 -26.29 -3.3 10.72 -30.5 -41.25 -9.81 -16.42 -14.31 -34.22 -12.22 2008-09 18244.15 6338.28 2009-10 16013.31 5624.35 Growth % -12.22 -11.26
PRIMARY IRON & STEEL & ITEMS THEREOF
B.
CONSUMER DURABLES Accumulator Air Compressor Automobile Parts Bicycle & Parts Cutting Tools Dry Batteries Electric Fan & Parts Electric Manufacturers N.O.S. Hand Tools I.C. Engine & Parts Instruments All Types Misc. Manufacturers N.O.S Office Equipments Prime Mica & Mica Products Pumps Sewing Machines and Needles etc. Stainless Steel Utensils Steel Files TOTAL OF "B" NON-FERROUS THEREOF METALS & PRODUCTS
2008-09 106.08 152.34 1808.84 209.3 207.92 15.74 144.03 344.72 196.48 1067.79 1011.71 146.3 56.46 236.51 390.36 26.14 189.64 27.92 6338.28
2009-10 93.07 107.21 1517.22 148.76 186.14 63 130.41 285.68 149.45 919.45 1034.83 139.57 60.44 204.46 341.51 28.44 192.18 22.53 5624.35
Growth % -12.26 -29.62 -16.12 -28.92 -10.48 300.25 -9.46 -17.13 -23.94 -13.89 2.29 -4.6 7.05 -13.55 -12.51 8.8 1.34 -19.31 -11.26
C.
2008-09 1165.18 2370.31 3535.49
2009-10 1042.08 2418.77 3460.85
Growth % -10.56 2.04 -2.11
Aluminium & Products Thereof Other Non Ferrous Metal & Products TOTAL OF "C"
D.
PRIMARY IRON & STEEL & ITEMS THEREOF Bolts & Nuts (Fasteners) Bright Bars Electrodes Ferro Alloys Ferrous Holloware Ferrous industrial castings Other Steel Products N.O.S Prime Iron & Steels Railway Track Materials (Fasteners) Razor Blades Sanitary Castings Steel Forgings Steel Furniture Steel Pipes & Tubes Steel Wire Steel Wire Ropes Wire Nails Nettings & Stranded Wires
2008-09 334.84 519.51 30.97 1546.81 422.41 639.78 819.06 5235.44 9.5 45.47 605.82 548.58 40.72 2275.32 237.44 61.53 91.37
2009-10 246.93 182.59 23.22 880.41 400.75 521.35 597.53 3282.63 6.48 50.14 440.02 354.86 34.55 1344.15 167.91 37.58 69.04
Growth % -26.25 -64.85 -25.02 -43.08 -5.13 -18.51 -27.05 -37.3 -31.79 10.27 -27.37 -35.31 -15.15 -40.92 -29.28 -38.92 -24.43
TOTAL OF "D"
13464.57
8640.14
-35.83
Source: http://www.eepcindia.org/export-statistics-dollar.asp
EXPORT PERFORMANCE M ONITOR
Export Performance of Principal Commodities: for March - 2010 Cumulative % change Exports over (09-10) 2008-09 47193.05 45325.81 26296.59 13640.72 10318.06 4142.87 3477.68 2643.73 1330.36 651.00 132.20 155152.07 -8.00 -9.96 -24.25 -37.35 11.45 -39.77 -30.54 13.22 -22.76 -2.39 -2.91 -15.74 (Figures in Rs cr) %change in % change in March-10 March 10 over over March 09 February- 10 42.93 24.62 21.58 8.90 23.49 5.25 89.75 21.19 124.73 15.30 15.36 39.35 25.09 29.65 34.92 23.75 131.76 108.03 76.94 151.73 102.93 46.88 77.50 23.76
Principal Commodity Transport equipment Machinery & instruments Manufactures of metals Primary & semi-finished iron & steel Non-ferrous metals Ferro alloys Iron & steel bar/rods Aluminium other than products Machine tools Residual engineering items Mica Grand Total
Source: DGCI&S Provisional Data, Statistics Department, EEPC INDIA Head Office – July 2010 Release Page No. 2
TOP DESTINATIONS: 2009 – 10 Export performance to Top 20 Destinations for March 2010
Cumulative Exports 09- 10 15857.54 10359.46 9545.43 7309.14 6880.53 6606.47 5509.68 4672.88 3615.65 3473.83 3405.90 3319.29 2950.41 2778.49 2751.75 2718.79 2607.21 2567.29 2337.45 Exports March 10 2182.61 1200.63 1092.78 574.79 453.25 623.14 511.75 434.65 268.10 253.46 327.61 349.87 419.41 315.02 491.58 229.20 200.13 236.18 240.68 %change March‘10 over Feb'10 34.54 204.78 91.74 -0.55 -12.32 18.97 25.19 58.37 10.91 45.66 40.81 57.54 53.39 10.68 100.19 0.58 -14.81 315.97 17.25 %change March‘10 over March‘ 09 40.30 65.34 38.74 -7.20 -44.57 -29.99 52.67 168.70 24.04 24.23 56.11 25.26 180.43 14.31 341.35 -32.60 1.07 29.70 68.69
Importing Country
% change over 08-09
Rank 08-09
Rank 09-10
USA SINGAPORE UAE UK CHINA P RP GERMANY ITALY MALAYSIA INDONESIA NETHERLAND FRANCE SAUDI ARAB KOREA RP NIGERIA SRI LANKA DSR IRAN BANGLADESH PR NEPAL THAILAND
-31.81 -10.72 -31.22 -13.57 67.71 -20.01 -6.13 -39.66 42.06 -30.61 -1.41 -45.28 -6.35 -11.85 5.80 -5.06 10.67 41.72 -19.12
1 3 2 4 11 5 8 6 18 9 12 7 14 13 17 16 20 29 15
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19
SOUTH AFRICA
2302.69
4.32
266.84
22
20
35.65
127.24
Source: DGCI&S Provisional Data, EEPC Member Returns, Statistics Department, EEPC INDIA Head Office– July 2010 Release Page No. 3
TOP 5 DESTINATIONS : PRODUCT PERFORMANCE
