Cambodia will begin construction of its Chinese-backed $1.7 billion Techo Funan canal this August, Prime Minister Hun Manet said, describing the development as a "historic project".
The 180-km (112-mile) canal that will connect the Mekong River basin to the Cambodian coast has caused tension between Cambodia and neighboring Vietnam, and sparked fears that it could be used by Chinese warships. Cambodia has dismissed those claims as baseless.
Acknowledging concerns about the project Hun Manet described the strategic infrastructure development as a "historic project" in the nation's interest.
"A lot of people have asked about this canal and some said this and that, that it benefits Vietnam, China, or (is) an attack on Vietnam," he said.
"Whatever they say, this canal on Cambodian territory is for the Cambodian people."
Cambodia says the upgraded canal would reduce its reliance on Vietnamese ports, cut transportation costs, and benefit 1.6 million people living along the canal by providing better irrigation for farming.
The government is in talks with a Chinese investment company to help fund the project, Hun Manet said, but stressed the project would proceed regardless.
"We must do it now, we don't wait anymore," he said. "We will begin construction in August."
The canal upgrade, part of China's Belt and Road Initiative, will be developed by a major Chinese state-owned construction company, China Road and Bridge Corporation.
Cambodia has consulted China on the technical aspects of the canal, said Hun Manet, adding that the government had also negotiated for the majority of the workers to be Cambodian.
Slated to be completed by 2028, the project has the potential to reignite tensions between Cambodia and Vietnam.
Environmentalists and Vietnamese authorities have expressed concern about possible damage to the fragile Mekong Delta, a massive rice-producing region supporting millions of people downstream in Vietnam.
Cambodia denies this and has also dismissed speculation the canal could be used to allow access for Chinese warships.
The announcement comes after close regional allies Cambodia and China held their annual 15-day "Golden Dragon" military exercises in May.
(Reuters - Reporting by Chan Thul Prak; Writing by Kate Lamb; Editing by Christian Schmollinger)
