The developer of the Thanaleng Dry Port (TDP) and Vientiane Logistics Park (VLP) says Laos is expected to become an important player in the regional and global supply chain as exports via Laos to Europe by rail will take only a little more than 10 days, much shorter than the 45 days by sea.
Visiting the Thanaleng Dry Port (TDP) and Vientiane Logistics Park (VLP) on Friday, Minister of Finance Bounchom Ubonpaseuth pledged to push for policy support for the regional and global transport-connecting project.
His visit came as the project’s developer – the Vientiane Logistics Park Co., Ltd. – is preparing to launch a soft opening of the mega project in September and a grand opening in November.
Mr Bounchom described the project, which is part of the Lao National Logistics Strategy and Laos Logistics Link (LLL) that will help transform Laos from being landlocked to a land-linked country, as a ‘long-awaited project for the country’.
Mr Chanthone Sitthixay (fifth left), Mr Bounchom Ubonpaseuth (seventh left) and other officials gather for a photo in front of a project model.
He told the Lao developer to work with the relevant departments of the ministry to look at additional policies needed to be considered and introduced to facilitate transport and logistics affairs.
“If we don’t introduce better policies (incentives), we can’t compete,” he said.
Being developed on 382 hectares in Dongphosy village, Hadxaifong district, Vientiane, and close to the Laos-Thailand railway station and the first Laos-Thailand Mekong Friendship Bridge, the US$727 million project will connect to the Laos-China railway. It will also link to the Vung Ang seaport in Vietnam’s central Ha Tinh province via a planned railway connecting the Lao capital of Vientiane with the seaport.
Blessed by its strategic location, the developer envisions that the TDP and VLP will become central transport links for Asean and the world.
Through the Vung Ang seaport, which Laos and Vietnam have jointly developed and operated, the route will better enable Laos to link with other countries in the region.
“That will be a route to link Laos with countries such as the southern region of China, Japan, Korea, Russia, the Philippines and Indonesia,” Chairman of Vientiane Logistics Park Co., Ltd., Mr Chanthone Sitthixay, told the minister.
Set to link with the Laos-China railway, which is scheduled to become operational in December, the VLP will link to another regional and global trade route via China towards Kazakhstan and all the way to Germany in Europe.
An agreement has been reached which will enable the Laos-China railway to connect to the VLP’s container yard, according to the chairman.
Initially, it is estimated that at least 300,000 containers from Laos, mainly from the TDP, will be shipped by rail to Europe via China each year. Later, shipments could rise to somewhere between 1.2 and 1.8 million containers a year, the chairman said.
This estimation is based on figures recorded in neighbouring Thailand’s Isan region, where as many as 17 million containers are shipped via Laem Chabang seaport to global markets.
Mr Chantone Sitthixay (Fourth left) guides Mr Bounchom Ubonpaseuth (Second right) and his delegates to visit construction site of the project
Given that transport by sea from Southeast Asia to Europe takes as long as 45 days and is more costly, Mr Chanthone was optimistic that the global supply chain would change with Laos as an important player in the region.
“But from Vientiane to Chongqing (China’s rail transit hub) and to Europe (by rail) takes just over 10 days.”
“If it doesn’t pass through Vientiane, where will the supply chain go?”
As it is estimated that each container will generate about US$200 in fees, Laos is expected to reap a huge income for the state budget, Mr Chanthone said.
The project with streamlined procedures will help cut transport and related logistics costs, TDP Managing Director Sakhone Philangam told the minister and his delegation.
Cross-border transport costs, especiaIIy at the Friendship Vientiane-Nong Khai border crossing, are expected to fall by 40 percent from current prices by 2025.
The Vientiane Logistics Park comprises five zones that offer various business opportunities for investors. The zones are as follows:
Minister of Finance Bounchom Ubonpaseuth supporting the project
1. Thanaleng Dry Port (TDP): The dry port acts as the centre of international import and export trade with all categories of customs operations. Importantly, quality equipment, vehicles and warehouse systems will be installed professionally to enable the processing of larger numbers of containers. Use of the Terminal Operation System will guarantee the best service in terms of speed, security and reliability.
2. Tank Farm: This facility will store Iiquid bulk cargoes for importing and storing fuel from Thailand and will serve as a fuel distribution centre for Laos. Diesel and petroleum products will arrive at the tank from a dedicated rail yard and pipeline.
3. Logistics Park: The main service provided by the Logistics Park is a warehousing and distribution centre, which offers goods storage, consoIidation, distribution, inventory management, and warehouse management.
4. Free Trade Zone (FTZ): The main business activities in the zone are the HALAL Hub and Agriculture Production Park, Technology Park, Office Zone, SME Building Area, Commercial Zone and Landmark (VLP Co., Ltd. office).
5. Export Processing Zone (EPZ): The new destination as a modern and the most dynamic EPZ in the region, it will offer a more competitive business environment and will gear up to become a manufacturing export hub for the Asean and global consumer market.
Mr Chanthone said the free trade zone would be the core component of the project as brand-name products including European brands would be displayed and sold here.
He said the project also plans to introduce a Shenzhen-style marketplace where shoppers in Laos and neighbouring countries can enjoy spending without having to go to China’s famed shopping destination.
Next month’s scheduled soft opening will be a test of facilities such as software and hardware before the grand opening in November.
Minister Bounchom said he fully supported the project, saying the ministry has strived to facilitate business operations.
Welcoming the minister and his entourage were also former Minister to the Prime Minister’s Office and current President of the Executive Board of Strategy and Planning at PTL Holding Company Limited (PTLH), Mr Alounkeo Kittikhoun, together with former Deputy Minister of Finance and now Vice President of the Executive Board of Trade and Regulation, PTLH Mr Sila Viengkeo, and the executive management team of VLP Co., Ltd.