Destinations Substantial Growth USA Heavy Decline NON-FERROUS METALS MANUFACTURES OF METALS ALUMINIUM OTHR THAN PRDCTS PRMRY & SEMI-FNSHD IRON & STEEL FERROUS ALLOYS PRIMARY & SEMI-FNSHD IRON & STEEL RESIDUAL ENGINEERING ITEMS MICA ALUMINIUM OTHR THAN PRDCTS MACHINE TOOLS IRON AND STEEL BAR/ROD,ETC. &FERROUS ALLOY PRIMARY & SEMI-FINSHED IRON & STEEL FERROUS ALLOYS
Singapore
UAE
NON-FERROUS METALS MACHINERRY AND INSTRUMENTS ALUMINIUM OTHR THAN PRODCTS
UK
TRANSPORT EQUIPMENTS MACHINE TOOLS
FERROUS ALLOYS,NON-FERROUS METALS,PRIMARY & SEMI-FINSHD IRON & STEEL ALUMINIUM OTHR THAN PRDCTS
China P RP
Source: DGCI&S Provisional Data, EEPC Member Returns, Statistics Department, EEPC INDIA Head Office – July 2010 Release, Page no. 4.
ALUMINIUM OTHR THAN PRDCTS NON-FERROUS METALS MACHINE TOOLS MACHINERRY AND INSTRUMENTS
TRANSPORT EQUIPMENTS PRMRY & SEMI-FNSHD IRON & STL
Govt targets $120-bn engineering exports by 2015 PTI,Feb 10, 2011, 05.45pm IST NEW DELHI: The government on Thursday said it has set an ambitious target of $120-billion engineering exports by 2015 and emphasised on the need to align policies in that direction. Commerce and Industry Minister Anand Sharma said the country's engineering exports have already reached $40 billion and is expected to touch $50 billion by the end of the current financial year. "We have remained mindful of the fact that we need to align government policies with the ambitious target of tripling India's engineering exports of $120 billion by 2015," Sharma said. The minister was speaking at the Eco-Products International Fair 2011 and International Engineering Trade Fair here. Source : http://articles.economictimes.indiatimes.com/2011-02-18/news/28615519_1_forgings-and-fastenersdependence-on-traditional-markets-engineering-goods
RECOMMENDATION
A key set of imperatives are defined to achieve India?s ambition to almost triple its engineering exports to USD110 billion by 2014. These imperatives cover the entire set of initiatives that need to be undertaken by the government, EEPC India and exporters. Following table depicts the recommendations.
Particulars Exporters Thrust products Striver Products
? Aggressively target big and tough markets to achieve high growth o Big Markets –Comparatively low effort as there is marginal Indian presence o Tough Markets –Comparatively higher effort as India has a negligible presence ? Target niche markets to maintain the existing levels of growth as lower effort is required due to India?s significant presence in these markets ? Focusing on thrust products can enhance the growth prospects
EEPC INDIA
?
Leverage MDA/MAI schemes to enhance growth ? Ensure the selection of thrust products for all relevant events in their thrust markets ? Enhance the publicity of High-Potential products in trade fairs and INDEEs ? Extend the FPS to HighPotential products on a priority basis ? Initiate the TUFS for manufacturers of HighPotential products ? Lower HT+MT imports to enable domestic companies to move up the value chain ? Lower exports in RB products if they offer value added manufacturing opportunities
? Focus on providing informational assistance by identifying relevant trade fairs for participation ? Initiate market study/surveys to enable exporters to effectively target the identified thrust markets ? Launch an aggressive campaign to improve the export orientation of the SME exporters
Government
? Extend the FPS for all the products for the next 5 years to significantly increase their world share ? Remove anti-dumping/ subsidy duties on imported raw materials for cost competitiveness ? Initiate the TUFS for product groups with dominant SME presence ? Enable cheaper credit for SMEs present in these products so as to help them achieve technology and product enhancement
CHANGING SHARE OF I NDIA ’S T HRUST P RODUCTS EXPORTS I N FUTURE
2.42 The share of Thrust Products in India‘s Engineering Products exports is estimated at US$ 4.82 Bn (36%) in 2004-05. With the targeted growth of 15% p.a. in India‘s overall engineering products exports, the share of thrust products is estimated to increase to US$ 13.02 Bn (47%) by 2009-10. Exhibit 2.12 shows the changing share of Thrust Products exports in future. Considering the optimistic potential for exports this share is expected to increase to 52% by year 2009-10.
