CHAIRPERSON,

AT THE OUTSET, ALLOW ME TO EXPRESS MY GRATITUDE TO THE UNCTAD SECRETARIAT FOR THEIR HARD WORK IN REVIEWING THE INVESTMENT POLICY REGIME OF LESOTHO. THEIR DEDICATION AND THIS EXCELLENT REVIEW DOCUMENT HAS SERVED TO STRENGTHEN OUR BELIEF THAT UNCTAD HAS A COMPARATIVE ADVANTAGE IN TERMS OF ANALYTICAL CAPACITY AND ALSO IN PROVIDING THE TECHNICAL SUPPORT THAT IS CRITICAL TO OUR ON-GOING EFFORTS TO ENHANCE TRADE COMPETITIVENESS. 

CHAIRPERSON,

ALSO, LET ME NOTE THAT THIS REVIEW CONFERENCE IS TAKING PLACE BACK TO BACK WITH THE TRADE POLICY REVIEW CONFERENCE OF LESOTHO AT THE WORLD TRADE ORGANISATION AS A MEMBER STATE OF THE SOUTHERN AFRICAN CUSTOMS UNION. TO US, THE TIMING OF THESE TWO IMPORTANT EVENTS IS CRITICALLY IMPORTANT NOT ONLY FROM A LOGISTICAL PERSPECTIVE BUT ALSO ALLOWS US TO FOCUS THE ATTENTION OF OUR TRADING PARTNERS ON THE ENTIRE SPECTRUM OF LESOTHO’S TRADE POLICY REGIME AND THUS ACHIEVE A MORE COMPREHENSIVE ASSESSMENT OF THE CONDITIONS PREVAILING IN LESOTHO. 

FURTHERMORE, WE ARE GRATIFIED BY THE PRESENCE OF SO MANY REPRESENTATIVES OF OUR TRADING PARTNERS INCLUDING REPRESENTATIVES OF PRIVATE ENTERPRISES THAT ARE ACTIVE IN LESOTHO AND THOSE THAT WE HOPE WILL ESTABLISH OPERATIONS IN LESOTHO IN THE NEAR FUTURE.

AS A BACKGROUND, IT IS IMPORTANT FOR US TO NOTE THAT THE ECONOMIC DEVELOPMENT OF LESOTHO OVER THE PAST FEW YEARS HAS TAKEN PLACE AGAINST A LANDSCAPE OF PROFOUND DEVELOPMENTS BOTH AT THE NATIONAL AND REGIONAL LEVELS.  WE ARE COGNISANT OF THE FACT THAT ALL THESE DEVELOPMENTS HAVE HAD A SIGNIFICANT IMPACT ON LESOTHO’S INVESTMENT CLIMATE AND ITS OVERALL ECONOMIC DEVELOPMENT. HOWEVER, IT IS THE DEVELOPMENTS THAT HAVE OCCURRED AT THE NATIONAL LEVEL THAT HAVE HAD A PROFOUND IMPACT.  THE CULTURE OF DEMOCRACY THAT HAS TAKEN ROOT IN LESOTHO AS EPITOMISED BY THE MAY 2002 GENERAL ELECTIONS WHICH HAVE BEEN DECLARED BY THE INTERNATIONAL COMMUNITY AS FREE, FAIR AND LEGITIMATE, AND THE STRONG COMMITMENT OF THE GOVERNMENT OF LESOTHO TO THE RULE OF LAW HAVE ENSURED THAT WE ARE ABLE TO PROVIDE THE PREDICTABLE CLIMATE THAT IS SO CRITICAL TO INVESTMENT DECISIONS.

IN ADDITION, OUR COMMITMENT TO THE RULES OF MULTILATERAL TRADE AND OUR COMMITMENT TO DEVELOPING A TRADE POLICY REGIME BASED ON INTERNATIONALLY AGREED NORMS HAS ENHANCED OUR COMPETITIVENESS.  HOWEVER, OUR DECISION TO SEEK UNCTAD’S ASSISTANCE IN CONDUCTING A REVIEW OF OUR INVESTMENT REGIME WAS AN ACKNOWLEDGEMENT THAT TO STAY COMPETITIVE, OUR FRAMEWORK FOR INVESTMENT SHOULD REFLECT PREVAILING REALITIES.

