Laos moves forward as logistics hub

Logistical improvements are part of the government's strategic development plan to transforming the landlocked country to become a regional transport hub, said the Director General of Transport Department Mr Viengsavath Siphandone at the launching of Savan Logistics Company.

The government has set aside a massive budget for developing and improving infrastructure in order to link with neighbouring countries, Mr Viengsavath said.

“For such legislation,” he explained, “we successfully signed bilateral agreements with almost all the neighbouring countries including Cambodia, Vietnam and Thailand but we are still in negotiations with Myanmar.”

“Moreover, we have signed contracts in collaboration with multilateral parties such as Laos-Vietnam-Thailand, Laos-Vietnam-Cambodia, the Great Mekong Sub-Regional Cross-Border Transport Agreement (GMS CBTA) and the Asean Framework Agreement.”

“In actual implementation, we only practice bilateral agreements of transport contracts; the majority of them are related to renting transportation vehicles from neighbouring countries, due to the fact that Lao transportation vehicles lack the capability to transport long distances to the sea ports of neighbouring countries,” Mr Viengsavath explained.

“Previous development and improvement of infrastructure, especially roads, bridges, seaports, and so on, has aimed to facilitate transportation, travelling and trade only to some extent; it still does not endorse and guarantee such a policy of transforming Laos completely from a landlocked to be a land-linked country.”

Due to the fact that Laos has infrastructure in place without providing services in logistics, the logistics operators in the regions and neighbouring countries will take whole benefits in this area while Laos will reap only minor benefits with a massive responsibility of national budget spending for maintenance of the transportation infrastructure, it was noted.

To address the situation, the ministry adopted a strategic development plan for transportation and logistics in Laos and this plan was officially approved by the Lao government in 2015, Mr Viengsavath said. 

Laos has also become a member of United Nations Economic and Social Commission for Asia Pacific (UNESCAP) for Dry Ports, which sets aside nine locations that are assigned for international logistics parks in the country. 

They include Huoayxai in Bokeo, Nateuy in Luang Namtha, Xay in Oudomxay, Luang Prabang province, Thanalaeng in Vientiane, Lak Xao in Borikhamxay, Thakhaek in Khammuan, Xeno in Savannakhet, and Vangtao in Champassak. 

Logistics improvements are underway in those nine locations including Thanalaeng which is in ongoing negotiations for investment collaborations with Japan under a Private-Public Partnership (PPP) while Savannakhet recently opened for service, Mr Viengsavsath said. 

Implementing these log istics services in line with the strategic development plan for transportation and logistics in Laos as well as various international agreements is urgently important to consolidate goods cargo and distribution, he explained 

This will integrate transportation services for both inbound and outbound cargoes and lower transportation costs and help to solve illegal parking of container trucks along public roads, which damages road conditions and road safety. 

Importantly, it will also generate real income from cross border transportation services. This will also promote more investment and encourage more production because entrepreneurs will be able to enjoy convenient services for on-time delivery to different destinations with reasonable transportation costs, Mr Viengsavath commented.