Interview: Julianne Furman
How effective has the Tangiers Free Zone (TFZ) been at reducing barriers for business start-ups, and what challenges remain?
JULIANNE FURMAN: I often tell potential investors that, if they are considering investing in Morocco, there is not a single reason to not choose the TFZ. The zone offers all of the advantages of a modern, state-of-the-art industrial park, a one-stop shop for investors, and clear rules and regulations. Investors in the TFZ benefit from the support of a single team whose mission it is to facilitate the set-up of their businesses in the zone.
As founder of the investors association at the TFZ, which now has around 400 companies, we worked hard to develop a legal framework that works for industrial and service companies alike. Over the first few years, we ironed out the kinks, and the result is now being used as a model for other zones. One area that could still be improved is transportation inside the zone for pedestrians, as the shuttle bus system we put in place is insufficient to meet demand. Due to the expansion of the zone, we also need additional gates to alleviate rush hour traffic, which can build up at the main gate.
What can be done to help reduce costs and further improve the competitiveness of Morocco?
FURMAN: Production costs are generally reasonable in Morocco. In the TFZ, we have the added advantage of not paying the 20% value-added tax rate on utilities. Wage rates here are slightly higher than in Egypt or India, for example, but they are fairly stable and, for the automotive industry, which requires a certain skill level, they are still competitive.
Logistics costs into and out of Morocco remain a challenge. Even though we are close to Europe, our logistics costs are relatively high compared to those of our competitors in Eastern and Central Europe. One solution is for industry to make the business case to our subcontractors and suppliers to come to Morocco, which is what our automotive association is doing, thereby significantly reducing inbound logistics costs.
What scope do you see for businesses located within free zones to expand?
FURMAN: Many companies currently have operations both outside and inside free zones – outside to service the local market and inside for exports. They are able to share support structures across their operations to reduce costs. There are also companies expanding into multiple free zones to benefit from labour pools located in different regions of Morocco. The automotive sector is a good example of this. At least three large multinationals have adopted such a strategy, establishing facilities in the Casablanca region, Kenitra, Tangiers, Meknès and Tétouan.
How can the transfer of technological know-how be facilitated?
FURMAN: I believe that industry associations have an important role to play in aiding foreign companies to transfer their technical know-how to local counterparts. Many multinationals are helping to raise the standard of local companies, introducing them to new industries and assisting them in gaining certifications. We realise that it is in our own best interests to have highly qualified suppliers nearby. Joint ventures and other business models, as well as multinational participation in university and trade school programmes through research grants and joint technical projects, are other ways to contribute to this transfer of skills.
What do you see as the principal risks facing the Tangiers-based manufacturing community?
FURMAN: In my opinion, the biggest risks we face are failing to maintain our competitiveness and not anticipating market trends. This means that we need to continually invest in our people so that we can retain the top talent and continue to expand into ever more technologically advanced areas. Tangiers is still growing as a city and with that growth come urban pressures, so, to keep our people motivated, we must make sure that they have affordable housing and a good quality of life.
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