CHAIRPERSON,

THE REPORT BEFORE US IS QUITE EXPLICIT AND THEREFORE I DO NOT INTEND TO GO INTO DETAIL ON ITS FINDINGS AND RECOMMENDATIONS.  HOWEVER, I WISH TO HIGHLIGHT SOME PERTINENT ISSUES RAISED IN THE REPORT.

LESOTHO, LIKE MANY DEVELOPING AND LEAST DEVELOPED COUNTRIES, CONTINUES TO RECEIVE PREFERENTIAL ACCESS INTO MARKETS OF MOST DEVELOPED COUNTRIES UNDER THE GSP AND OTHER INITIATIVES.  FOR LESOTHO, AS NOTED IN THE REPORT, THE BULK OF FDI FLOWS HAS GONE PREDOMINANTLY INTO THE GARMENT-MANUFACTURING SECTOR, AND THIS IS LARGELY A RESULT OF THE PREFERENTIAL TERMS UNDER THE US AGOA SCHEME.  WE ARE COGNIZANT OF THE FACT THAT THE CLOTHING AND TEXTILES SECTOR WILL BE GOING THROUGH SOME MAJOR STRUCTURAL ADJUSTMENTS IN THE NEXT TWO YEARS AS A RESULT OF CHANGES TO THE MULTILATERAL TRADE REGIME THAT REGULATES THE INDUSTRY.  IT IS, THEREFORE, ON THE BASIS OF THIS AND OTHER CONSIDERATIONS THAT WE HAVE LAUNCHED A PROCESS OF WIDENING OUR ECONOMIC BASE TO ALLOW US TO MINIMIZE THE POTENTIAL SHOCK TO OUR ECONOMY.

FUTHERMORE, AS PART OF OUR ONGOING EFFORTS TO BROADEN OUR INVESTMENT BASE, WE HAVE DEDICATED CONSIDERABLE RESOURCES TOWARDS ENHANCING OUR REGULATORY FRAMEWORK, PARTICULARLY IN AREAS SUCH AS UTILITIES THAT ARE SO CRITICAL TO MAINTAINING A COMPETITIVE INVESTMENT CLIMATE.

THE GOVERNMENT OF LESOTHO IS ALSO ENGAGED IN EFFORTS AIMED AT ENSURING THAT OTHER SECTORS SUCH AS TOURISM AND MINING ATTRACT HIGHER LEVELS OF INVESTMENT THAT WILL ENSURE THAT THEY BECOME DRIVERS OF ECONOMIC GROWTH, LIKE THE MANUFACTURING SECTOR.

CHAIRPERSON,

ANOTHER AREA WHERE WE HAVE NOTED THAT POTENTIAL HAS NOT BEEN FULLY TAPPED IS THAT OF TRADE IN SERVICES.  IN ADDITION TO OUR LIBERAL COMMITMENTS UNDER THE URUGUAY AGREEMENTS, WE ARE WORKING HARD TO PUT IN PLACE ADDITIONAL INCENTIVES THAT WILL ENHANCE THE ATTRACTIVENESS OF THIS INDUSTRY.  IN ADDITION TO THESE EFFORTS, WE ARE ALSO IN THE PROCESS OF FINALIZING OUR SERVICES INITIAL OFFERS UNDER THE GATS NEGOTIATIONS CURRENTLY UNDERWAY IN THE WTO.  IN THIS REGARD, WE ARE PAYING PARTICULAR ATTENTION TO THE FINANCIAL SERVICES, TOURISM AND TELECOMMUNICATIONS SECTORS.

AT THIS JUNCTURE, ALLOW ME, CHAIRPERSON, TO FOCUS ON THE SET OF CONCLUSIONS AND RECOMMENDATIONS CONTAINED IN THE REPORT INCLUDING ON HOW WE SEE THE PROCESS UNFOLDING FROM HERE.

