Cambodia Breaks Ground on the Funan Techo Canal, Initiating New Route for Exports

On August 5, the Cambodian government broke ground on the Funan Techo Canal project, which plans to connect the Mekong River and Phnom Penh to Kep Province, on the Gulf of Thailand. The US$1.7 billion project is jointly funded by China Road and Bridge Corporation (one of Beijing’s state-owned enterprises) and a consortium of local Cambodian companies. According to Cambodian Deputy Prime Minister Sun Chanthol, the local companies will maintain the majority ownership of the project at 51%. The canal is estimated to be completed by 2028.  

At the ground-breaking ceremony, which coincided with his father Hun Sen’s birthday, Prime Minister Hun Manet emphasized that his government would proceed with the canal, “no matter the cost.” Price tag aside, the canal project has sparked friction in Cambodia’s relationship with Vietnam, due to both economic and environmental concerns. By DPM Sun Chanthol’s own estimates, the canal could reduce shipping through Vietnamese ports by as much as 70%, as Cambodian exporters redirect their supply chains to the new domestic route.  

Additionally, the widening of existing narrow, low-levee canals in Cambodia the project requires will alter flooding patterns, constraining water availability and agricultural yields in Vietnam’s Mekong Delta, particularly in An Giang and Kien Giang provinces. Under the 1995 Mekong Agreement, Cambodia and all other Mekong River Commission (MRC) countries are required to engage in prior, intra-Commission consultation about projects that affect the Mekong mainstream and alter its flow. Cambodia’s designation of the Funan Techo canal as a tributary project, rather than a mainstream one, has limited information-sharing with Vietnam, which has repeatedly requested more information about the project’s downstream environmental impacts.