Exhibit 2.12 Estimated Changing share of Thrust Products Exports as per Target Growth Rate
Products
2004-05
2005-06 2007-08 6.18 8.95
2009-10 13.02
Estimated Thrust Products Exports from 4.82 India (US$ Bn) Estimated total Engineering Products Exports from India (US$ Bn) 13.30 % share of thrust Products Exports 36%
15.54 40%
20.49 44%
27.42 47%
Source: UNCTAD PCTAS Data analysis, EEPC Data 2003, AFF Estimates
Therefore greater focus on exports of thrust products in thrust markets is required vis-à-vis the current approach, i.e. exporting identified thrust products to identified thrust markets with a focus on increasing penetration/ share in thrust product imports of these markets to achieve the overall exports target growth rate. It is important to note that thrust products exports to thrust markets are characterised by a number of factors associated with identified products like; Weight of products- High weight of product means higher freight costs. This leads to geographical limitations for product exports. For example, for metal exports like copper and aluminium, India would have greater competitive advantage in Asian markets vis-àvis Europe and Americas. Standards: Product related standards/ regulations can be a non-tariff barrier for exports of engineering products to a particular country. For example, high level of energy efficiency in electrical products is a key barrier for exports to developed countries. Technology- high technology products are typically demanded by developed economies, which are large markets for such products, while low technology products have relatively limited market size with high degree of competition Based on above considerations, engineering exports in certain thrust markets/ non-thrust markets may be relatively more competitive vis-à-vis other markets and hence, international marketing strategy should be more product and market specific. While increasing the focus on thrust markets, the current markets that are not part of thrust markets (mostly, developing countries) could be also be focussed upon, given that relatively low effort is required to increase exports in these markets as these markets have similar market conditions and product profile as that in India, viz. African countries (like Kenya, South Africa, etc.), SAARC
countries (Nepal, Bangladesh, Sri Lanka, Bhutan), Latin America (key exporting nations are Mexico, Brazil). However, it should be noted that most of these markets do not have significant share of world imports of engineering products.
Engineering Goods Drive Export Arecent strategy paper put out by the department of commerce had targeted doubling India‘s merchandise exports within three years to about $450 billion by 2013-14.The worlds second-fastest growing economy exported goods worth $179 billion in 200910,4% lower than the year before. If global commodity prices moderate quickly with better supply response, it will help reduce inflation pressure faster than expected and keep current account deficit within manageable levels, wrote Tanvee Gupta Jain and Chetan Ahya of Morgan Stanley in a comment on latest trade numbers. We expect export growth to remain strong. This, we believe,will help to some extent in offsetting the slower-than expected domestic demand growth, the note added. Total exports during April-February 2010-11 were valued at $208.2 billion while imports added to $305.3 billion, up 21.2%.Trade deficit for the first 11 months was $97 billion, much lower than initially estimated. The growth in exports was driven by the engineering goods sector, which saw an increase of 81% during April-February to $52.7 billion.Gems & jewellery, petroleum, oil & lubricants,electronics,plastics and chemicals also posted high export growth, as India‘s attempt to diversify its markets aft er the financial crisis yielded good results. Several experts,however,are not very optimistic on India maintaining a 30% export growth next year. A number of Asian economies have lifted rates sharply to combat inflation, which will affect demand, while the US and Europe are still not firmly on their feet. Rising prices of crude oil and other commodities could dampen demand further. Expecting an over 30% growth in exports in the future could be optimistic as typically we are exporting conventional goods and global economy and trade is projected to slow down a bit, said Madan Sabnavis, chief economist at rating agency CARE. The free trade agreements signed with the Southeast Asian countries and recent forays into markets in Africa and South America could be the saving grace in the next fiscal, said Ajay Sahai, Director-general of exporters lobby FIEO. Source : Economic Times ,11th March 2011 - Pg No 19
TRADE POLICY AND PROMOTION India has benefited less than other India-like countries from the proliferation of bilateral and regional trade agreements – comparatively higher tariff rates apply for Indian exports. Further, some of its export competitors have availed reduction or complete removal of tariffs for their exports, which has resulted in a decline in the competitiveness of exports from India vis-à-vis its competitors. India has been able to avail preferential treatment for only a small percentage of its exports till now, mainly due to the following reasons: 1. Narrow focus on regional integration: Most of India‘s trade agreements that became operationalized till as recently as 2007 were with SAARC countries. 2. Nature of trade agreements: Most of India‘s agreements have been preferential trade agreements that cover only a small cross-section of goods. Hence, if India wants to improve its export prospects, it needs to ensure preferential market access for its engineering exports by (1) negotiating trade agreements with some of its bigger exports markets and by (2) broadening the scope of the agreements by negotiating for complete FTAs/ CECAs. PROMOTIONAL EVENTS BY EEPC INDIA EEPC India conducted promotional activities in 45 different countries (majority of which are the thrust markets) during the period 2005–2009, Engineering exports to these countries have