ON THE ISSUE OF ENHANCING THE INVESTMENT FRAMEWORK, WE HAVE DULY NOTED THE ISSUES RAISED IN THE REPORT AND TO THIS END WISH TO NOTE THAT WITH REGARD TO THE ISSUES RELATING TO TAXATION, THE GOVERNMENT OF LESOTHO IS IN THE PROCESS OF CONDUCTING A COMPREHENSIVE REVIEW OF THE REVENUE STRUCTURE AND BASE WITH THE OBJECTIVE OF STREAMLINING IT AND REMOVING IMPEDIMENTS TO GROWTH.  AS PART OF THIS PROCESS, THE GOVERNMENT, WITH THE ASSISTANCE OF THE BRETON WOODS INSTITUTIONS, AND OTHER DEVELOPMENT PARTNERS, HAS JUST ESTABLISHED THE LESOTHO REVENUE AUTHORITY THAT HAS AMONG ITS OBJECTIVES THE RATIONALIZATION OF THE SYSTEM OF TAXATION IN LESOTHO.

FURTHERMORE, IT IS WORTH NOTING THAT LESOTHO, WITH THE ASSISTANCE OF UNCTAD, IS IN THE PROCESS OF FORMULATING A COMPETITION POLICY FRAMEWORK THAT WE HOPE WILL BE IN PLACE IN THE NEAR FUTURE.  WE ARE ALSO IN CONSULTATIONS WITH OUR DEVELOPMENT PARTNERS TO SECURE ASSISTANCE TOWARDS BUILDING UP THE REQUISITE ADMINISTRATIVE, HUMAN AND INSTITUTIONAL CAPACITY.

ON THE SUBJECT OF TRADE PRIVILEGES THAT LESOTHO CURRENTLY ENJOYS, AND AS NOTED IN THE REPORT, THE US AGOA INITIATIVE HAS BROUGHT ABOUT CONSIDERABLE BENEFITS TO LESOTHO IN THE FORM OF NEW INVESTMENTS AS A CONSEQUENCE OF THE FLEXIBLE RULES OF ORIGIN REGIME PARTICULARLY AS IT AFFECTS USE OF THIRD COUNTRY FABRIC.  HOWEVER, REMOVAL OF THIS BENEFIT COULD UNDERMINE OUR CURRENT GROWTH PATTERNS.  TO THIS END, WE ARE ACTIVELY ENGAGED IN CONSULTATIONS WITH THE US AUTHORITIES TO SEEK OUT POSSIBILITIES OF EXTENDING THESE PROVISIONS THAT ARE SCHEDULED TO EXPIRE BY THE END OF 2004.  LESOTHO WILL, THEREFORE, APPRECIATE UNCTAD’S SUPPORT IN MAKING THE US AUTHORITIES, AND OTHER DEVELOPMENT PARTNERS AT DIFFERENT FORA SEE THEIR WAY CLEAR TOWARDS A SYMPATHETIC CONSIDERATION OF THE REQUEST FOR EXTENSION.

IN ADDITION, WE HAVE BEEN CONSULTING WITH OUR EU PARTNERS ON WAYS TO ENHANCE UTILIZATION OF THE BENEFITS OFFERED BY THEIR EVERYTHING BUT ARMS (EBA) INITIATIVE.  UP TO DATE, THERE HAS BEEN VERY LIMITED USE OF THIS SCHEME BY LESOTHO BASED EXPORTERS. IN THE MEANTIME, CANADA HAS ALSO GIVEN THE LDCS DUTY-FREE AND QUOTA FREE ACCESS INTO HER MARKET. LESOTHO’S INTENDS TO TAKE OPTIMUM ADVANTAGE OF THIS BENEFIT.

NOTWITHSTANDING THESE LUCRATIVE TRADE PRIVILEGES, IN OUR VIEW, AN ISSUE THAT HAS TO BE ADDRESSED AS A MATTER OF URGENCY, IS THAT OF THE NEED FOR HARMONIZATION OF THE DIFFERENT RULES OF ORIGIN AND CUSTOMS REQUIREMENTS IN THE DIFFERENT INITIATIVES.

