(KPL) To boost connectivity and improve the competitiveness of the Lao PDR’s tourism industry, IFC has signed an advisory agreement with the country’s Ministry of Public Works and Transport to modernize the Luang Prabang International Airport (LPIA) through the establishment of a public-private partnership (PPP).

Under this agreement, IFC will be the lead advisor for the PPP, which aims to upgrade and expand the LPIA while enhancing safety and efficiencies under a long-term concession agreement.

Currently, LPIA handles 1.3 million passengers annually with a single terminal for both domestic and international flights. By the time the PPP is completed, the airport is expected to serve over four million international passengers and 500,000 domestic passengers per year, improving the Lao PDR's integration with Southeast Asia and beyond.

“Luang Prabang is a major tourist gateway for the Lao PDR,” said Vanh Dilaphanh, Director General, Department of Planning and Finance, Ministry of Public Works and Transport. “Our international airport is the country’s second busiest airport and serves as a regional hub, connecting Bangkok, Chiang Mai, Siem Reap, Vientiane, and other domestic provinces. This partnership will allow us to tap into IFC’s global expertise and explore the best options to engage the private sector in developing this critical tourism infrastructure.

Before the COVID-19 pandemic, the Lao PDR saw substantial growth in international tourist arrivals, from 2.5 million people in 2010 to nearly 4.8 million in 2019. In 2019, tourism generated US$934 million to the economy, equivalent to 9.1 per cent of GDP. While tourist arrivals halted during the pandemic, as global tourism recovers, the Lao PDR’s tourism industry is expected to rebound.

The Lao Ministry of Information, Culture, and Tourism anticipates at least 4.6 million international tourists in 2024, generating US$1.3 billion in revenue.

"Robust infrastructure investments are key to bolstering the Lao PDR's regional connectivity and growing tourism sector," said Thomas Lubeck, IFC Regional Manager for Public-Private Partnerships Transaction Advisory Services, Asia and the Pacific. "With IFC's advisory support, this project will follow international best practices and apply them in a manner suitable for the Lao PDR. Leveraging private-sector financing and technical expertise will help the Lao PDR maximize the potential of the Luang Prabang International Airport, while establishing a high benchmark for similar PPP initiatives in the future."

For over 20 years, IFC has been a trusted advisor to governments on structuring PPP transactions, working on over 350 projects in 99 countries, including many of the least developed countries, helping facilitate about US$45 billion in private investment.

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