Deal to develop Laos’ first integrated logistics facility inked

  • Laos
  • Wednesday, 17 Mar 2021

VIENTIANE (Vientiane Times/ANN): In a bid to improve logistics infrastructure and help promote cross-border trade in Laos, the International Finance Corporation (IFC) will support Sitthi Logistics Lao Co., Ltd. (Sitthi Logistics) to develop an integrated logistics facility in Vientiane.

An agreement on advisory support to the Vientiane Logistics Park (VLP) between Sitthi Logistics and IFC was signed in Vientiane on Monday (March 15)).

The agreement was signed by the CEO of Sitthi Logistics, Chanthone Sitthixay, and Head of Office of the IFC in Laos, Phongsavanh Phomkong.

The first-ever integrated logistics facility in Laos, which will include the expanded Thanaleng Dry Port (TDP) and the greenfield VLP, signals a major shift from sea trade to road and rail for landlocked Laos.

Cross-border trade is expected to be enhanced with the completion of railways connecting Laos with China, Thailand, and Vietnam. It is estimated that 70 per cent of the bilateral trade between China and Laos and transit trade with Thailand, Malaysia, and Singapore could shift to rail through Laos by 2030.

To be developed as a BOT (Build, Operate and Transfer) project under a 50-year concession agreement with the government, the facility developer and the sponsor - VLP Co., Ltd. and Sitthi Logistics - sought IFC’s technical assistance.

“This is the first long-term concession project of its kind in Laos. We aim to make it a best-in-class dry port and logistics hub to serve the increased trade potential and enhance Laos’ economic competitiveness, ” said Chanthone.

“IFC’s timely support will help us develop a bankable facility that follows best industry and environmental and social practices.”

IFC will assist in structuring the project in a way that will help attract experienced operating and financing partners, a move that will include developing structured risk mitigation strategies that may arise from key legal, regulatory, technical, financial, environmental and social issues.

The work will see the development of performance standards for the project in line with international best practices.

“With extensive global experience in the logistics sector, IFC is well-positioned to help develop a world-class facility which can serve as a model for other logistics projects in Laos, attracting international lenders, ” said IFC Country Manager for Vietnam, Cambodia, and Laos, Kyle Kelhofer.

“IFC’s involvement marks what we call working “upstream” to help put the right structures in place to create an internationally bankable project. Further, a robust logistics sector will help Laos generate more efficient and competitive trade, assisting the nation in its goal to become a regional hub for connectivity.”

The first phase of expansion of the dry port is expected to be completed by the end of 2021, with the rest to be completed by 2024.

Meanwhile, the construction of the logistics park -- including warehouses, distribution centres, an export processing zone, and an industrial complex among others -- will be completed in phases between 2021 and 2030.

The expanded TDP’s cargo capacity is expected to reach 10.5 million metric tonnes (MMT) per year from the current 3 MMT once the Laos-China and Laos-Thailand railways come into operation in 2021 and 2026.

The International Finance Corporation -- a member of the World Bank Group -- is the largest global development institution focused on the private sector in emerging markets.

The IFC works in more than 100 countries, using its capital, expertise, and influence to create markets and opportunities in developing countries.

In fiscal year 2020, the IFC invested US$22 billion in private companies and financial institutions in developing countries, leveraging the power of the private sector to end extreme poverty and boost shared prosperity.

Sitthi Logistics offers logistical services for Phongsavanh Group’s consumer goods including PetroTrade’s fuel and petroleum products.

Its founders are determined to develop an inclusive logistics system in Laos and take part in implementing government policies.

The plan is to develop an international logistics network providing links to other Asean nations, transforming Laos from a landlocked to a land-linked country. - Vientiane Times/Asia News Network

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Laos , logistics , facility , Sitthi Logistics , IFC


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