CHAIRPERSON,

THE REPORT RIGHTLY ALLUDES TO LESOTHO HAVING SIGNED ONLY TWO BILATERAL INVESTMENT TREATIES (BITS) WITH GERMANY AND UNITED KINGDOM.  IN OUR VIEW, IT IS THE RESPONSIBILITY OF BOTH THE HOST AND THE HOME COUNTRIES OF FOREIGN CAPITAL TO LEVEL THE PLAYING FIELD IN ORDER TO ENABLE THEIR PRIVATE SECTORS TO TAKE MAXIMUM ADVANTAGE OF THE FOREIGN DIRECT INVESTMENT (FDI) FLOWS.

WE SUBSCRIBE TO THE NOTION THAT SUCCESS FOR ATTRACTION OF FDI INCLUDES ENTRY INTO BILATERAL INVESTMENT TREATIES AS ONE OF THE MAJOR POLICY INSTRUMENTS AVAILABLE TO PROVIDE LEGAL PROTECTION TO FOREIGN INVESTMENTS UNDER INTERNATIONAL LAW AND THUS HELP TO REDUCE AS MUCH AS POSSIBLE THE NON-COMMERCIAL RISKS FACING FOREIGN INVESTORS IN HOST COUNTRIES.

IN THIS REGARD, LESOTHO WOULD NEED TECHNICAL ASSISTANCE FOR TRADE CAPACITY BUILDING IN NEGOTIATING BILATERAL INVESTMENT TREATIES, WHICH WILL, WITHOUT DOUBT, INCREASE THE QUANTITY AND THE QUALITY OF FDI THAT WE CAN ATTRACT.

CHAIRPERSON,  

THE REPORT HAS APTLY CAPTURED THE FACT THAT LESOTHO LACKS A MODERN INVESTMENT LAW. THERE IS, THEREFORE, A NEED TO FORMULATE A LAW THAT WILL OFFER STANDARDS OF TREATMENT AND PROTECTION OF FOREIGN INVESTMENTS, THAT WILL ALLOW ESTABLISHMENT OF JOINT VENTURES BETWEEN LOCAL AND FOREIGN FIRMS IN SUPPORT OF INDUSTRIES, AS WELL AS IN THE AREAS CURRENTLY RESTRICTED TO FDI ENTRY UNDER THE EXISTING LEGISLATION.  THIS IS DEFINITELY ONE OF OUR PRIORITY NEEDS, AND WE WOULD WELCOME ANY FORM OF ASSISTANCE TO ESTABLISH THE NECESSARY LEGAL FRAMEWORK.

CHAIRPERSON,

THE GOVERNMENT OF LESOTHO THROUGH THE MINISTRY OF TRADE AND INDUSTRY, COOPERATIVES AND MARKETING IS PRESENTLY WORKING ON A COHERENT INDUSTRIAL POLICY AND THE FIRST INDUSTRIAL MASTER PLAN IN ORDER TO PRO-ACTIVELY ADDRESS THE WEAKNESSES OF ATTRACTING FDI WHICH THE REPORT SUGGESTS AS POLICY SCATTERED IN MANY DIFFERENT DOCUMENTS.  WE WOULD NEED SOME TECHNICAL ASSISTANCE FROM COOPERATING PARTNERS IN ORDER TO ACHIEVE GOOD RESULTS IN THIS EXERCISE.

THE REPORT POINTS OUT THAT LESOTHO HAS A NARROW INDUSTRIAL BASE WHICH IS CONSIDERED AS THE RESULT OF OVER DEPENDENCE ON A FEW PRODUCTS AND ON A FEW MARKETS AS WELL.  THERE IS A NEED TO VENTURE INTO PRODUCTION OF ADDITIONAL PRODUCTS SO THAT WE CAN TAKE ADVANTAGE OF OPPORTUNITIES IN THE EXISTING MARKETS.  THERE IS ALSO A NEED TO DIVERSIFY OUR MARKETS SINCE IT IS NOT SAFE THESE DAYS TO PUT ALL OUR EGGS IN ONE AMERICAN BASKET UNDER AGOA.

