Webinar on “The Funan Techo Canal: Redefining Connectivity, Reshaping Politics”

Friday, 21 June 2024 – In this webinar, Dr Vannarith Chheang, Dr Le Hong Hiep and Dr Brian Eyler deep dive into the multifaceted aspects of Cambodia’s proposed Funan Techo Canal.


In a webinar held by the ISEAS – Yusof Ishak Institute, Dr Vannarith Chheang, Dr Le Hong Hiep and Dr Brian Eyler shared their views on the motivations and potential impacts of Cambodia’s proposed Funan Techo Canal project, and how the relevant parties – especially Cambodia, Vietnam and the Mekong River Commission (MRC) – can collaborate to ensure the project adheres to the spirit and letters of the 1995 Mekong Agreement.

Clockwise from top left: Dr Le Hong Hiep, Ms Hoang Thi Ha (moderator), Dr Brian Eyler and Dr Vannarith Chheang. (Credit: ISEAS – Yusof Ishak Institute)

Dr Chheang commenced the webinar by explaining the name of the project. He said that many big infrastructure projects in Cambodia, including roads and bridges, bear the label “Techo”, which is a branding associated with Cambodia’s former prime minister Hun Sen. He noted that the canal project is particularly tied to Hun Sen’s legacy, as it was approved and initiated during his tenure in office. In addition, he highlighted that the name “Funan” carries significant historical and cultural symbolism. Influenced by Indian culture, Funan was an ancient kingdom that thrived in the Mekong Delta from the 1st to 6th century AD, known for its advanced civilization, intricate canal networks and economic prosperity that centred around Angkor Borey, which used to be the early Khmer capital.

Dr Chheang highlighted the economic, environmental, and political motivations behind the project. First, the 180-kilometer canal, spanning the Kandal, Takeo, Kampot, and Kep provinces, aims to enhance transport and logistics connectivity, reducing costs and fostering economic development, particularly in areas along the canal. With a width of 100 meters upstream, 80 meters downstream, and a depth of 4 to 5.4 meters, the canal is envisioned to support two-way traffic for ships. The canal is also expected to stimulate real estate development, as well as the establishment of commercial centres and industrial zones along its route. Second, the canal would include three water gates – built in accordance to international standards to ensure safety and construction quality – to manage water flow particularly during the flood season, highlighting the canal’s role in flood risk mitigation alongside its economic benefits. Third, the canal is projected to reduce Cambodian reliance on Vietnamese waterways and ports, which typically involve complex, time-consuming and costly border-crossing procedures and paperwork. By developing this canal, Cambodia aims to achieve greater independence and sovereignty over its logistics and transport network.

Dr Chheang noted that while the Cambodian government had approached China for investment and technical cooperation, China is “not interested in fully investing” in the canal project. He thus emphasised that the canal project is a “Cambodian-led” and “Cambodian-owned initiative”. While some analysts view it as a Chinese project aimed at exerting pressure on Vietnam or influencing the Mekong region, Dr Chheang emphasised that the Cambodian government is the main stakeholder, mobilizing domestic resources to fund the canal project. However, he caveated that the current estimated cost of the construction, at about US$1.7 billion, might be too low. Some experts, particularly from China, have noted that a similar 100-kilometer canal in China cost over US$10 billion. He thus suggested that it might be challenging to realise the project with the current budget estimate.

Dr Chheang said that while the canal project had initially caused some tensions between Vietnam and Cambodia, mutual understanding between the two parties over the project has improved, especially following their respective Deputy Prime Ministers’ meeting in Tokyo. Emphasising that the root causes of potential tensions include a lack of information and transparency, he stressed the importance of fostering dialogue based on “scientific and technical” explanations to bridge gaps and maintain the longstanding friendship between Cambodia and Vietnam. Over-politicizing and over-securitizing the issue, he warned, could inflame nationalist sentiments in both countries.

Dr Chheang discussed the legality of the canal project, noting that the Cambodian government had hired international lawyers for expert advice. According to their analysis, since the project utilizes water from a tributary rather than the Mekong mainstream, Cambodia is required to go through only the Notification process at the MRC, as outlined in the 1995 Mekong Agreement, particularly Article 5.

