Cambodia’s latest megaproject, the Funan Techno Canal, raises concerns about environmental impacts and diplomatic concerns
Image Source: Getty
The Funan Techno Canal (FTC) is a 180-kilometre-long, 5.4 metre-deep, 100-metre-wide megaproject worth US$1.7 billion, funded by China under its Belt and Road Initiative (BRI), as shown in Figure 1. The project aims to connect the capital, Phnom Penh, to a seaport in the coastal Kep province to foster the country’s economic development, facilitating the transport of goods and boosting tourism. The project also supports southern Cambodia’s agricultural, mining, and industrial modernisation, aligning with Cambodia’s ambition to become one of the world’s top 10 agricultural economies by 2030. Moreover, the FTC also asserts Cambodia’s strategic autonomy by reducing its reliance on Vietnam’s seaport—Cai Mep. The 100-metre-wide waterway will also include three water gate systems and 11 bridges, funded by the China Bridge and Road Corporation, under the Build-Operate-Transfer (BOT) model. Yet, despite the stated benefits, the FTC has raised many eyebrows outside Cambodia about its environmental and diplomatic implications.
The project aims to connect the capital, Phnom Penh, to a seaport in the coastal Kep province to foster the country’s economic development, facilitating the transport of goods and boosting tourism.
Figure 1: Funan Techo Canal Project
Source: Radio Free Asia
While the FTC has been hailed by the Cambodian government as a symbol of national pride, this project has also raised many environmental concerns. The foremost of such worries stems from how the FTC runs across Cambodia's Kampot, Kandal, and Takeo provinces, cutting across a major international floodplain into Vietnam. This region has many endangered species and is a prolific agricultural and fisheries zone, critical to Cambodia’s rice production. By altering the flow of the floodplain, this project poses the threat of creating a dry zone to the south of the canal and a wet zone to the north, with additional flooding in the Takeo province. These disruptions also jeopardise the social and economic livelihoods of the millions of Cambodian and Vietnamese citizens who rely on this delta. Historically, too, the socio-environmental impacts of China’s BOT ventures in Cambodia have left much to be desired. The Phnom Penh-Sihanoukville Expressway, while lauded for its transportation prowess, cut down over 20 percent of cultivated land and 16 percent of water bodies in Cambodia, giving rise to ecological risks such as landslides and flooding. The trend of increasing Chinese investments in the country since 2013 has also contributed to increased forced relocation of indigenous and local populations.
Given the international spillover of the FTC, Vietnam’s fear is palpable. Some Vietnamese experts estimate that, in the worst-case scenario where the canal is used to divert water during the dry season, it could lead to a 30-50 percent reduction in available waters in the Mekong Delta, exacerbating the existing water crisis in the region. To this end, Doan Khac Viet, the deputy spokesperson for the Vietnamese Foreign Ministry, announced that Vietnam will thoroughly investigate the project’s overall impact.
Typically, the 1995 Mekong River Commission (MRC) would look into such transboundary water-sharing concerns. This agreement brought together the neighbouring states of Cambodia, Laos, Vietnam and Thailand to jointly manage and cooperate in sharing the Mekong River’s waters. However, Cambodia was able to circumvent the involvement of the MRC by labelling the FTC as a tributary project on the Mekong River rather than a mainstream one. This meant that Cambodia could act unilaterally, simply having to notify its riparian neighbours rather than seeking approval for the project.
Some Vietnamese experts estimate that, in the worst-case scenario where the canal is used to divert water during the dry season, it could lead to a 30-50 percent reduction in available waters in the Mekong Delta, exacerbating the existing water crisis in the region.
However, Cambodia’s Prime Minister (PM) Hun Manet has assured his fellow Mekong riparian nations that the FTC will not produce any harmful environmental impacts. Additionally, Cambodian Deputy Prime Minister Sun Chanthol has claimed that the FTC can benefit Vietnam by helping mitigate floods in southern Vietnam.