been promoted through different events such as INDEE, participation in international trade fairs, trade delegations, BSMs and catalogue shows. EEPC India has also been active in the Indian pavilion of various international trade fairs, to promote Indian engineering exports. It has been observed that generally there is an increase in India‘s market share in most markets where EEPC India has conducted events over the past four years. We have defined a key set of imperatives to achieve India‘s ambition to almost triple its engineering exports to USD110 billion by 2014. These imperatives cover the entire set of initiatives that need to be undertaken by the government, EEPC India and exporters. These imperatives recognize the need for differential action across the thrust and striver products to boost the Indian engineering exports while ensuring inclusive growth of all the sub sectors in the engineering sector. Taking a balanced view, a set of discrete initiatives for thrust and striver products have been identified as given below: India has traditionally lagged behind in its engineering exports, since most SME players have not achieved economies of scale or the requisite technological capabilities required to be competitive in the global export market. To rectify this situation, the government and EEPC India will need to take concrete measures, which will have to be supplemented by the initiatives of individual exporters. The government needs to facilitate economies of scale in the engineering sector by initiating policy-level measures to improve the saleability of engineering SEZs in the developer and user community and also attract higher levels of FDI in the engineering sector. These measures will need additional stimulus in the form of labor reforms to amend the existing archaic laws to meet the needs of current market realities, and also enhance the quality and quantity of manpower. While labor reform initiatives have to be taken by the government, improvement in the quality and quantity of manpower can be only achieved by the active participation of the government, EEPC India and individual exporters in various manpower development initiatives. The government should set up a skill development fund to impart training in areas where technology upgradation is being initiated to ensure the enhancement the productivity and quality levels. EEPC should take the lead in enhancing the skill levels in the engineering sector by identifying clusters where it is a necessity as well as developing a training plan so as to quickly implement it across the length and breadth of the country. While FDI will definitely help improve the technological capabilities in India, certain other important initiatives such as centralized mapping of the R&D activity happening in the engineering sector, incentivizing commercialization of indigenously developed technology, marketing of the developed technologies to ensure sustainability of R&D, enhancing industry-academia-central R&D institution interactions need to be taken up on a priority basis by the government. Additionally, an enhancement of the tax incentives would further boost R&D in the engineering sector. EEPC India should take the lead in the promoting green technology by spreading awareness on carbon mitigation measures and energy saving concepts in the engineering sector. This is
a major imperative going forward as green technology will be seen as differentiator in the global arena and the reduction in engineering sector‘s carbon emissions will decide whether India meets its voluntary carbon reduction targets by 2020. Infrastructural and procedural inadequacies have long been pointed out as sources of competitive disadvantage in terms of costs and timelines for Indian exports. Hence, these issues need to be acted on by the government at the earliest, so that Indian engineering exports can realize their full potential in the next five years. Greater autonomy for state governments with respect to port projects is also an imperative to accelerate capacity additions. While implementations of port connectivity projects by rail or road are steps in the right direction, last-mile connectivity to various engineering clusters across the country is still inadequate. Since a number of these projects are not taken up due to financial non-viability, the government needs to bundle them with other financially lucrative projects to ensure a gap-free infrastructure for exporters. The government needs to simplify several customs procedures by reducing the number of requisite procedures or by initiating the process of self-certification for status-holders. In addition, it should undertake other relevant technological initiatives to reduce the overall transaction time and related costs.
