Cambodia is going to dig a canal, and the construction party of the project with an investment of 1.7 billion yuan is the mainland's China Construction Road and Bridge Group.
The project has been studied for several months last year, and a series of preparatory work has been prepared in the early stage, and it is only waiting for the official start of construction in the second half of this year.
This will be another moment for mainland infrastructure projects to show their might in Southeast Asia. Why is Cambodia planning a canal to connect the sea at this time, and what good things will it bring about in the future?
Let's start with a resolution passed by the Cambodian parliament last month.
Cambodia adopted a draft Law on Water Transport
A month ago, the Cambodian National Assembly passed a draft law on water transport. Just the day before the bill was reviewed, Cambodia's Deputy Prime Minister Sun Chanto said that the groundbreaking ceremony for the De Chong Phu South Canal project would be held in June and July this year.
In mid-January, Cambodia's Minister of Public Works and Transport Bing Boni also said that the canal project would start construction in the fourth quarter. It is not difficult to see from the information revealed by Cambodian government officials that the project should have started earlier.
The Cambodian National Assembly passed the "Water Transport Law" in real time, which also paved the way for the construction of the canal at the legal and regulatory level.
Because the main purpose of the new law is to effectively supervise the construction and maintenance of water transport facilities, create more investment opportunities, attract more domestic and foreign investment, and promote the country's economic development.
From a holistic perspective, the bill is also an important goal of the first phase of the new Cambodian government's Pentagon Strategy. That is, through legislative guarantees, Cambodia's water transport system will be comprehensively and systematically upgraded.
To this end, the Cambodian government has formulated and planned 174 infrastructure projects, which will have a total investment of 36.6 billion US dollars.
Specifically, the project construction covers four aspects: water, land, air and sea. There are 102 road and rail construction projects, 23 inland canal projects, 20 maritime projects, and 10 air transportation projects. In addition, there are 15 logistics construction projects.
Among the many projects, the Dechongfu South Canal project, with an investment scale of 1.7 billion US dollars, will be the first construction project to start.
Therefore, it is clear that the Cambodian government has taken a comprehensive approach to improve the country's infrastructure and transportation scale.
Especially in the improvement of the water transport system, Cambodia's needs are more urgent. Because the country does not have a direct inland waterway to the sea, this not only pushes up logistics costs, restricts Cambodia's economy, trade and import and export of goods, but also has to be constrained by neighboring Vietnam in the field of water transportation.
Thailand is in dire need of a waterway outlet to the sea
In Southeast Asian countries, the cost of logistics container transportation in Cambodia is twice as high as that of Thailand and Vietnam, and the cost of customs clearance is four to five times that of neighboring countries.
Although Cambodia is not a landlocked country, there are no large rivers that connect directly to the ocean in the western and southwestern coastal areas of the country.
The Mekong River originates from the Lancang River in the southwest of the mainland, and although there are large sections of the river in Cambodia, the Mekong River flows into the sea in southern Vietnam rather than Cambodia.
To use Southeast Asia's largest golden waterway for waterway transportation, Cambodia needs to pass through Vietnam, and eventually through downstream Vietnamese ports, in order to import and export goods.
Since you want to borrow the road, you have to apply to Vietnam from time to time, and you have to pay relevant fees to Vietnam for the stacking and management of goods in downstream ports. It is this that makes Cambodia feel stuck in the neck from time to time.
As early as 2021, Cambodia's commerce ministry said that the high cost of transportation and logistics has led to a decline in Cambodia's international competitiveness.
According to Cambodia's domestic data, logistics and transportation costs account for 15% of the price of agricultural products, and in the field of manufactured goods, this proportion is as high as 31%.
In other words, a large part of the money spent by Cambodians on daily consumption, whether it is food, clothing, housing and transportation, is the cost of transportation. Among them, the "toll" to Vietnam is naturally indispensable.
According to information disclosed by Cambodia's maritime transport department, the existing rivers leading to the sea are small and shallow, and large cargo ships cannot pass through them. In this case, Cambodia wants to do it or not, and most of the seaborne cargo has to be transshipped from the lower Mekong River, i.e. Vietnam.
Some people may wonder, doesn't Cambodia also have a seaport, which can be transshipped by land transportation.
That being said, there are also two downsides.
First of all, land transport is smaller and more expensive than water transport. Secondly, Cambodia's overall infrastructure construction is very backward, and there is no road and railway system for land transportation, so even if it wants to transship through its own ports, Cambodia cannot reach it.
In this case, if you want to travel through Vietnam, you have to be subject to fees and red tape.
According to Vietnam's regulations in 2022, in order to carry out cargo through the ports of the lower Mekong, all goods must be documented to the country's industrial and trade sectors before they are passed.
In this way, the import and export of goods in Cambodia must be approved by the Vietnamese in advance, and the procedures are cumbersome, which seriously delays the travel time.
In terms of fees, the shipping fare from the Vietnamese port to Phnom Penh is US$100 for a 20-foot container and US$200 for a 40-foot container. In addition, the logistics cost of handling cargo at the terminal is US$1,200 for a 40ft container.
In addition to the above two parts of the cost, there are also export customs clearance costs, and the price of the container is between $220 and $250. In contrast, the cost of Vietnam and Thailand is only $60, so Cambodia's cost in this area is 3 to 4 times higher than that of neighboring countries.
