Chinese and Cambodian state-owned firms inked shareholder and investment agreements for the flagship Funan Techo Canal during President Xi Jinping’s visit to Phnom Penh last month, but details on financing still remain under wraps, worrying stakeholders eyeing slim returns.
Meanwhile, residents near the planned 180 km canal’s groundbreaking site off the Mekong River say they have yet to receive resettlement offers.
Near the end of Xi’s April 17-18 state visit, five agreements tied to the canal were signed with various partners, according to the Council for the Development of Cambodia (CDC), amid official fanfare but few disclosed details.
The project, officially called the Tonle Bassac Navigation Road and Logistics System, involves a group of recurring stakeholders named across limited official documentation.
Cambodian investors reportedly hold 51% of the joint venture, with Chinese partners holding 49%.
Previously, Beijing, which is Cambodia’s largest creditor, made no public funding pledge for the canal, while Phnom Penh has shifted its line on Chinese support from covering 100% to 49% of the project’s costs.
Originally valued as a $1.7 billion joint-venture, the project is now estimated at $1.156 billion, likely reflecting Cambodia’s plan to build the first 21 km.
State-owned firms listed as key developers include the Overseas Cambodian Investment Corporation (OCIC), Phnom Penh Autonomous Port (PPAP), and Sihanoukville Autonomous Port (PAS), along with China Road and Bridge Corporation (CRBC), according to a CDC press release.
When contacted by CamboJA News, Lim Sophany – one of three directors of Funan Techo Canal Investment Co., a venture among the Cambodian state-owned firms involved – declined to disclose the company’s financial commitment, saying the information was not public before ending the call.
PPAP Chairman and CEO Hei Bavy, who signed the shareholder agreement on behalf of the investment company, did not respond to requests for comment, saying he was at a conference.
CamboJA News also reached out to Zhou Yong, Director General of CRBC for Cambodia, using a phone number listed in the Ministry of Commerce’s registry. A man identifying himself as a CRBC employee answered but declined to provide any details on the investment amounts.
Stephen Higgins, managing partner at Phnom Penh-based Mekong Strategic Capital, voiced concerns that publicly listed companies like PPAP and PAS – in which his firm is a major investor – are backing a large infrastructure project without informing shareholders about the potential financial impact.
“It is concerning that publicly listed entities are investing in a major project such as this without shareholders being given information on what it might mean for those listed entities,” he said.
In an email, Higgins also raised doubts about the project’s return potential. The canal is being developed under a build-operate-transfer (BOT) model.
He outlined that, based on assumptions of a 50-year BOT timeline, modest revenue growth of 3% annually, and a construction cost of around $2 billion (factoring in typical cost overruns for large infrastructure projects), the project would need to generate profits of around $65 million annually. However, with current channel fees for using the Mekong to access Vietnam at just $8 million per year, he expressed concern over how this financial gap would be addressed.
On May 6, CamboJA News revisited the groundbreaking site for the canal but found minimal progress, aside from ongoing demarcation work. Official social media posts for the project, however, stated that efforts were underway to clear mines and unexploded ordnance – a standard procedure for many development projects in Cambodia – in preparation for excavation.
With little clarity for stakeholders, residents along the canal route are also left uncertain about their futures.
Dim Mech, a businessman who has lived along the proposed canal route since before 2000, told CamboJA News he has not received any formal notice about compensation or relocation, though local authorities have already recorded his assets, including land, house, and crops. He said his business currently earns between $150 and $200 per day.
“I’m afraid to leave. I’ve worked so hard to build this life. If I lose it, I won’t survive,” he said, adding that his son, who recently built a house with a $50,000 bank loan, will also have to move for the project.
When he questioned officials during the demarcation process, Mech said they told him compensation would mirror that offered to residents displaced by the Phnom Penh-Sihanoukville expressway, another project developed by the Cambodian and Chinese state-owned firms behind the canal.
Still, he remains uncertain and is calling on the government for fair and transparent compensation.
Phan Rim, spokesperson for the Ministry of Public Works and Transport, told CamboJA News in February that resettlement of affected families would be completed by April’s end, with construction set to follow.
Meas Soksensan, spokesperson for the Ministry of Economy and Finance, which handles compensation packages for impacted residents, did not immediately respond to a request for comment.