TECHNOLOGICAL UPGRADATION
The government should extend the Technology Upgradation Fund Scheme (TUFS) to the High-Potential and Striver product categories to combat increasing technological obsolescence in them. The TUFS should be first geared towards High-Potential products and later towards Strivers to ensure an immediate boost to engineering exports while enabling higher employment generation at the same time. To usher in the next phase of export growth, India needs to move up in the value chain of export goods. This objective is sought to be achieved by encouraging technological upgradation of our export sector. A number of initiatives have been taken in this Policy to focus on technological upgradation; such initiatives include: a. EPCG Scheme at zero duty has been introduced for certain engineering products, electronic products, basic chemicals and pharmaceuticals, apparel and textiles, plastics, handicrafts, chemicals and allied products and leather and leather products. b. The existing 3 % EPCG Scheme has been considerably simplified, to ease its usage by the exporters. c. To encourage value added manufacture export, a minimum 15 % value addition on imported inputs under Advance Authorisation Scheme has been stipulated. d. A number of products including automobiles and other engineering products have been included for incentives under Focus Product, and Market Linked Focus Product Schemes. e. Steps to encourage Project Exports shall be taken
SUPPORT TO STATUS HOLDERS The Government recognized ?Status Holders‘ contribute approx. 60% of India‘s goods exports. To incentivise and encourage the status holders, as well as to encourage Technological upgradation of export production, additional duty credit scrip @ 1 % of the FOB of past export shall be granted for specified product groups including leather, specific sub sectors in engineering, textiles, plastics, handicrafts and jute. This duty credit scrip can be used for import of capital goods by these status holders. The imported capital goods shall be subject to actual user condition. EXPORT OF SPARES Warranty spares (whether indigenous or imported) of plant, equipment, machinery, automobiles or any other goods, (except those restricted under ITC (HS)) may be exported along with main equipment or subsequently but within contracted warranty period of such goods subject to approval of RBI. M ARKET ACCESS INITIATIVE Under MAI scheme, Financial assistance is provided (MAI) for export promotion activities on focus country, focus product basis. Financial assistance is available for Export Promotion Councils (EPCs), Industry and Trade Associations (ITAs), Agencies of State Government, Indian Commercial Missions (ICMs) abroad and other national level institutions/eligible entities as may be notified. A whole range of activities can be funded under MAI scheme. These include, amongst others, - Testing charges for engineering products abroad, COMMON FACILITY CENTRES Government shall promote establishment of Common Facility Centres for use by home-based service providers, particularly in areas like Engineering & Architectural Design, Multi-media operations, Software developers etc., in State and District level towns, to draw in a vast multitude of home-based professionals into services export arena. The Status Holders of the following Sectors shall be eligible for this Status Holders Incentive Scrip: 1. Leather Sector (excluding finished leather); 2. Textiles and Jute Sector; 3. Handicrafts; 4. Engineering Sector (excluding Iron & Steel, Nonferrous Metals in primary or intermediate forms, Automobiles & two wheelers, nuclear reactors & parts and Ships, Boats and Floating Structures; 5. Plastics; and 6. Basic Chemicals (excluding Pharma Products).
ZERO DUTY EPCG SCHEME Zero duty EPCG scheme allows import of capital goods for pre production, production and post production (including CKD/SKD thereof as well as computer software systems) at zero Customs duty, subject to an export obligation equivalent to 6 times of duty saved on capital goods imported under EPCG scheme, to be fulfilled in 6 years reckoned from Authorization issue-date. The scheme will be available for exporters of engineering & electronic products, basic chemicals & pharmaceuticals, apparels & textiles, plastics, handicrafts, chemicals & allied products and leather & leather products; subject to exclusions as provided in HBPv1. Validity period for import of capital goods and provision for extension in export obligation period will be as separately provided in the HBPv1. All other provisions pertaining to concessional 3 % duty EPCG scheme under this Chapter, to the extent they are not inconsistent with the above provisions of zero duty EPCG scheme, shall be applicable to the zero duty EPCG scheme also. The zero duty EPCG scheme will be in operation till 31.3.2011 .
PROCURING/M ANUFACTURING GOODS FOR EXPORT & THEIR INSPECTION B Y GOVERNMENT AUTHORITIES OF INDIA. I.Procuring / Manufacturing Goods Once you are ready with the infrastructure for exporting goods and have obtained necessary finance, you should proceed to procure the goods for export. Procuring the goods should be done with extreme care and caution as to the quality and cost. However, procuring the raw materials etc. and manufacturing the goods for export will need extra efforts on your part. If you are an established exporter, you can have the facility of procuring raw materials under the Duty Exemption Scheme.
II.Compulsory Quality Control & Preshipment Inspection
An important aspect about the goods to be exported is compulsory quality control and preshipment inspection. Under the Export(Quality Control and Inspection) Act, 1963, about 1000 commodities under the major groups of Food and Agriculture, Fishery, Minerals, Organic and Inorganic Chemicals, Rubber Products, Refractoriness, Ceramic Products, Pesticides, Light Engineering, Steel Products, Jute Products, Coir and Coir Products, Footwear and Footwear Products / Components are subject to compulsory pre-shipment inspection. At times, foreign buyers lay down their own standards / specifications which may or may not be in consonance with the Indian standards. They may also insist upon inspection by their own nominated agencies. These issues should be sorted out before confirmation of order. Specific provisions have also been made for compulsory inspection of textile goods. Products having ISI Certification mark or Agmark are not required to be inspected by any agency. These products do not fall within the purview of the export inspection agencies network. The Customs Authorities allow export of such goods even if not accompanied by any pre-shipment inspection certificate, provided they are otherwise satisfied that the goods carry ISI Certification or the Agmark. Depending upon the nature of products, goods meant for export are inspected for quality in the following manner: Consignment to Consignment Inspection Each individual consignment is inspected by the Export Inspection Agency, Commodity Board and certificate of inspection is issued. The application for inspection for goods has to be submitted well in advance before the expected date of shipment of the consignment. Inspection of the consignment is generally carried out either at the premises of the exporter, provided adequate facilities exist therein for inspection, or at the port of shipment. The export inspection agency has a right to exercise supervision of inspected consignment(s) at any place or time.