Dr Hiep outlined Vietnam’s environmental, economic, security and geopolitical concerns regarding the canal project. First, Vietnam’s primary concern revolves around the potential environmental impact on the Mekong Delta. Known as the “rice basket” of the region, the delta’s rice production supports not only Vietnam’s food security but also its rice exports, including to the Philippines, Indonesia, and Singapore. Any adverse effects on the delta could, therefore, have significant implications for food security across Southeast Asia. The severity of the impact, Dr Hiep noted, depends on the canal’s primary purpose. If it serves mainly for navigation, the impact might be minimal. However, if the project includes irrigation and industrial uses, Cambodia’s increased water extraction from the Mekong could significantly affect the delta’s ecosystem and agricultural output. Vietnam’s unease is compounded by Cambodia’s reluctance to share detailed information, especially concerning environmental impact assessments. This lack of transparency fuels suspicions that Cambodia may be hiding adverse effects. Dr Hiep emphasized that enhancing transparency is crucial to easing Vietnam’s concerns and fostering regional cooperation on the canal project. The second concern relates to potential economic losses for Vietnam. However, Dr Hiep noted that Vietnam currently gains minimal economic benefit from Cambodian goods transhipment through ports like Cai Mep-Thi Vai, which accounts for only about five to six per cent of their total capacity. He thus pointed out that the project’s economic implications for Vietnam are not a major concern at this stage. Third, Dr Hiep highlighted the security implications of the canal project for Vietnam. He suggested that while Cambodian leadership has repeatedly emphasized the project’s economic development goals and denied China’s potential involvement, Vietnam should remain cautious. Dr Hiep mentioned the case of the Ream Naval Base which, despite Cambodian assurances, has seen extended presence of Chinese naval ships and is perceived by some as a “de facto naval base for China”. The final factor Dr Hiep noted is the “Chinese factor”, which will be subject to China’s involvement in the project’s roll-out.

Dr Hiep suggested that there are several reasons for Vietnam to maintain cautious optimism about the canal project. First, the project could potentially experience significant delays due to several challenges, such as lack of funding. Highlighting that this large-scale project has not drawn strong interests from Chinese investors, Dr Hiep questioned its financial viability. Second, Dr Hiep questioned whether shipping companies will utilise the canal upon its completion. He noted that the canal would be able to accommodate ships between 3000 and 5000 tons, much lower than the 20,000 tons supported by the Tien River in Vietnam. Another issue is the longer distance that shipping companies must travel to export goods to the Northeast Asian countries like China, Korea and Japan than the existing trans-shipment route from Vietnam. The companies must also pay a toll fee, whereas there is no fee required should they use the river through the Mekong Delta. Third, the potential environmental impact on the Mekong Delta from the canal project remains uncertain, with varying estimates regarding the volume of water diversion. Vietnamese experts suggest that up to 50 per cent of water flow, particularly during critical periods, could be diverted. Conversely, Cambodian sources propose a much lower figure of 0.51 per cent. With environmental implications of the canal project still undetermined, this has led to restrained reactions from the Vietnamese government thus far. Hoping to avoid any unnecessary confrontation that may constrain bilateral ties, the Vietnamese leadership has yet to loudly protest against the project, preventing escalation of tensions that may lead to rising anti-Vietnam sentiments in Cambodia, and similarly, anti-Cambodia sentiments in Vietnam.

Dr Hiep said that Vietnam could explore several options to address the concerns surrounding the canal project. First, Vietnam can streamline bureaucratic processes and reduce red tape to expedite the time it takes for Cambodian companies to ship goods through Vietnamese ports. Second, Vietnam could utilise diplomatic channels, such as raising relevant concerns during bilateral meetings, to seek clarification about the project and its potential impacts. If bilateral discussion do not yield satisfactory outcomes, Vietnam could escalate the matter to multilateral forums like ASEAN. Third, Vietnam could consider the option of pursuing legal action to address any disagreements regarding the definition of the tributary in question. However, he caveated that Vietnam would need to thoroughly consider how such an approach could affect its bilateral ties with Cambodia. Fourth, Vietnam needs to undertake adaptation strategies – such as constructing reservoirs, dams or other systems – to mitigate the increasing adverse impacts of climate change and upstream water uses on the Mekong Delta.

