Cambodia’s Funan-Techno Canal Project and Regional Concerns
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Temjenmeren Ao
Dr Temjenmeren Ao is an Associate Fellow at the South East Asia and Oceania Centre of MP-IDSA. He specialises in international relations and security issues in South East Asia. He… Continue reading Cambodia’s Funan-Techno Canal Project and Regional Concerns read more
Cambodia’s Prime Minister Hun Manet on 5 August 2024 launched the mega connectivity project, the Funan-Techno Canal. At the ground-breaking ceremony for the construction of the US$ 1.7 billion Funan-Techno Canal, Manet stated that the project will help Cambodia strengthen its political independence in terms of waterway transport.1 This will be Cambodia’s first historical mega transport project which will provide a new link from the Mekong River and give access to the sea through the Gulf of Thailand. As per the blueprint, the 100 meters wide and of 5.4 meters deep canal would allow for two shipping lanes with vessels carrying up to 3,000 deadweight tonnages. For seamless connectivity, the initiative would also include building of other transport-related infrastructure such as dams and bridges.2
Source: Indo-Pacific Defence Forum
As indicated in Figure 1, the 180 km canal will run from the Phnom Penh Autonomous port, located southeast of the capital, into a new port facility at Kep in the Gulf of Thailand. Currently, ocean-bound shipping from Phom Penh passes through Vietnam’s Mekong Delta to ports near Ho Chi Minh City. The Funan-Techno Canal would provide an alternative to transit via Vietnam and will reduce dependence on Vietnamese ports and give Cambodia sea access for commercial and other uses.
The project is expected to be completed by 2028, as per the report submitted to the Mekong River Commission (MRC) in August 2023 by Cambodia. Once completed, it will create an estimated 1.6 million jobs in the inland provinces of Kandal, Takeo and Kampot along the route of the canal. The Funan-Techno Canal is expected to develop Cambodia’s agricultural sector as it would provide water for crops, improve water management during the rainy season and boost freshwater fishing.3 The canal which will alter the course of the water is also being envisioned as a catalyst for environmental sustainability by enhancing flood mitigation and water resource conservation and management.4
The momentum around the Funan-Techno Canal began when a feasibility study pact was announced between Cambodia and China during the Belt and Road Forum held in October 2023. Following the pact signed with state-owned China Bridge and Road Cooperation (CBRC), a feasibility study on the project was conducted. In January 2024, Cambodian Transport Minister announced that the canal project will begin construction in late 2024.5
The first section of the Funan-Techno Canal runs from the lower Mekong River of Prek Takeo to the Bassac River in Saang district, covering a distance of approximately 21 km. The project’s second section, extends from Koh Thom to Kep province, spanning more than 130 kilometres. The Funan-Techno Canal will be built as a Build-Operate-Transfer (BOT) model, which is used for financing large projects through public-private partnerships.6
Under the BOT model, this venture would comprise Cambodian state-owned company, the Sihanoukville Autonomous Port, the Phnom Penh Autonomous Port, and a private enterprise which jointly have a 51 per cent stake. The other 49 per cent stake will be taken up by CBRC, which as a major stakeholder in the project will be funding the construction of the canal. It is suggested that Chinese BOT will build and run the canal for a certain number of years before handing it back to the Cambodian government.7
Key Risks and Concerns
Amongst Southeast Asian countries, Cambodia and China share strong economic relations, with the former also being one of the key partners for Beijing in its Belt and Road Initiative (BRI). The broad spectrum of their bilateral engagement also includes connectivity and infrastructure projects being funded and build by China. At the first BRI in May 2017, then Prime Minister Hun Sen led a large delegation and China pledged US$ 240 million in grant to Cambodia. Further, both sides also signed 13 agreements in areas such as infrastructure development, trade, maritime cooperation and tourism.8
There are however, significant concerns not only from the risk of increasing economic interdependency on Beijing, but also relating to the socio-economic impact on account of water availability, agricultural production, and the ecology in the Mekong delta.
Environmental Impacts and Concerns
The primary concern on the Funan-Techno Canal centres around the potential environmental impacts that it might have on the Mekong Region. The Mekong River and its tributaries which is a lifeline for millions in Southeast Asia is of strategic significance in terms of security, prosperity and stability of the whole sub-region. According to the estimate by the MRC, the Mekong River is about 4,909 km in length, and its basin supports about 65 million people including a large and diverse biodiversity.
The Lower Mekong basin which covers a total area of 630,000 km2 is critical in order to maintain the region’s water resources and the ecosystem. The Mekong region known as ‘Asia’s Rice Bowl’ depends on the river and its tributaries for not only water availability but also its role in regulating and replenishing soil fertility. The Mekong Delta also has the world’s largest inland fishery which accounts for a quarter of the global fresh water catch and supports the livelihood of millions in the region.9
Given the project’s potential impact on water resources and the ecosystem in the Mekong Delta, Vietnam has shared its concerns as this could disrupt its agricultural production, particularly in its southern provinces of An Giang and Kien Giang. Further, Vietnam also noted that alteration of the water stream could impact the biodiversity of vulnerable species in the Mekong region.10 PM Hun Manet during his visit to Hanoi in December 2023 assured his Vietnamese counterpart Pham Minh Chinh that preliminary studies indicated that altering the course of the Mekong River will not have a transboundary impact on the water resources or the natural biodiversity.11 Despite the Cambodian government dismissing these concerns, Vietnam remains apprehensive on account of the fact that the project will be Chinese-funded and built.
Regional Security Concerns
The Funan-Techno Canal under the broader framework of China’s BRI is aimed at realising its ‘Industrial Development’ and ‘Rice and Fish Corridors’, through an enhanced and seamless regional connectivity. Apart from bolstering socio-economic development through the Funan-Techno Canal, China is also seeking to further enhance its regional influence. Cambodia’s deepening economic reliance on Beijing would reduce Vietnam’s influence, altering the geopolitics of the Mekong region. The canal’s 100 meter-wide and depth of 5.4 meters could provide a passage for navy ships to come close to the Cambodian-Vietnamese border.
The military aspect of the project emerges also from the fact that the new port facility to be built in Kep is about 100 km from Cambodia’s Ream Naval Base in Sihanoukville.12 The potential of a strategically important military outpost for Beijing on the Gulf of Thailand is a vital concern for Vietnam. Given that Vietnam would now not only have Beijing trying to shape the geopolitics of the Mekong region but it could also have wider implication in context of its ongoing territorial dispute in the South China Sea. Therefore, apart from Vietnam’s concerns about the potential environmental impact and the reduced shipping earnings, there is also anxiety with regard to the impact of the project on regional security.
Conclusion
The Funan-Techno Canal symbolises Cambodia’s quest for greater economic autonomy by strengthening its trade competitiveness through enhanced connectivity and reducing its dependence on foreign ports. However, since the announcement of this initiative, there has been multifaceted concerns, as pointed above. The mega project brings to light the increasing trajectory of Cambodia–China relations. Despite its touted benefits, given that the project has the potential to enhance Beijing’s role in shaping the geopolitics of the Mekong region, regional countries have expressed environmental and security-related concerns.
Views expressed are of the author and do not necessarily reflect the views of the Manohar Parrikar IDSA or of the Government of India.