The application should be made in duplicate in the new prescribed form 'Intimation for Inspection' as per standardised pre-shipment export documents to the nearest office of the respective Export Inspection Agency along with the following documents : Particulars of the consignment intended to be exported. A crossed cheque/draft for the amount of requisite inspection fees or an Indian Postal Order. Copy of the Commercial Invoice. Copy of letter of credit. Details of packing specifications. Copy of the export order/contract, indicating inter alia the buyer's requirement that goods are strictly according to the prescribed specifications, or as per samples etc. After satisfying itself that the consignment of exportable goods meets the requirements stipulated in the export contract/order, the inspection agency issues, generally within four days of receipt of intimation for inspection, the necessary certificate of inspection to the exporter in the prescribed proforma in five copies. The certificate is issued in the standardised form which is aligned pre-shipment export document. (Three copies for exporter, original copy for customs use, the second copy for the use of the foreign buyer and the third copy for the exporter's use, fourth copy for Data Bank, Export Inspection Council, New Delhi and the fifth copy is retained with the agency for their own office record).
IN-PROCESS QUALITY CONTROL (IPQC) Certain products like chemicals or engineering goods are subject to this control. The inspection is done at various stages of production. The exporter has to get his unit registered as "Export Worthy" and keep record of processing and production. Inspection by the officers of Export Inspection Agency is done from time to time. The certification of inspection on the end-products is then given without in-depth study at the shipment stage. Under this system, export is allowed on the basis of adequacy of in-process quality control and inspection measures exercised by the manufacturing units themselves. The certificates of inspection in favor of the units approved under the scheme are issued by the Export Inspection Agencies (EIAs) in the normal course. However, these units are kept under surveillance by the EIAs and random spot checks of the consignments are carried out by them. Units approved under this system of in-process quality control may themselves issue the certificate of inspection, but only for the products for which they have been granted IPQC facilities. However, these units have the option either to get the certificate from the Export Inspection Agencies (EIAs) or issue the same themselves. Consequently, the manufacturer exporters of products approved under the IPQC have been recognised as an agency for pre-shipment inspection for export of engineering products for which they have been approved by the Export Inspection Agencies at Bombay, Calcutta, Cochin, Delhi and Madras. SELF CERTIFICATION SCHEME Large manufacturers/exporters, export houses/tradingp 7 3 houses are allowed the facility of Self-Certification on the theory that the exporter himself is the best judge of the quality of his products and will not allow his reputation to be spoiled in the international market by compromising on quality. The industrial units having proven reputation and adequate testing facilities have to apply to the Director (Inspection and Quality Control), Export Inspection Council of India, 11th Floor, Pragati Tower, 26 Rajendra Place, New Delhi-110008. They are granted a certificate valid for a period of one year, allowing them self-certification facility. The facility is available to manufacturers of engineering products, chemical and allied products and marine products. During this period the exporter can issue a certificate signed by himself or by a person authorised by him. The certificate has to indicate the number and date of EIA's reference for registration under Self-Certification Scheme. It has to be issued in the aligned format as per new standardised pre-shipment documents. The approval of an industrial unit under this scheme is notified in the Gazette of India and the exporter has to pay a lump sum fee to the export inspection agencies depending upon his export turnover. Minimum Quality Norms prescribed by the Export Inspection Council should be maintained and achieved for the grant of facility under Self-Certification Scheme
M ARKET RESEARCH
As mentioned earlier to effectively implement the engineering export strategy and penetrate thrust markets, market research (country specific and including market surveys as considered relevant) should be undertaken through professional/ experienced agencies in this domain as an initial step for international marketing in identified thrust products and their thrust markets to make market intelligence available to the exporters. Structured and focused information on thrust products and thrust markets would help the exporters to direct their efforts to develop market specific products and penetrate these markets more efficiently. B RAND PROMOTION AND PUBLICITY As indicated earlier, India has met with limited success in the field of brand promotion and publicity for engineering exports. Brand promotion/ publicity is desired at individual thrust product level as well as India as a supplier of high-quality exporter of engineering products. If we consider the optimistic potential rate of growth of Engineering products exports from India, then share of Consumer Durables product group is expected to increase over the strategy period term (2005-06 to 2009-10). Keeping above in mind, International marketing strategy should be targeting to increase awareness/ visibility of thrust products in thrust markets through focused activities like signature visits/ delegation from thrust markets to reputed Indian engineering product manufacturers, aggressively participating in large exhibitions, arranging road shows in thrust markets, etc. However, to make these events effective, experienced/ professional agencies with wide experience in event management activities should be appointed. KEY SUPPORT ELEMENTS FOR SUCCESSFUL STRATEGY IMPLEMETNATION The following have been identified as key support elements for successful implementation and execution of India‘s engineering export strategy. Their role has been detailed in the report.Infrastructure: - The entire spectrum of infrastructure has been covered under:? ? ? ? ? ? ? ? Ports Roads Rails Power Special Economic Zones (SEZs) Technology Improvement and Capacity Enhancement Domestic and foreign investments in manufacturing Exploit the potential for Outsourcing of engineering products ? Export Finance
ROLE OF VARIOUS BODIES
CENTRAL GOVERNMENT The central government is the chief responsible body that can promote export growth in the near future. It is critical for the central government to play a key role in the following areas: FOREIGN TRADE POLICY The New Foreign Trade policy announced by the UPA government in 2004 for the first time integrated trade policy with the process of the country‘s economic development. The following strategies have been spelt out in the policy document: ? ? ? ? Procedures simplification Deregulation Reduction in transaction costs Facilitating the development of India as a global hub for manufacturing, trading and services