CHAIRPERSON,

THE REPORT TALKS OF BUREAUCRATIC DELAYS WHILE SERVICING THE INVESTORS DUE TO, AMONGST OTHER FACTORS, THE LONG LICENSING PROCEDURES. WE INTEND TO ADDRESS THAT THROUGH THE ESTABLISHMENT OF A ONE-STOP-SHOP WITHIN THE MINISTRY OF TRADE AND INDUSTRY.  OFFICES FOR THIS FACILITY HAVE BEEN SECURED, OFFICE EQUIPMENT AND OFFICE FURNITURE IS AVAILABLE, AND MANPOWER TO MAN THE FACILITY HAS BEEN IDENTIFIED FOR TRAINING WE ARE PRESENTLY AWAITING FINALIZATION OF THE LEGAL FRAMEWORK THAT WILL ENABLE ALL DIFFERENT SERVICES THAT WERE PERFORMED BY DIFFERENT OFFICES TO BE CARRIED OUT UNDER ONE ROOF.

CHAIRPERSON,

AS THE REPORT STATES THAT THERE IS NEED FOR CAPACITY BUILDING IN TRADE AND INVESTMENT POLICY ANALYTICAL SKILLS, IN ORDER TO DETERMINE THE RIGHT POLICY DIRECTION WE NEED TECHNICAL ASSISTANCE IN BUILDING THESE SKILLS.

FURTHERMORE, THE ATTRACTION OF FDI SHOULD BE ACCOMPANIED BY PROMOTION AND THE DEVELOPMENT OF LOCALLY OWNED INDUSTRIES TO CREATE THE NECESSARY LINKAGES BETWEEN FOREIGN AND LOCAL BUSINESSES.  THERE IS NEED TO FOCUS ON THE PARTICIPATION OF BASOTHO-OWNED COMPANIES IN THE BROAD RANGE OF MANUFACTURING ACTIVITIES.  WE NEED TO BRING OUR SMES INTO THE MAIN STREAM OF ECONOMIC DEVELOPMENT THROUGH THE FORMATION OF INDUSTRIAL LINKAGES BETWEEN THE SMALL AND MEDIUM ENTERPRISES (SMES) AND THE FDI.  THIS IS ANOTHER AREA WHERE UNCTAD COULD OFFER TECHNICAL ASSISTANCE IN THE CONTEXT OF ITS INDUSTRIAL LINKAGES PROGRAMME.

CHAIRPERSON,

ONE OF THE CHARACTERISTICS OF COUNTRIES UNDERGOING TAKE-OFF IN ECONOMIC DEVELOPMENT, IN WHICH LESOTHO IS NO EXCEPTION, IS THAT MANUFACTURING GROWTH, ALTHOUGH RAPID LIKE IN OUR GARMENT INDUSTRY, IS CONCENTRATED IN JUST ONE OR TWO GROWTH POLES.  IN LESOTHO, THEY ARE MAINLY CONCENTRATED IN TWO DISTRICTS OF LERIBE AND MASERU.  THERE IS A NEED FOR DECENTRALIZATION OF INDUSTRIES BASED ON THE AVAILABILITY OF THE FACTORS OF PRODUCTION AT DIFFERENT PARTS OF THE COUNTRY, E.G. LABOUR, RAW MATERIALS, NATURAL RESOURCES, ETC, INCLUDING SMOOTH LOGISTICS FOR MOVEMENT OF GOODS AND RELIABLE UTILITIES. SUCH DECENTRALIZATION NEEDS HUGE CAPITAL RESOURCES TO IMPLEMENT IT. TO ATTAIN THE OBJECTIVE OF INDUSTRIALISATION, THE CAPITAL RESOURCES GAP WOULD HAVE TO BE CLOSED, AND THE REQUISITE TECHNICAL ASSISTANCE WOULD HAVE TO BE PROVIDED.

