PHNOM PENH, Cambodia (AP) – In a significant development for Cambodia's infrastructure and trade efficiency, Cambodia and China have entered into a $1.2 billion agreement to finance the construction of the Funan Techo Canal. This ambitious project aims to connect a branch of the Mekong River located near Phnom Penh to a port on the Gulf of Thailand, as announced by the Cambodian government agency overseeing the initiative.
The deal to fund this extensive canal project was finalized on Thursday during the state visit of Chinese President Xi Jinping to Cambodia. This visit also included stops in Vietnam and Malaysia, after which Xi returned to China on Friday.
Although construction of the 151.6-kilometer (94-mile) canal commenced last year, it was suspended shortly after the groundbreaking ceremony on August 5. The reasons for the halt were not specified at the time, but Cambodian Prime Minister Hun Manet highlighted the canal's significance, stating it would be built "no matter what the cost," emphasizing its role in promoting Cambodia's "national prestige, territorial integrity, and development."
The agreement, which is described as a public-private partnership, was signed by Deputy Prime Minister Sun Chanthol on behalf of the Cambodian government and by Ieng Sunly from the Funan Techo Coastal-Inland Waterways Company Ltd., the private sector partner involved. The venture is structured on a build-operate-transfer basis, with Cambodian investors owning 51% of the project and Chinese investors holding the remaining 49%.
According to the announcement made on Friday, the canal is designed to create a new inland waterway-maritime corridor capable of accommodating vessels weighing up to 3,000 deadweight tons. The project will involve significant canal excavation and the construction of essential navigation and logistics infrastructure, including ship locks.
Wang Tongzhou, chairman of China Communications Construction Company, highlighted the project’s potential to serve as a key driver of Cambodia's economic growth, stating that it would greatly reduce logistics costs within the country and advance Cambodian industries to a middle-to-high end of the value chain upon its completion. The China Communications Construction Company is the parent entity of the China Road and Bridge Corporation, which has been entrusted with the construction of the canal that will stretch from the Bassac River to the coastal province of Kep.
Despite the anticipated benefits of the canal, concerns have been raised regarding its potential environmental impact. Critics warn that the canal could disrupt the natural flooding patterns of the Mekong River, leading to exacerbated droughts and a decrease in nutrient-rich silt essential for rice production in Vietnam's Mekong Delta – a crucial agricultural region that supports millions and plays a significant role in global rice exports.
The Cambodian government, however, has maintained that a rigorous Environmental Impact Assessment conducted by a team of 48 specialists found minimal environmental impact associated with the canal. Furthermore, the government has claimed to prioritize minimizing resettlement by carefully designing the canal's route to avoid densely populated areas and cultural sites. A responsible compensation and consultation process is said to be already underway to address any potential disruptions faced by local communities.
As the canal project moves forward, it is projected to create “up to 50,000 direct and indirect jobs in Cambodia,” potentially providing a significant boost to the local economy and workforce. The ongoing commitment to enhance the nation’s infrastructure through the Funan Techo Canal illustrates Cambodia's ambitions to improve trade efficiency and economic development through international partnerships.