The above series of unfavorable circumstances have made Cambodia urgently need an inland waterway of its own.
Plan water transportation and find Chinese construction
Even in 2022, Cambodia was already planning a waterway transport system, and after a series of investigations, the goal was to open up inland waterways.
Cambodia has a total length of 1,750 kilometres of rivers, but only 780 kilometres of navigable rivers are available. Among them, the Mekong River accounts for the largest proportion, reaching 30%. The Tonle Sap River accounts for 15% and the Baise River accounts for 5%.
Moreover, these rivers are not connected, and the flow direction is also different, and the comprehensive utilization efficiency is very low.
In the previous inspection, Cambodia chose the seaport of Kep Province as the country's seaport. This is due to the geographical proximity to the available natural rivers and lakes, as long as they are connected to each other, there will be a water transport route from the mouth of the sea to the inland.
It is on this premise that the project has been gradually planned, and Cambodia's Ministry of Public Works and Transport issued a detailed feasibility report in August 2022.
It is worth mentioning that the collaborators of this report include the mainland's China Construction Road and Bridge Group and Beijing CCCC Water Transport Planning and Design Institute. In other words, at the beginning of Cambodia's domestic planning, the mainland has already participated.
In the past, any project, from planning to implementation, often had twists and turns in the middle, and it took a lot of time. It's like the Vietnamese shouting about attracting foreign investment to build the railway, and after more than 20 years of shouting, it is still a blank.
However, it took only a few months to plan Cambodia's water transport system, from the feasibility of the project to the implementation of the project.
The above feasibility study report was issued around August 2022, and by June 2023, the Dechongfu South Canal project was officially finalized.
To speed up progress, the Cambodian government set up a 35-member interdepartmental committee last year, led by Deputy Prime Minister Sun Chanto. It can be seen how urgent Cambodia's demand for the canal is.
From the specific planning point of view, after the completion of the canal, it will connect the seaport of Kep Province and the inland port of Phnom Penh, spanning the four provinces of Kep, Kon Bhu, Takeo and Kandal in Cambodia, with a total length of 180 kilometers. When completed, the canal will cover 1.6 million people along the river.
In the construction of the canal, 11 bridges need to be built, and 3 traffic control stations will be built. In addition, the construction time of the project will take about 4 years.
According to the previous inspection plan, once the canal is completed, it will reduce the logistics and transportation cost by 16% compared with the current one. The future value of freight could directly generate nearly $400 million in revenue.
In addition to logistics and shipping, new water tourism projects can also be developed along the canal in the future. In addition, the canal will also play its due role in flood control and drainage and people's livelihood construction.
In October 2023, China Construction Road & Bridge Group and the Cambodian government officially signed a cooperation framework agreement in Beijing.
Construction of the canal began this year
According to information disclosed by Cambodia's Ministry of Public Works and Transport in mid-January, the construction of the De Chong Phu South Canal project started in the fourth quarter.
By the end of February, Vice Premier Sun Zhanto said the groundbreaking ceremony would take place in June or July. Regardless of when construction starts, the overall plan is that construction will begin this year.
According to the previous four years of construction, the canal will be completed between 2028 and 2029.
It is worth mentioning that Cambodia digs its own canals, and other countries express concern. Vietnam was the first to express concern.
In December last year, the Cambodian prime minister visited Vietnam, and according to Cambodian media reports, the Vietnamese side expressed concern about the canal project.
Although public information shows that Vietnam is worried about the negative impact on the Mekong River after the canal is dug.
But from Cambodia's point of view, once the domestic canal is repaired, there will be no need to import and export goods through the lower Mekong River in the future. For Vietnam, this is equivalent to losing a large amount of toll revenue.
In addition, Australia has shown strong interest in the canal project. Although the public report does not mention what specific message Australia has conveyed to Cambodia, from the perspective of Australia's concern about the "environmental impact", Australia's attitude may be the same as Vietnam's.
From an environmental point of view, from a geopolitical point of view, neither Vietnam nor the West is happy to see significant changes in Cambodia, especially China's infrastructure.
Therefore, in the future progress of the project, these external factors may also accumulate to form interference with the implementation of the project.
epilogue
However, in Cambodia's domestic infrastructure construction, it is not the first time that the mainland road and bridge group has participated in investment and construction.
Previously, Cambodia's Kim Ba Expressway and the Phnom Penh to Siem Reap and Bobi Expressway were all built by Road and Bridge Group.
Therefore, in Cambodia's domestic construction, mainland enterprises have accumulated a lot of experience. If there are no other factors to interfere, purely from the field of construction, with our experience and technical advantages, the construction of the canal project will progress smoothly.
Resources:
"Cambodia plans to revive the waterway transport system and open up inland waterways", Cambodia-China Times, August 1, 2022
"Government Establishes Inter-Ministerial Committee to Accelerate US$1.7 Billion Canal Project," Cambodia-China Times, June 12, 2023
"Cambodian Prime Minister Hun Manet Witnesses the Company's Signing of the De Chong Phu South Canal Project" China International Contractors Association October 19, 2023
"Cambodia Canal Project Will Not Have an Impact on the Mekong River in Response to Vietnam's Concerns" Cambodia-China Times, December 13, 2023