Chapter four: Economic governance and management • New system of VAT refunds. The government, through the LRA, is in the process of establishing a new system that will streamline the process of refunding VAT claims in order to reduce the problems of cash flow. • Introduction of capital account reforms. As a result of the increased risks facing manufacturers in international markets, the CBL has introduced gradual capital account reforms which will allow businesses to open foreign currency and offshore accounts. These facilities will enable businesses to hedge against exchange risks. 479. Discussions with officials tend to give the impression that, although the SADC free trade area was launched in 2008 after a long process of negotiating the protocols, it is neither certain nor clear that the customs union could be launched in 2010, as agreed at the Conference of Ministers. On SACU, officials believe that there has been limited success in respect of harmonising policies in industry, agriculture and competition. Furthermore, it is felt that too much attention is paid to SACU revenue-sharing issues than to concrete issues of integration, like developing common policies concerning trade, developing relationships with the rest of the world or developing national institutions like tariff bodies. Indeed, such a body exists only in South Africa. iii. Recommendations 480. The APR Panel recommends that: • As a small, landlocked economy, Lesotho should continue to take regional economic integration issues seriously, as it appears that its economic salvation may lie in the benefits it can derive from membership of regional initiatives. (Parliament, MoFDP, MTICM, Ministry of Foreign Affairs and International Relations, CBL) • The government should implement the various measures it has introduced to attract foreign investors. The contributions of such investors would be useful additions to those of local investors. (Parliament, MoFDP, MTICM, Ministry of Foreign Affairs and International Relations, CBL) • Lesotho needs to develop strong, specialised research and analytical capacity to assess regularly the benefits and constraints of regional integration arrangements on its economy. These analyses should help the country to design measures to mitigate the adverse effects and maximise the benefits of regional integration. (CBL, MoFDP) 133