Transport and Logistics in Lao PDR:Impact of the ASEAN Economic CommunityFinal Report

On behalf of GIZ

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Regional Economic Integration of Laos into ASEAN,

Trade and Entrepreneurship Development (RELATED)

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Text

Paul Apthorp

Christian Ksoll

John Quarmby

Contributions of the contractor, Greater Mekong Transportation, do not necessarily represent the position of GIZ.

On behalf of the

German Federal Ministry for Economic Cooperation and Development (BMZ)

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1Transport and Logistics in Lao PDR: Impact of the ASEAN Economic Community Greater Mekong Transportation

Table of ContentsAbbreviations......................................................................................................................................4

Exchange Rates ..................................................................................................................................5

Executive Summary.............................................................................................................................6

Introduction and Background...............................................................................................................9

Background of the Study .....................................................................................................................9

Objectives of the Study .......................................................................................................................9

Definitions ........................................................................................................................................10

Cargo Operations ..............................................................................................................................10

Vehicle Weights ................................................................................................................................11

Truck sizes and wheeling configuration ..............................................................................................11

Value Chain vs. Supply Chain.............................................................................................................13

Stakeholders.....................................................................................................................................13

The Lao Transport and Logistics Sector ..............................................................................................15

Transport of Goods ...........................................................................................................................15

Contribution of transport and logistics to the economy ........................................................................15

Functions of the Lao Transport and Logistics Sector ............................................................................16

Main Routes & Gateways ...................................................................................................................22

Transport of People...........................................................................................................................23

Contribution of transport and logistics to the economy ........................................................................23

Functions of the Lao Passenger Transport ..........................................................................................23

Stakeholder Overview .......................................................................................................................26

Transport operators ..........................................................................................................................26

Freight Forwarders............................................................................................................................29

Customer Brokers .............................................................................................................................29

Lao PDR' dependence on neighboring countries for trade ....................................................................30

Analysis of the Transport and Logistics Value Chain in Lao PDR ...........................................................32

Economic Analysis.............................................................................................................................33

Raw Materials and Minerals ...............................................................................................................33

Domestic Distribution ........................................................................................................................33

Import / Export of General cargo .......................................................................................................34

Transit Cargo....................................................................................................................................34

2Transport and Logistics in Lao PDR: Impact of the ASEAN Economic Community Greater Mekong Transportation

Myanmar ..........................................................................................................................................73

China ...............................................................................................................................................75

Annex VII: ASEAN Framework Agreement on the Facilitation of Goods in Transit ..................................79

Annex VIII: Professional Standards in Transport .................................................................................81

Bibliography .....................................................................................................................................84

Transport and Logistics in Lao PDR: Impact of the ASEAN Economic Community Greater Mekong Transportation

Perishables .......................................................................................................................................34

Organic Vegetable Exports.................................................................................................................35

Market Opportunities for the Lao Transport Sector ..............................................................................36

Political Analysis................................................................................................................................39

Challenges and Obstacles for Value Chain Development ......................................................................41

Lao PDR Transport and Logistics Sector and ASEAN ...........................................................................43

Transport and Logistics in ASEAN.......................................................................................................43

Indirect impact of AEC on the Lao transportation and logistics industry ................................................45

Direct impact of AEC on the Lao transportation and logistics industry ...................................................46

The ASEAN Customs Transit System ..................................................................................................46

Market liberalization for international trucking operations ....................................................................47

Trans-loading and related logistics services ........................................................................................48

Ownership liberalization for foreign investors ......................................................................................49

Liberalization of skilled labor movement .............................................................................................50

Conclusions and Recommendations....................................................................................................50

Further Research ..............................................................................................................................54

Appendices.......................................................................................................................................55

Appendix I: Methodology...................................................................................................................55

Survey Design.......................................................................................................................