Dr Eyler highlighted that the canal’s environmental impacts could potentially be worse than those outlined in the Cambodian notification document to the MRC. Furthermore, another serious concern is the future of the 1995 Mekong Agreement and Cambodia’s role as a staunch advocate within it. Historically, Cambodia has been proactive in highlighting violations of the 1995 Mekong Agreement by other MRC countries. For instance, Cambodia contested against Laos when the latter initially classified the Don Sahong dam as a tributary dam, insisting it was clearly on the mainstream based on maps and scientific evidence. Through constructive dialogue and hydro diplomacy, Cambodia successfully convinced the Lao government to reclassify the dam as a mainstream Mekong dam which had to go through the notification, prior consultation and agreement procedures within the MRC. Cambodia’s pivotal role in reinforcing the 1995 Mekong Agreement is also underscored by its proactive stance when the Sekong A dam, constructed by a Vietnamese company in Laos, was not initially notified to the MRC by the Lao government. It required a year of diplomatic efforts from the Cambodian government to persuade Laos to properly notify the project. Such actions on the part of Cambodia resulted in the evolution of the MRC Secretariat and the creation of a transboundary environmental impact assessment process, highlighting Cambodia’s commitment and role in upholding robust water governance.

However, Dr Eyler noted that the Funan Techo Canal project undermines all the progress and good work Cambodia has made over the years, because it clearly violates the 1995 Mekong Agreement. While former Prime Minister Hun Sen claims that the canal has no impact on the flow of the Mekong River because it does not connect directly to it, but rather to the Bassac river (or “sông Hậu” in Vietnamese), Dr Eyler clarified that the canal “very clearly” connects to the Mekong River. Additionally, he stated that the Bassac is considered part of the Mekong mainstream in the first place. He referenced Dr Chheang’s definition of a tributary, noting that while a tributary indeed contributes water into a mainstream, the Bassac does not meet this definition; instead, it draws water from the mainstream. Therefore, Dr Eyler stated that the Bassac is a distributary or a branch of the Mekong mainstream, rather than a tributary of the Mekong River. Moreover, Dr Eyler stated that another way to determine whether the Bassac is a tributary or part of the Mekong mainstream involves testing the origin of the water flow. If water in a channel originates from the mainstream, it is categorised as a mainstream channel. Conversely, if the water does not originate from the mainstream, it is classified as a tributary. In the case of the Bassac, its water “100%” originates from the Mekong mainstream. Thus, according to this definition, Dr Eyler asserts that the Funan Techo Canal project must qualify as a mainstream project.

In addition, Dr Eyler highlighted that Cambodia should have sought prior consultation and agreement on the canal project because it constitutes an inter-basin diversion. The 1995 Mekong Agreement stipulates that any inter-basin diversion project shall be agreed upon by the Joint Committee through a specific agreement for each project prior to any proposed diversion. According to Dr Eyler, an inter-basin diversion involves transferring water from one river basin to another. Notably, the Funan Techo Canal project extends from within the Mekong Basin into a different basin. In this case, the canal has the capability to draw water from the Mekong mainstream and redirect it into the coastal watershed. This process aligns with the technical description of an inter-basin diversion, where water is moved between distinct river basins. Dr Eyler stated that although Cambodia has the right to construct the Funan Techo Canal project from a sovereignty perspective, the country should carry out prior consultations, provide full disclosure of all project-related documents, and commission independent studies through the MRC that is trusted and accepted by all member countries.

Dr Eyler pointed out that the Cambodian government’s notification to the MRC did not mention the potential use of the canal’s water for agricultural activities in Cambodia. He noted that this omission highlights one of several inconsistencies and shifts in narrative of Cambodia. Moreover, he noted that if the canal is intended for irrigation and agricultural purposes, especially during the dry season, it would involve intra-basin use, which would mean taking water from either the Mekong mainstream or the Bassac and redirecting it to the floodplain for agricultural irrigation. Such usage also necessitates prior consultation and agreement by the joint committee, according to established procedures. Dr Eyler stressed that the project presents an opportunity for the Cambodian government to update and strengthen the 1995 Mekong Agreement. If there is no prior consultation and agreement regarding the Funan Techo Canal project, it will signal to all MRC member countries and the global community that the existing agreement “does not hold water”. The protocols would then become obsolete, jeopardizing the river system and the millions of people dependent on it. Given that the Mekong River is already facing a rapid depletion of its natural resource base, exacerbated by climate change, Dr Eyler stressed the importance of adhering to and reinforcing the 1995 Mekong Agreement.

The webinar was attended by an online audience of around 180 people and concluded with a Q&A session. Among the inquires addressed were the legal/geographical status of the Bassac river, the necessity of invoking prior consultation and agreement requirements in the 1995 Mekong Agreement for irrigation purposes, the project’s commercial viability given the apparent lack of Chinese funding interest, the possibility of reviewing the 1995 Mekong Agreement, and the domestic debate within Cambodia regarding the desirability of the canal project.