BRI's Funan Techo Canal could steer Cambodia away from Vietnam and towards China

After taking office in August 2023, Cambodian Prime Minister Hun Manet embarked on an ambitious US$1.7 billion waterway project known as the Funan Techo Canal. This would be the first waterway canal in Cambodia that connects the Phnom Penh Autonomous Port to the coastal province of Kep by cutting through four provinces - Kandal, Takeo, Kampot and Kep.

The 100-metre wide waterway with a consistent depth of 5.4 metres is able to carry cargo ships up to 3000 deadweight tonnage (DWT). The project also includes the construction of three water gate systems, 11 bridges and a 208-kilometre sidewalk.

Government officials and Cambodian analysts believe that the project could enhance the country's economic development by facilitating the transportation of manufactured goods between Phnom Penh Autonomous Port and the deep seaport in Sihanoukville province. In addition, the canal could reduce Cambodia's dependency on Vietnam's seaport. The canal could also have implications for Cambodia's relations with China and Vietnam.

Cambodia was governed by former Prime Minister Hun Sen for nearly 40 years. He was perceived as Cambodia's charismatic strong man who got things done.

Coming after him, Hun Manet, Hun Sen's son and the new prime minister of Cambodia, also needs to show results and charismatic leadership. In that context, the Funan Techo Canal could help to enhance his popularity among Cambodian people. This probably explains why though Hun Sen mooted the idea, Hun Manet is the one implementing it.

Two months prior to leaving office, Hun Sen led a cabinet meeting which decided that the "Tonle Bassac navigation road and logistics system project" would be known as the Funan Techo Canal. The detailed plan of the project was laid out, including the budget, structure and time span.

However, the project appears to have kicked into high gear since Hun Manet became Cambodia's prime minister. Hun Manet has been pushing for the construction of the project including attracting investors and visiting neighbouring countries.

In 16-17 September 2023, Manet made his first foreign visit to China, participating in the 20th ASEAN-China Expo in Nanning. While meeting with many Chinese leaders and investors, he met with Wang Tongzhou, chairman of China Bridge and Road Cooperation (CBRC), a Chinese state-owned company involved in many giant infrastructure developments in Cambodia.

After returning to Cambodia, Hun Manet described the visit as "fruitful" while other Cambodian government officials called it a "great success" for Cambodia. A month later, Cambodia signed an agreement with CBRC to invest in the construction of the canal.

Then on 11-12 December 2023, Hun Manet visited Vietnam at the invitation of Vietnamese Prime Minister Pham Minh Chinh. Many local media in Vietnam and international outlets were quick to report that Manet's first visit to Vietnam would help to strengthen bilateral relations.

The Vietnamese state-owned media, the Voice of Vietnam (VoV), referred to the visit as turning a "new page" in bilateral relations and that Hun Manet was continuing the foreign policy of the previous administration. VoV also described the visit as strengthening the "good neighbours, traditional friendship, comprehensive, long-lasting, long-term sustainable cooperation" between the two countries.

In contrast to the high-profile coverage of the China visit, Cambodian senior officials stated that the main agenda was to reassure Vietnam that the Funan Techo Canal would not affect the river flow of the Mekong River.

However, some senior Cambodian government officials and Cambodian analysts believe that Vietnam has different concerns regarding the canal, particularly with regards to the possibility that cargo ships from Cambodia would no longer call at the Vietnamese port of Cai Mep, located around 50 kilometres southeast of Ho Chi Minh City.

An article by a Cambodian researcher published in The Diplomat argued that Vietnam's concerns are mainly derived from economic reasons. If Cambodia is able to depend on its own waterway transportation - what Hun Manet calls "breathing through our own nose" - Vietnam would lose all its shipping earnings from Cambodia.

In addition to expressing concerns to Hun Manet about the environmental impact of the dam, the Vietnamese government is conducting its own assessments of the cross-border impact of the Funan Techo Canal. If the results are different from the assessment conducted by Cambodia, the canal could be an issue in the bilateral relations between Phnom Penh and Hanoi.

So Naro, the minister delegate attached to the prime minister in charge of ASEAN affairs, had accompanied Hun Manet to Vietnam. Giving comments to the media after the visit, he implied that the Funan Techo Canal could improve Cambodia's independence by not shipping via Vietnamese ports. He stated: "We don't have anything negative about Vietnam. However, when we depend on someone for our existence, we are losing part of our independence."

Such rhetoric from a senior Cambodian government official seems to suggest that Cambodia, under Hun Manet, will successfully reduce the influence of Vietnam. Getting away from Vietnam's influence was an impossible task for Hun Manet's predecessor.

