Laos becomes regional logistics connector, offers boon for entrepreneurs

The operation of the Laos-China railway, which converges with the Laos-Thailand railway at the dry port - Laos’ integrated logistics project – has transformed landlocked Laos into a land link country.


Mr Sakhone Philangam explains how the Thanaleng Dry Port connects to a rail system that links the region to the rest of the world. PHOTO: THE VIENTIANE TIMES

October 12, 2023

VIENTIANE – By becoming an important logistics connector for Southeast Asia, China and even Europe, Laos is offering great opportunities for entrepreneurs, the developer of the Thanaleng Dry Port told the eCommerce Expo Asia in Singapore on October 11.

The operation of the Laos-China railway, which converges with the Laos-Thailand railway at the dry port – Laos’ integrated logistics project – has transformed landlocked Laos into a land link country.

Managing Director of the dry port, Sakhone Philangam, showcased the opportunities Laos is offering at the fourth edition of the Expo, which is taking place onOctober 11-12 at Marina Bay Sands.

The event features business networking, conferences, and game-changing solutions to help businesses of all sizes achieve their goals.

With improved connectivity, Laos is better positioned to offer trade and investment opportunities, Mr Sakhone said.

Trade opportunities

Thanks to cost-effective logistics and transport services, more and more exporters are shipping freight to countries in the region via the new trade route made possible by the Laos-China railway, in particular between China, Laos and Thailand.

Opened for service in December 2021, the dry port last year handled more than 50,000 containers, averaging more than 4,000 containers a month. The number significantly rose to more than 7,000 containers a month over the first six months of 2023. The containers were destined for countries such as Thailand, Vietnam, Cambodia, Myanmar, Malaysia, Singapore, China and Russia.

Speedy rail transport has shortened the time needed to transport freight from the Thanaleng Dry Port International Border Checkpoint (Cargo Terminal) in Vientiane near the Thai border to the Chinese border to just four hours.

“It takes only four hours from Vientiane to China’s border,” Mr Sakhone told audiences at the Expo where his company set up a booth to showcase the business opportunities.

This most direct trade route has enabled Thai exporters to cut costs by about 30 percent.
By rail, shifting cargo from Southeast Asia to Europe now takes only about two weeks as opposed to 45 days by sea, he added.

Through the trade route, which forms a crucial part of the global infrastructure network – the Belt and Road Initiative initiated by China – trains from Laos pass through China, Kazakhstan, Russia, Belarus and Poland and terminate at Duisburg in Germany.

To Southeast Asian markets, freight shipped from the multimodal dry port can travel over a distance of about 700 kilometres to reach Thailand’s Laem Chabang seaport, about 150km south of Bangkok. From Bangkok, the trade route connects to the Malaysian capital Kuala Lumpur and onwards to Singapore.

Mr Sakhone described the dry port as an important logistics and transport connector that connects Southeast Asia to China and Europe.

The US$195 million dry port and its associated Vientiane Logistics Park are a crucial component of the Lao Logistics Link project, being developed by PTL Holding Company Limited. This strategically important project also includes the Vung Ang seaport in Vietnam’s central Ha Tinh province, a planned railway linking the seaport to the dry port in Vientiane, and a dry port in central Khammuan province through which the railway will pass.

Through Vung Ang, freight can reach markets in the Pacific region, thus providing another trade opportunity.

Investment opportunities

Thanks to Laos’ central location, bordered by the world’s second largest economy of China, along with Myanmar, Thailand, Cambodia and Vietnam, and coupled with improved connectivity, the dry port’s developer said Laos is well positioned to set up production bases and value-adding activities for regional trade.

To this end, Vientiane Logistics Park Co., Ltd., a subsidiary of PTL Holding Company Limited, is also setting up a logistics park to welcome foreign investment.

The park includes an export processing zone, logistics park, free trade zone, and technology and halal hub.

Within the park, the developer is building all necessary facilities, while investors just need to bring in capital, machinery and know-how.

Investment incentives

Investors benefit from a number of incentives by doing business in Laos, including a corporate tax holiday of 8-16 years and lower Value-Added Tax, with cheap electricity being an added bonus.

Goods manufactured or assembled in Laos also enjoy privileged access to markets in countries whose governments have waived or reduced import tariffs on made-in-Laos products.

More than 30 countries including Australia, Canada, members of the European Union (EU 28), Japan, New Zealand, Norway, Russia, Switzerland and Turkiye have extended such privileges to Laos.

As a member of the Association of Southeast Asian Nations (Asean) and the Regional Comprehensive Economic Partnership (RCEP), investors also enjoy incentives and market access under Asean and RCEP free trade agreements.

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