Laos’ international standard dry port receives funding boost

The Thanaleng Dry Port, part of an integrated logistics facility in the capital Vientiane, has received new financing for its development and equipment costs to modernise and deliver world-class services.
The International Finance Corporation (IFC), as the lead arranger, has arranged a financing package of US$67 million to fund the development, construction, and equipment costs of the dry port, which is part of the country’s first-ever integrated Vientiane Logistics Park (VLP).

A signing ceremony for the financing took place on Tuesday at the dry port site.
Open for service since December last year, the dry port and logistics park will set new standards for Laos’ logistics infrastructure and help drive cross-border trade, signalling a major shift from sea trade to road and rail for landlocked Laos.
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.
Under the new financing, IFC - a member of the World Bank Group -  will contribute US$27 million from its own account, with development finance institutions and international lenders providing the remaining amount.
A loan of US$21 million—part of the IFC-led financing package—will be provided through the Blended Finance Facility under the International Development Association’s Private Sector Window, set up to catalyse 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 the Chief Executive Officer (CEO) of Sitthi Logistics Company Limited, Chanthone Sitthixay, who is also Chairman of Vientiane Logistics Park Co., Ltd.
“The integrated logistics facility will help reduce costs 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 trade between China and Laos, as well as transit trade between China and Thailand, Malaysia, and Singapore, spurring a major shift from sea trade to road and rail passing through Laos with the completion of new cross-border railway lines in the next few years.
 “This first of its kind project in Laos shows that well-structured projects, even in a small market like the Lao PDR, can unlock international funding, and serve as a valuable model for future infrastructure projects in Laos 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 Laos’ 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.
Minister of Public Works and Transport Viengsavath Siphandone witnessed the signing, which was also attended by representatives of related government agencies, private businesses, and key international organisations.

Mr Vikram Kumar.	Mr Chanthone Sitthixay.

Mr Viengsavath Siphandone, Mr Vikram Kumar, Mr Chanthone Sitthixay and guests attending the signing ceremony gather for group photo.

By Times Reporters
 (Latest Update June 8, 2022)