It should be noted that the former government was strongly backed by Vietnam particularly during and after the Khmer Rouge. Vietnam not only provided training to Hun Sen and his colleagues who escaped to Vietnam during the Khmer Rouge but also helped provide administrative support to Hun Sen's government during the civil war from 1979 to the 1980s. Vietnam still played a significant role in Cambodia during Hun Sen's leadership. This can be seen via the construction of the Cambodia-Vietnam Friendship monument throughout the country to commemorate the victory against the Khmer Rouge.

In addition, the framing of Vietnamese involvement in Cambodia in 1979 is a sensitive subject as well. In 2019, Hun Sen accused Singaporean Prime Minister Lee Hsien Loong of supporting a genocidal regime in Cambodia after Lee made comments referring to Vietnam's involvement in Cambodia in 1978 as an "invasion". The term "invasion" and "occupation" are strongly opposed by Vietnam and Cambodia.

In contrast, Hun Manet and his government do not share the same sympathies and ties with their Vietnamese counterparts. Publicising Vietnamese concerns about the construction of the canal, and asserting that Cambodia would push ahead with the project, could improve the standing and popularity of the current Cambodian prime minister.

Vietnam has long perceived Cambodia as an "integral part of its traditional sphere of influence". The previous Cambodian administration was under strong political influence from Vietnam. This can be seen from Cambodia's response to the infringement of its sovereignty by neighbouring countries, Thailand, Laos and Vietnam.

For example, from March 2020, Vietnamese soldiers set up 83 camping camps along the border in Cambodia's Takeo and Kampot provinces, allegedly to stop people from crossing the border during the Covid-19 pandemic. The camps continued to exist in late June of the same year, despite the Cambodian government sending a diplomatic note to Vietnam in early May to remove them. This is considered a violation of Cambodia's sovereign territory; however, there was no public strong reaction from Cambodia's senior government officials.

In contrast, senior Cambodian Government officials, particularly Hun Sen, issued ultimatums or warnings to Thailand and Laos to withdraw their troops from Cambodia's territory or disputed area along the border. The case highlights Vietnam's political influence over Cambodia.

Currently, Cambodia relies heavily on the Vietnamese port for importing raw materials from China and exporting finished products to the US and Western countries. Around 20 million tons of goods have been transported across Vietnam-Cambodia waterway routes since a waterway transport agreement between the two countries was concluded in 2011.

Vietnam will lose significant earnings from these transits as Cambodia starts to depend on its own waterway transportation. The construction of the Funan Techo Canal is showing a decrease of Vietnam's influence on Cambodia. This will be Hun Manet's legacy.

Another loss for Vietnam is China's increasing influence in the region, particularly on Cambodia. CBRC, which is one of China's giant state-owned companies, signed an agreement with the Cambodian government to invest in the project via a Build-Operate-Transfer (BOT) contract.

Previous Chinese BOT investments in Cambodia show that Chinese companies will finance and take the risk of the project. For instance, the CBRC's BOT development model is the 187-kilometre Phnom Penh-Sihanoukville Expressway, in which China is allowed to collect tolls and manage the project for 50 years. Drivers would need to pay between US$12 for a small car and up to US$60 for a cargo truck for one-way travel on the expressway.

Based on the contract for Funan Techo Canal, the Chinese company would manage the canal, including maintaining it and making a profit from charging for passage through the canal. The Chinese company would transfer the management of the canal to the Cambodian government after a period of time, around 40 to 50 years. The Funan Techo Canal is one among many other China's key infrastructure projects in Cambodia.

These investments have deepened Cambodia's asymmetrical economic interdependence with China. Cambodia needs China to sustain its economic growth. This was clearly seen during the Covid-19 pandemic, when trade flows were restricted between countries. Cambodia's garment sector suffered a fatal blow as China could not supply raw materials to Cambodia. Similarly, the pandemic led some Chinese investors to withdraw from their development projects in Cambodia, for instance in the case of the 300-hectare airport in Modulkiri, where construction remains stalled to this day as Cambodia has yet to find new investors.

Cambodia's economic dependency on China can be translated into political influence which persuades Cambodia to support China in its regional and international issues bilaterally and in regional fora. This includes the matter of overlapping maritime claims between China and Southeast Asian countries in the South China Sea, of which Vietnam has the largest overlapping area with China. If tensions in the South China Sea become more dangerous, Vietnam might need to pay more attention to its Western neighbour.

Overall, the Funan Techo Canal is a case in point showing that Vietnam is losing its traditional sphere of influence in the region. It will be very interesting to see how Vietnam will react to the increasing Chinese influence in the region.

Related: Cambodia's foreign policy under new Prime Minister Hun Manet | Easy highway, troubled city: How China wins and loses Cambodians' hearts