CHAIRPERSON,

AS STATED IN THE REPORT, THE GARMENT SECTOR IS THE MOST DYNAMIC IN TERMS OF EMPLOYMENT CREATION, WHICH IS THE GOVERNMENT PRIORITY AT THE MOMENT.  BUT THE JOBS CREATED ARE SKEWED TOWARDS LOW SKILLS.  THE SLUGGISH GROWTH IN SKILL INTENSITY HAS BEEN ATTRIBUTED TO SUPPLY SCARCITY WITH ADVERSE IMPACT ON OUR COMPETITIVENESS TO ATTRACT FDI.  TO ADDRESS THE SKILLS DEFICIENCIES IN THE GARMENT SECTOR, GOVERNMENT IS IN THE PROCESS OF ENGAGING COOPERATING PARTNERS IN CONSULTATIONS, FOR SECURING ASSISTANCE FOR ESTABLISHMENT OF A TRAINING INSTITUTION IN THE AREA OF TEXTILES AND CLOTHING.

FOR A SUSTAINED POLICY CHANGE, THE INCREASE IN THE SUPPLY OF SKILLED LABOUR, RELEVANT EDUCATION AND TRAINING SHOULD BECOME A PRIORITY.  THERE SHOULD BE A FUNDAMENTAL SHIFT  FROM A LARGELY SUPPLY-DRIVEN STRATEGY TO A MORE DEMAND-DRIVEN APPROACH TO INVESTMENT IN EDUCATION AND TRAINING.  ELEMENTS OF THIS POLICY SHIFT SHOULD INCLUDE MANDATORY TRAINING BY INDUSTRY, CHANGE OF SCHOOLS SYLLABI TO ACCOMMODATE ENTREPRENEURSHIP TRAINING AT SECONDARY SCHOOLS AND TECHNICAL INSTITUTES, PROVISION OF INCENTIVES FOR PRIVATE SECTOR INVESTMENT IN TRAINING AND THE FORGING OF INDUSTRY – INSTITUTION LINKS.  .

ANOTHER EQUALLY IMPORTANT POINT RAISED IN THE REPORT IS THAT OF LAND REFORM.  THE GOVERNMENT OF LESOTHO HAS COMMISSIONED A STUDY ON THIS ISSUE. ALSO, THE GOVERNMENT HAS ADOPTED THE REPORT AS A WORKING DOCUMENT, AND IS IN THE PROCESS OF DELIBERATING ON THE PROPOSED REFORMS WITH THE VIEW TO DEVELOPING STRATEGIES THAT WILL BE CONDUCIVE TO INVESTMENT.

IN ADDITION, THE GOVERNMENT OF LESOTHO ATTACHES GREAT IMPORTANCE TO THE FOSTERING OF STRONG PUBLIC/PRIVATE PARTNERSHIPS IN THE TRADE AND INVESTMENT SECTOR.  TO THIS END, IT HAS CONTINUED TO ENCOURAGE PARTICIPATION OF THE PRIVATE SECTOR IN ONGOING DISCUSSIONS RELATED TO TRADE POLICY MATTERS.  THE UNCTAD SECRETARIAT WILL RECALL THE ACTIVE PARTICIPATION OF OUR CIVIL SOCIETY DURING THE NATIONAL CONFERENCE THAT REVIEWED THE FIRST DRAFT OF THIS REPORT IN MASERU IN FEBRUARY THIS YEAR.

IN CONCLUSION, CHAIRPERSON, I WISH TO UNDERSCORE THE COMMITMENT OF THE GOVERNMENT OF LESOTHO TOWARDS FOLLOWING THROUGH WITH SOME OF THE RECOMMENDATIONS CONTAINED IN THE REPORT AND TO THIS END I WISH TO MAKE A STRONG APPEAL TO BOTH UNCTAD AND OUR COOPERATING PARTNERS TO RENDER US THE REQUISITE SUPPORT.  ANY FAILURE TO EFFECTIVELY FOLLOW UP ON THIS PROCESS WILL NULLIFY THE POTENTIAL BENEFITS OF THIS REVIEW PROCESS, TAKING INTO ACCOUNT THE MULTITUDE OF POLICY CHALLENGES SUCH AS SUSTAINABLE ECONOMIC GROWTH, JOB CREATION, POVERTY REDUCTION, THE RAVAGES OF FAMINE AND THE FIGHT AGAINST HIV/AIDS PANDEMIC, FACING LESOTHO.

I THANK YOU FOR YOUR ATTENTION.