Funan Techo Canal Development: Shifting Economic Currents in Southeast Asia
The ambitious Funan Techo Canal project aims to forge a direct link between the Phnom Penh Autonomous Port and the seaport of Kep province through a monumental canal—the largest in Cambodian history. With dimensions boasting a width of 100 metres and a depth of 5.4 metres, the canal is primed to accommodate cargo ships of up to 3,000 DWT. Spanning four provinces, the project encompasses the construction of three sluice systems, 11 bridges, and 208 kilometres of sidewalks, underscoring its scale and significance.
Beyond facilitating smoother inland waterway transport, the Funan Techo Canal promises to reshape Cambodia’s inland waterway strategy, diminishing reliance on Vietnamese ports—particularly Cai Mep near Ho Chi Minh City. An analysis by Rim Sokvy, published in ThinkChina on 11 March 2024, highlights the transformative potential of this initiative, which is poised to bolster Cambodia’s economic momentum while ushering in a new era of autonomy and strategic positioning in the region.
Background & Interests of the Funan Canal to Boost the New Prime Minister’s Domestic Popularity
With Cambodia under the nearly four-decade rule of former Prime Minister Hun Sen, Samdech Techo has been perceived as a stalwart figure known for his impactful contributions across various fronts within Cambodia.
Upon assuming office, Samdech Hun Manet, Samdech Hun Sen’s son and as the new Prime Minister, faced the imperative of demonstrating tangible achievements and astute leadership. In this context, the conception and execution of the Funan Techo canal project served as a means to bolster his popularity among the Cambodian populace. It is plausible that the genesis of this initiative stemmed from Mr Hun Sen, with Samdech Hun Manet subsequently spearheading its implementation.
Two months before Hun Sen’s departure from office, a pivotal cabinet meeting chaired by him delineated the transformation of the “Tonle Bassac Navigation Road and Logistics System Project” into what is now known as the Funan Techo Canal Project. This meeting laid out a comprehensive plan detailing the project’s scope, budget, structure, and timeline. (Read more)
Subsequently, on 16-17 September 2023, Samdech Hun Manet embarked on his maiden foreign visit to China, where he participated in the 20th ASEAN-China Expo held in Nanjing. During this visit, he engaged with Chinese leaders and investors, notably meeting with Wang Tongzhou, chairman of China Bridge and Road Cooperation (CBRC), a pivotal entity overseeing large-scale infrastructure endeavours in Cambodia.
Upon his return, Prime Minister Hun Manet lauded the visit as “fruitful,” with other Cambodian government officials echoing sentiments of its significant success for Cambodia. A month later, Cambodia formalised an agreement with CBRC to invest in the construction of the canal project, cementing a pivotal partnership.
Continuing his diplomatic engagements, on 11-12 December 2023, Samdech Hun Manet accepted an invitation from Vietnamese Prime Minister Pham Minh Chinh to visit Vietnam. This visit received widespread coverage in both local and international media, with Vietnam’s state-run media, Voice of Vietnam (VoV), characterising it as a watershed moment in bilateral relations.
Samdech Hun Manet Emphasised: “No More Borrowing Other People’s Noses, Breathe Through Our Noses”
Unlike the primary focus of the visit to China, a senior Cambodian official clarified that the primary agenda during the visit to Vietnam was to assuage concerns regarding the potential impact of the Funan Techo Canal on river flow, particularly the Mekong River.
Nevertheless, senior Cambodian government officials and several analysts within Cambodia harbour apprehensions regarding Vietnam’s reservations concerning the canal. Specifically, there are concerns about the potential implications of Cambodian cargo ships docking at the Vietnamese port of Cai Mep, situated approximately 50 kilometres southeast of Ho Chi Minh City.
A Cambodian researcher’s article in The Diplomat suggests that Vietnam’s apprehensions primarily revolve around economic factors rather than environmental concerns. If Cambodia achieves self-reliance in water transport, as Prime Minister Hun Manet metaphorically termed “breathing through our noses,” Vietnam stands to lose significant shipping revenue generated from Cambodia.
Furthermore, aside from expressing environmental apprehensions to Hun Manet, the Vietnamese government is conducting its assessment of the canal’s potential impact on its territory. Any disparities between Vietnam’s assessment and Cambodia’s findings could escalate tensions, potentially straining bilateral relations between Phnom Penh and Hanoi, particularly concerning areas like the canal.
Conversely, some analysts perceive a shift in diplomatic dynamics under Samdech Hun Manet’s leadership and the new Royal Government of Cambodia. Unlike the previous administration, there appear to be no significant special ties with Vietnamese counterparts. Hence, by addressing Vietnam’s concerns regarding the canal’s construction and pressing forward with the project, Cambodia may bolster the current Prime Minister’s standing and popularity.
Vietnam is Losing its Traditional Influence to China
Vietnam’s longstanding influence in the region is gradually yielding to China, evidenced by Cambodia’s shifting economic ties. Historically, Vietnam has considered Cambodia integral to its political and economic sphere. Presently, Cambodia heavily relies on Vietnamese ports for importing raw materials from China and exporting goods to the United States and the West. The Vietnam-Cambodia waterway has facilitated the transport of approximately 20 million tons of goods since the countries inked an inland waterway agreement in 2011.
Vietnam stands to lose significant revenue from these shipments as Cambodia pivots towards utilising its waterways. The construction of the Funan Techo Canal signifies a reduction in Vietnam’s influence over Cambodia, marking a legacy of Prime Minister Hun Manet’s leadership.
Indispensable Economic Support between Cambodia & China through the Funan Canal
The burgeoning Chinese influence in the region further exacerbates Vietnam’s waning dominance, particularly in Cambodia. China’s state-owned enterprise, CBRC, has agreed with the Cambodian government to invest in the Funan Techo Canal project through a construction-operation-transfer (BOT) contract. Previous Chinese BOT initiatives in Cambodia, such as the Phnom Penh-Sihanoukville Expressway, underscore China’s significant role in financing and managing infrastructure projects for extended periods, typically 50 years.
Under the terms of the Funan Techo canal contract, the Chinese company will oversee canal management, including maintenance and profit generation from toll fees. After approximately 40 to 50 years, control of the canal will transition to the Cambodian government. This project represents one of China’s paramount infrastructure endeavours in Cambodia. These investments underscore a deepening economic reliance between Cambodia and China. Cambodia’s economic growth hinges on Chinese support.
In essence, the Funan Techo Canal epitomises Cambodia’s quest for economic autonomy and strategic repositioning under Prime Minister Hun Manet’s leadership. As Cambodia charts a course towards greater self-reliance and connectivity, the canal project heralds a new chapter in the region’s economic landscape, with far-reaching implications for geopolitical alignments and trade dynamics in Southeast Asia.
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