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THURSDAY, October 06, 2022
Laos’ international-standard dry port receives $67m funding boost

Laos’ international-standard dry port receives $67m funding boost

WEDNESDAY, June 08, 2022

The Thanaleng Dry Port, part of an integrated logistics facility 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 is expected to 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 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 Co Ltd, 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 of Sitthi Logistics Co Ltd, Chanthone Sitthixay, who is also chairman of Vientiane Logistics Park Co Ltd.

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.

Vientiane Times

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Laos’ international-standard dry port receives $67m funding boost