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IFC Advises on Developing Lao PDR's First Integrated Logistics Facility to Boost Trade and Competitiveness

Vientiane, Lao PDR, March 15, 2021—In a bid to improve the logistics infrastructure and help promote cross-border trade in Lao PDR, IFC, a member of the World Bank Group, will support Sitthi Logistics Company Limited to develop an integrated logistics facility in the Vientiane capital. 

The first-ever integrated logistics facility in the country, which will include the expanded Thanaleng dry port and the greenfield Vientiane logistics park, will signal a major shift from sea trade to road and rail for landlocked Lao PDR. Cross-border trade is expected to be boosted with the completion of railway lines connecting Lao PDR with China, Thailand, and Vietnam. It is estimated that 70 percent of the bilateral trade between China-Lao PDR and transit trade with Thailand, Malaysia, and Singapore could shift to rail through Lao PDR 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—Vientiane Logistics Park Company Limited (VLP) and Sitthi Logistics Lao Company Limited— sought IFC's technical assistance. 

"This is the first long-term concession project of its kind in the country. We aim to make it a best-in-class dry port and logistics hub to serve the increased trade potential and enhance Lao PDR's economic competitiveness," said Chanthone Sitthixay, CEO of Sitthi Logistics Co. "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 the country, attracting international lenders,"  said Kyle Kelhofer, IFC Country Manager for Vietnam, Cambodia, and Lao PDR. "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 Lao PDR generate more efficient and competitive trade, assisting the nation in its goal of becoming 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 is to be completed by 2024. Meanwhile, the construction of the logistics park—including warehouses, distribution centers, export processing zone, and an industrial complex, among others—will be completed in phases between 2021 and 2030. The expanded Thanaleng dry port's cargo capacity is expected to reach 10.5 million metric tons (MMT) per year from the current 3 MMT once the Lao-China and Lao-Thailand railway lines come into operation in 2021 and 2026. 

About IFC

IFC—a member of the World Bank Group—is the largest global development institution focused on the private sector in emerging markets. We work in more than 100 countries, using our capital, expertise, and influence to create markets and opportunities in developing countries. In fiscal year 2020, we invested $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. For more information, visit www.ifc.org.

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About Sitthi Logistics Lao Company Limited

Sitthi Logistics Lao Co., Ltd. offers logistical services for Phongsavanh Group's consumer goods including Petro Trade's fuel and petroleum products. Its founders are determined to develop an inclusive logistics system in Lao PDR and take part in implementing government policies. The plan is to develop an international logistics network for providing links to ASEAN nations, transforming Lao PDR from land-locked to land-linked country.