The Government should see to it that the benefits of these policies and strategies are available to the exporters through effective implementation of the same. The issue of policy on Labor reforms does not impart flexibility to exporters of engineering products. It is important that the GOI documents a clear-cut policy on this issue. This would encourage exporters and other manufacturers to commit effort and resources to improve performance. The competitiveness of the exports from India depends on the availability of raw material at internationally competitive prices. Therefore, it is necessary to have a ?Raw Material Policy? that will ensure the supply of raw material to exporters at competitive prices. This measure has become all the more important given the significant rise in input costs in the form of rise in steep prices of pig iron etc. over the last couple of years. In the year 2003-04, 31% of the total engineering exports came from Small Enterprises. The foreign trade policy should research and make available WTO compatible export incentives to SME‘s. This obviously should be in line with India‘s WTO commitments. TRADE AGREEMENTS The Central Government should ensure that the industry has meaningful representation in formulation and negotiations of Trade agreements with partnering countries/ Trade Blocks. Trade agreements should be planned with a larger perspective rather than signing them on a one to one basis. With this understanding, the Central Government could strategise and hasten the process towards becoming members of important trade blocks such as ASEAN with an objective of increasing exports of Engineering Products
INFRASTRUCTURE India needs very large investments in infrastructure, both social and economic, rural and urban to step up the rate of GDP growth to 7% to 8% p.a. The economy must therefore absorb very large investment in infrastructure over the next decade for us to be able to increase our growth rate. A large part of this needs to come from foreign direct investment. The government over the years has assigned industry status to infrastructure. Commitment of funds to infrastructure has increased with time. The infrastructure issues range from ports, rail, roads, power, etc. All this is important not only from the point of view of reducing transaction costs, but also from the point of view of promoting a positive image of India abroad to do business. Discussion with the exporters revealed that if issues related to documentation and infrastructure were sorted out, the transaction costs could come down by 10%-15%. Infrastructure issue is critical to almost all exporters. The team of EEPC could work with the central and state government to direct efforts productively towards infrastructure development. EEPC would need to proactively undertake making presentations/ conducting workshops to relevant bodies to make them aware/ sensitise them on the need for significant enhancement in availability of quality infrastructure, availability of critical materials, etc. needed by the exporters to achieve the target of doubling the engineering products exports in the next five years. In power sector alone in order to sustain an annual growth rate of over 7% p.a. an estimated capacity addition over 10,000 MW per year is needed Creating and operationalising port based SEZs with world class infrastructure and attracting FDI in Thrust Products manufacturing for exports in the SEZs is very important The government can arrange focussed road shows for attracting the export oriented foreign investment in Thrust Product categories and promotion of SEZs. FOREIGN DIRECT INVESTMENT FDI has a significant role to play in the development of an export-oriented economy. The success of China‘s exports is a pointer in this direction. As discussed above for the development of manufacturing and infrastructure to support the growth in GDP and exports India needs very large investments and much of this must come in as Foreign Direct Investment. The central government could have a FDI roadmap to prepare foreign investors in identified thrust product categories in advance of the emerging investment potential in India. The government has a role to play in making India attractive destination for FDI and create an environment conducive to the growth of spirit of adventure and enterprise. As an example, the Indian bureaucracy continues to slow down things. According to a World Bank ?Investment Climate Assessment? report published last year (2004), it takes about 89 days to secure all the permits needed to start a business in India compared with 41 days in China. This shows that there is a need to simplify procedure and time taken to process the FDI related matters. The potential growth of outsourcing by foreign companies is a sign of the confidence of the foreign investors in India and it needs to pick up momentum.
SECTORAL POLICIES The following sectors of the country require a long-term policy document that outlines with specific measurable results – for example 2010 vision document. Sectors that need to be covered include; Steel – (e.g. to target over 100 Mn Tonnes of annual consumption at end of next 10 to 15 years) Automobile Power Shipping: -In order to have complete control on exports from India, the importance of a National Carrier and a Shipping Line cannot be underestimated. A national carrier shipping policy will impart leverage to Indian exporters by reducing dependence on multinational shipping lines. At the moment, most of the trade happens through feeder vessels. With a shipping line policy in place, the Central Government could then develop a mother vessel policy to improve the volume of Indian exports. Along with the Sectoral Policies, the Government should establish research institutions for thrust product categories. An example in case is the dearth of institutions like Automobile Research Association of India (ARAI) and the test facilities. The domestic automobile industry is already facing shortage of test facilities for testing and certification. INDIA PROMOTION This is an extremely critical responsibility that is under the onus of the Central Government. The government is doing its part in enabling this aspect. INDIAN EMBASSIES / TRADE MISSIONS ABROAD The Government should encourage Indian Embassies / Trade Missions in Thrust markets abroad to be more responsive to the request by exporters for information, help and required assistance, especially by the SMEs. TAXATION Introduction of VAT will simplify the multi-level taxation structure It will also help in speeding up freight as lorries would no longer have to stop at the state borders EXCHANGE RATE MANAGEMENT This issue has been under the purview of RBI. A market-adjusted exchange rate is a reality now and encourages exporters to resort to foreign exchange instruments to manage their foreign exposure. LABOUR REFORMS Labour reforms should be viewed by the government as a means of increasing the labour productivity and should be addressed in that manner. Labour Reforms are needed in order for
India to become competitive internationally w.r.t. its competitors like China and also in attracting Foreign Direct Investments PARTNERSHIP WITH EXPORTERS In the area of project exports particularly, government could step in as a re-insurer. The government should make efforts in bringing in ?Exports‘ as focus among industry sectors INCENTIVES TO PROMOTE SMES The Government should earmark some incentives which are WTO compatible and can be provided to the SMEs, e.g. Capital Subsidy @ 1% of the exports made by the SMEs or @ 1% of the export performance made by the engineering sector for export promotion of SME products.