Apart from the environmental implications, the FTC has also led to increasing concerns in Hanoi for two reasons—rising anti-Vietnamese sentiment in Cambodia and the increasing influence of China. Firstly, the FTC project is symbolic of Cambodia’s quest to achieve greater sovereignty, as emphasised by the adoption of Funan terminology in the project’s name. The Funan name comes from the ancient kingdom, a predecessor of today's Cambodia, considered more prosperous than its neighbours during its existence between 1st-6th century CE. This name emphasises the nationalistic sentiment associated with the project and is an exercise of Cambodia’s strategic autonomy. Cambodia has argued that the FTC project aims to reduce its port dependence on Vietnam for trade and connectivity routes, as it aims to increase trade with the United States (US) and European markets.
Following its announcement, the FTC project has generated much diplomatic discussion in Vietnam regarding the political considerations driving it. Vietnam has expressed concerns about the FTC. The Vietnam Foreign Ministry spokesperson said he “hopes that riparian countries, including Cambodia, will work together to manage and develop the Mekong River’s water resources effectively.” Furthermore, Hanoi also expressed its intention to work with Phnom Penh to “assess the project’s overall impacts” and “minimise any potential negative effects.” Although Vietnam is concerned, this calculated response to the FTC highlights that it would like to take the path of cooperation rather than opposition.
The FTC project is symbolic of Cambodia’s quest to achieve greater sovereignty, as emphasised by the adoption of Funan terminology in the project’s name.
The launch of the FTC project also coincided with another development: Cambodia’s withdrawal from the Cambodia-Laos-Vietnam Triangle Development Area (CLV-DTA)—a sub-regional framework established in 1999 that came into force in 2004—an important initiative aimed to foster trilateral cooperation between the three countries. Cambodia’s shift from emphasising the significance of CLV-DTA in July 2024 to withdrawing from it on 20 September 2024, is another sign of growing anti-Vietnamese sentiment in Cambodia. Both these developments highlight the waning influence of Hanoi in Phnom Penh.
Moreover, Hanoi has become more concerned with increasing Chinese presence in Cambodia over the last decade. Although the FTC project has been presented as symbolic of its independence from Vietnam, it coincides with China’s increasing economic and military presence in Cambodia, like with the Ream Naval Base. Besides, some scholars in Vietnam have also expressed concern about the project's dual use, connecting Ream Naval Base and the port with mainland Cambodia. Although much of the military concern is speculative, it is still symbolic of Vietnam’s anxiety over its inability to manage the situation. To address this concern, Hun Sen, the former PM and father of Hun Manet, the current PM, released a statement clarifying that FTC “purely serves socio-economic benefits as it provides more waterways to southwestern Cambodia.”
Although the FTC project has been presented as symbolic of its independence from Vietnam, it coincides with China’s increasing economic and military presence in Cambodia, like with the Ream Naval Base.
It is obvious that China’s increasing economic and diplomatic presence and Vietnam’s decreasing profile in Cambodia's strategic outlook have put Hanoi on the edge. Nonetheless, the response from Hanoi and Phnom Penh suggests that both countries are interested in taking forward relations, rather than engage in any diplomatic contests. Thus, irrespective of the FTC project and its impact on bilateral ties between Cambodia and Vietnam, both capitals have favoured continuing strategic engagement and cooperation. However, going forward, two big questions will decide the future trajectory of the bilateral ties between the two countries. First, how will Cambodia manage anti-Vietnamese sentiment? Second, to what extent Cambodia will allow itself to ignore Vietnam’s security concerns about China?
Abhishek Sharma is a Research Assistant with the Observer Research Foundation’s Strategic Studies Programme.
Roshani Jain is a Research Assistant with the Observer Research Foundation’s Strategic Studies Programme.
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Abhishek Sharma is a Research Assistant with ORF’s Strategic Studies Programme. His research focuses on the Indo-Pacific regional security and geopolitical developments with a special ...
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Roshani Jain is a Research Assistant for the Strategic Studies Programme, under the Neighbourhood Team. Her research interests include South Asian environmental security and international ...
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