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According to the Moroccan government, Japan is the largest foreign private employer in Morocco, with 75 Japan owned organisations generating more than 50,000 jobs. These numbers look likely to grow further in the coming years, as in April 2022 the agreements between Japan and Morocco on the promotion and protection of investments and elimination of double taxation came into force.
The lack of such agreements has meant that up until now many Japanese companies’ presence in Morocco had been as branches of their French, Spanish or German subsidiaries. The largest employers are manufacturers, mostly in the automotive sector, with around 30,000 employed by Sumitomo Electric Industries and Yazaki. Sumitomo Electric Industries has 8 plants in Morocco, and is set to increase this as it diverts production from Ukraine. Yazaki is planning to invest Y9bn to increase its output in Morocco by 25%, including a new production facility. Fujikura is about to start its plant there, also shifting production from Ukraine.
Renault and Stellantis (Peugeot) have assembly plants in Morocco, contributing to Morocco becoming the biggest exporter of passenger cars in Africa, 80% of which are sold to Europe – primarily France, Spain, Germany and Italy – supported by the free trade agreement with the European Union.
The Moroccan government has been very insistent on local sourcing but also supportive of foreign companies operating there in terms of incentives and taxation. It has also invested in infrastructure such as a high-speed rail link between Casablanca and Tangier, where Renault’s plant is located. Labour costs in Morocco are about a quarter of those in Spain and lower than in Eastern Europe too.
It is not just the automotive sector that is growing in Morocco, however. NTT Data has recently committed to investing around Y200m, creating 1,000 jobs, after a memorandum of understanding was signed between the telecommunications ministries of Japan and Morocco. The Moroccan government is also keen to increase inward investment in its aerospace and renewable energy sectors.
The King of Morocco introduced democratic reforms after the Arab Spring of 2011, since which a moderate Islamist government has been in power. The Islamist party comprehensively lost in the elections in 2021, however. The new government, led by the RNI party, contains influential members of the Moroccan business community. Human rights and freedom of expression are still a concern, with journalists being imprisoned recently in a crackdown.
From a Japanese business perspective, there is definitely a mood of optimism, as can be seen in the recent JETRO Africa report (link to pdf), where 65% of the Japanese companies in Morocco who responded to their survey expected to expand their operations there.* The size of the market, growth potential and the stable social and political situation all scored highly compared to other African countries. Morocco also scored better than other African countries on infrastructure and the ease of hiring and retaining employees. Morocco is more French speaking than English speaking, however, which may account for the relatively low number of Japanese expatriates based there.
*since this was written, a new JETRO report has come out, which the article above now links to, which showed that there had been a drop in the number of Japanese companies expecting to expand in Morocco, to 54.5% – on the other hand, Morocco was one of the top African countries for current and future profitability.
This article by Pernille Rudlin first appeared in the Teikoku Databank News in June 2022
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