ENGINEERING EXPORT PROMOTION COUNCIL (EEPC)
EEPC has a critical role to play in putting in place enablers for growth of engineering exports: Executive Powers: As an apex body for promoting engineering exports, it is important for the council to have a forum to have the queries of its members answered and resolved. EEPC should be take up a proactive role in networking with government agencies and ensure that it has its say in the policy formulation at central level EEPC Experts should be involved by the Government in addressing WTO related issues and strategy Thrust Product and Market Initiative: EEPC, along with its members, could adopt focussed thrust product and market initiatives to drive export growth. The benefits could be the following: ? ? ? ? ? Business potential and customer information to exporters Awareness in thrust markets of Indian potential Dissemination of information to other members Information on product requirements in foreign markets for the benefit of exporters Exporter Related Matters
EEPC could adopt the following initiatives to help exporters: ? ? ? ? Knowledge Management of the experience of exporters for the benefit of other exporters Information dissemination to exporters on the Lines of Credit in operation and availing benefit of them Time bound grievance redressal SME Initiative
EEPC should arrange industry specific training for SMEs with focus on thrust products and markets, in areas that need improvement. Further, EEPC could also look at the possibility to represent the products of SME sector internationally. More importantly,
help should be provided in terms of market intelligence for various products in thrust markets viz. size, structure and growth, regulatory and standards related information, key competitors, products desired and key characteristics, etc. ? ? ? ? Training on export benefits / schemes, procedures and availing the benefits to SMEs. Training for the perspective and vision for SME Exporters Regional Meetings The regional meeting is an important forum to recognize the issues facing exporters.
EEPC could put in place a mechanism to tap and resolve all major issues in a time bound manner. A dedicated team in EEPC with the Chairman as the Head could ensure that the concerns and ideas of engineering exporters are taken care of Foreign Offices. Currently, EEPC has local/ regional presence through its four international offices in following countries, viz. USA, Germany, Singapore and Nigeria. However, EEPC should aim at increasing local presence in thrust markets by setting up offices in the identified thrust markets or at least regional offices catering to a group of thrust markets. It is suggested that EEPC should examine the feasibility of establishing a local office in the following key markets; ? ? ? ? ? ? ? ? ? ? ? America Canada Mexico Europe United Kingdom France Asia China Japan Korea Malaysia
EEPC foreign offices should be accessible to small and medium exporters. Apart from disseminating the market and product information these offices can provide other important information such as availability of cheaper (lower prices than that from India) raw materials from foreign markets, local standards, etc. Joint Sessions and co-operation with other Councils and Industry Associations. Joint meetings and sessions of EEPC with various export councils and other Industry Associations will help in co-ordination of export promotion and acquiring learning from other councils. This would not only avoid duplication, but also lead to improved productivity in export related matters.
Annual study of the thrust markets‘ regulations and business practices in the engineering segment. This shall provide valuable inputs in the formulation of relevant Indian policies for export promotion and also enable dissemination of useful information to Indian exporters One stop-shop for engineering firms interested in investing in India. EEPC could help firms find Indian partners and advise then on investment opportunities. Operate Business Support Centers ? ? ? To provide companies with free office space for a limited for buyer-seller transactions, during trade and factory visits, etc. To provide cost-effective commercial intelligence to members. Web – based trade tie-up promotion program will help match Indian and foreign firms with similar interests.
Operate foreign offices as mentioned earlier; ? ? ? ? ? ? ? ? ? ? ? For international services to Indian members To facilitate trade measures. Educate international firms of business customs and practices in the Indian market. Liaison with other trade promotion councils in the Thrust Markets that are involved with supporting industries in developing nations to enhance their exports. Promote and review Foreign Direct Investment in different engineering sectors. Support import of world-class capital goods for the engineering sector. Assist foreign subsidiaries of Indian companies to grow their share in the global engineering market. Seek and activate involvement of various commercial attaches of Government of India in foreign countries for effectiveness in trade promotion. Organize international exhibitions in thrust markets and arrange participation of Indian engineering companies in similar events overseas. Undertake trade missions primarily for SME‘s Operate Buyer Service Centers where buyers visiting India can receive assistance in business meetings with Indian companies and collect information on Indian engineering products and suppliers.
BIBLIOGRAPHY
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