Vientiane, Lao PDR, June 7, 2022—A new international standard dry port, part of an integrated logistics facility in the capital city Vientiane will set a new standard for Lao PDR's logistics infrastructure and help drive cross-border trade, signaling a major shift from sea trade to road and rail for the landlocked country. Developed with IFC's advisory and financing support, once completed, the Thanaleng Dry Port will offer access to efficient and cost-effective logistics services, increasing competitiveness and establishing a new trade hub in the Southeast Asian region.
As the lead arranger, IFC is arranging a financing package of up to $67 million to fund the development, construction, and equipment costs of the Thanaleng Dry Port, part of the country's first-ever integrated Vientiane Logistics Park located in the country's capital city. IFC will contribute $26.1 million from its own account, with leading international commercial banks providing the remaining amount.
A loan of $21 million—part of the IFC-led financing package—will be provided through the Blended Finance Facility under the International Development Association's (IDA) Private Sector Window (PSW), set up to catalyze investment in low-income and fragile countries.
The IFC-led funding follows its earlier advisory engagement in 2021, where it helped structure a BOT (build, operate, and transfer) project—under a 50-year concession agreement with the government—to attract experienced operating and financing partners. IFC advised the project developer and sponsor, Sitthi Logistics Company Limited, on strategies to mitigate various project risks and strengthen the project's bankability. IFC also helped the client align the project to IFC's Performance Standards—a widely adopted international benchmark for identifying and managing environmental and social risks.
"While long-term funding for infrastructure projects is not available locally, with IFC's support, the project has been structured in line with best international practices to make it bankable for global lenders," said Chanthone Sitthixay, Chief Executive Officer (CEO) of Sitthi Logistics Company Limited. "The integrated logistics facility will help reduce cost and time for cross-border trade, contributing to the government's strategy to turn Laos from a land-locked to a land-linked country and allowing it to emerge as a new export base in manufacturing and agriculture."
This critical infrastructure will facilitate a major increase in bilateral trade between China and Lao PDR and transit trade between China and Thailand, Malaysia, and Singapore, spurring a major shift from sea trade to road and rail passing through Lao PDR with the completion of new cross-border railway lines in the next few years.
"This first of its kind project in the country shows that well-structured bankable public-private partnership (PPP) projects, even in a small market like Lao PDR, can unlock international funding, and serve as a valuable model for future infrastructure projects in Lao and other developing countries," said Isabel Chatterton, IFC Infrastructure Regional Director for Asia and the Pacific. "The use of blended finance helps IFC support higher risk projects with promising sustainable and strong development impacts. Strong logistics infrastructure is key to increasing Lao PDR's competitiveness, enabling it to become a regional hub for connectivity, creating jobs and driving economic growth."
The new funding agreement was signed at the Thanaleng Dry Port site by Vikram Kumar, IFC's Infrastructure Business Development Manager for Asia and the Pacific and Chanthone Sitthixay, CEO of Sitthi Logistics Company Limited, witnessed by Minister of Public Works and Transport and attended by representatives from related government agencies, private businesses and key international organizations.
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 2021, IFC committed a record $31.5 billion to private companies and financial institutions in developing countries, leveraging the power of the private sector to end extreme poverty and boost shared prosperity as economies grapple with the impacts of the COVID-19 pandemic. For more information, visit www.ifc.org.
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About the IDA Private Sector Window
As part of the 19th replenishment of the International Development Association (IDA), the World Bank Group is continuing the IDA Private Sector Window (PSW) created under IDA18 to catalyze private sector investment in the poorest and most fragile countries. Recognizing the key role of the private sector in achieving IDA's objectives and the World Bank Group's twin goals, the window provides a source of co-investment funding and guarantees to de-risk private investments supported by IFC and the Multilateral Investment Guarantee Agency (MIGA). The IDA PSW is an option when there is no commercial solution and the World Bank Group's other tools and approaches are insufficient. For more information, visit: http://ida.worldbank.org/psw
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.
