Cambodia and China have signed a $1.2 billion deal to finance an ambitious canal project that aims to boost trade efficiency by linking a branch of the Mekong River near Phnom Penh to a port on the Gulf of Thailand, the Cambodian government agency heading the project announced Friday.

The deal to fund the Funan Techo Canal was signed Thursday during the state visit to Cambodia of Chinese President Xi Jinping, the agency said in a news release. Xi returned home Friday after a three-nation Southeast Asian tour that also included Vietnam and Malaysia.

Construction of the 151.6-kilometer (94-mile) canal began last year but was halted shortly after the Aug. 5 groundbreaking ceremony for reasons that were not made clear. Cambodian Prime Minister Hun Manet said at the time that the canal will be built “no matter what the cost,” emphasizing that the project promotes “national prestige, the territorial integrity and the development of Cambodia.”

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HO CHI MINH CITY — Alibaba plans to build a data center in Vietnam to store data locally in compliance with legal requirements, while it currently relies on government-owned facilities.

The Chinese tech group told Nikkei Asia that for now it rents space for computer servers from telecommunications companies Viettel and VNPT, providing one example of how companies have responded since a contentious law took effect in 2022. Google, Amazon and others fought hard against Vietnam’s plan to force them to keep data in the country, but the policy ultimately went through towards the end of that year.

As a result, businesses have been looking for cross-border options.

Dang Minh Tam, solution architect lead at Alibaba Cloud, said the company uses colocation — a term for renting out space from data center operators — partnering with the two state companies to park client data locally. But it also backs up data at its own server farms located across the region, from Taiwan to Singapore.

Alibaba plans to build a data center in Vietnam to keep pace with demand in one of Asia’s fastest-growing economies, Tam said. He said he did not yet know the cost and declined to give a timeline for the project, as the details have not been made public. The cost of building a data center can exceed $1 billion.

“Vietnam is a very [high] potential market,” Tam said in an interview. “There’s a lot of space to grow.”

One reason companies like Alibaba might want to build their own servers, in addition to cost considerations, is to ensure greater security and control over their information.

Liability can be an issue when multiple companies are involved in managing the same data, said Leif Schneider, counsel at law firm Luther.

Contracts must be clear “so you always know who bears what risk and responsibility,” he said at a cloud and data center conference in Ho Chi Minh City last week.

Local companies, meanwhile, share Alibaba’s bullish outlook on the market.

Viettel IDC, run by Vietnam’s military, told Nikkei that its customers from Alibaba to Microsoft are demanding environmental, social and governance (ESG) improvements.

It calls its approach “ESGT,” with the added use of technology. For example, tech can be used to track and optimize water use, which is used to keep computers cool and can rack up big costs. Viettel does not currently use much renewable energy but is aiming to make renewables count for 30% of its power consumption by 2030, said technical department manager Nguyen Dinh Tuan.

“We need to prepare for the data center boom,” he said in an interview. “We need to prepare for the sustainability trend.”

Viettel projects the Southeast Asian country’s data center market will expand 15% a year for the foreseeable future, and likely more if a big cloud company like Alibaba invests there.

The expansion is fueled in part by the data localization rules, which Hanoi admits violate its free trade agreements, but which ease the one-party state’s ability to access data. The rules have been a boon for cloud providers that already have server farms in Vietnam, including gaming unicorn VNG and IT company CMC, which said it will construct at least two data centers in the next few years, potentially doubling its capacity.

Vietnam should look to Malaysia and Thailand, whose markets really took off once international players entered the competition, said Evolution Data Centers CEO Darren Webb.

“The countries that try to protect their domestic markets, that doesn’t work,” he said at the industry conference. “The pie doesn’t get bigger.”

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KRATIE, Cambodia, Jan. 2 (Xinhua) — Cambodia on Monday broke ground for the construction of a bridge across the Mekong River here in the country’s northeastern part, with funds from China.

The ceremony was presided over by Cambodian Prime Minister Samdech Techo Hun Sen and Chinese Ambassador to Cambodia Wang Wentian, and was attended by thousands of local officials, residents and students.

The 1,761-km-by-13.5-meter bridge, along with a 31.69-km connecting road, will be constructed by the Shanghai Construction Group under China’s preferential loan, and the construction is expected to be completed in 42 months.

Hun Sen said the bridge is another fruitful result of close cooperation and solidarity between Cambodia and China under the framework of the Belt and Road Initiative (BRI).

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China and the countries of the lower Mekong River are teaming up for their largest joint study yet of the impacts climate change and hydropower dams are having on one of Asia’s great waterways, and how to cope with the growing threats from floods and drought.

On Tuesday, the Mekong River Commission — an intergovernmental body comprising Cambodia, Laos, Thailand and Vietnam — announced a three-year study spanning the entire river basin, in tandem with Myanmar and the China-led Lancang-Mekong Cooperation Water Center, or LMC. Lancang is China’s name for the Mekong.

From its headwaters in China’s western highlands to its delta on the South China Sea, the Mekong courses over 4,000 kilometers through Myanmar, Laos, Thailand, Cambodia and Vietnam, supporting the livelihoods of 60 million people along the way.

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Last week, Chinese Foreign Minister Wang Yi concluded a three-day visit to Vietnam, making him the second high-ranking Chinese official to have visited the country since the outbreak of the COVID-19 pandemic in late 2019 and early 2020.

Wang’s trip to Hanoi came on the heels of those of the United States Secretary of Defense Lloyd Austin and Vice President Kamala Harris, in July and August, respectively. In their meetings with Vietnamese leaders, both Austin and Harris proposed to elevate the U.S. relationship with Vietnam to a “strategic partnership.”

In Hanoi, Wang therefore had two major challenges: winning Vietnam’s approval by offering more COVID-19 vaccines and pulling Vietnam back from its growing proximity to the U.S. and reinforcing trust between the two communist parties over their disputes in the South China Sea or the East Sea as Vietnam calls it.

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China last month inaugurated a new trade route via ship, road and rail running through Myanmar in keeping with Beijing’s dogged building spree across the Southeast Asian country to reach the Indian Ocean and points west.

Analysts say it is one more strand in the ever-expanding web of transportation channels pulling China and Southeast Asia closer under the banner of Beijing’s sprawling Belt and Road Initiative while boosting China’s sway across the region.

Whether the new route actually pays off, they add, may hinge on whether and when new rail lines are laid across Myanmar, a challenge made tougher by the violent turmoil the country has tipped into since its Feb. 1 coup.

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Chinese Premier Li Keqiang urged a closer connection and stronger political mutual trust among Mekong countries amid challenges, including the uncertain world economy and the still rampant COVID-19 pandemic at the 7th Greater Mekong Subregion (GMS) Leaders’ Summit held on Thursday via video conference. Experts said political trust is the cornerstone of the GMS mechanism, warning that intervention from other countries remains a challenge but will not shake members’ determination to cooperate.

The summit, chaired by Cambodian Prime Minister Samdech Techo Hun Sen, centered on the theme of strengthening partnership and coping with new challenges, focusing on high-priority sub-regional projects in the fields of traffic, energy, agriculture, tourism, and urban development. 

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When China announced in early August a new US$6 million for new development projects in Myanmar, the sum was trifling in Beijing’s wider $1 trillion global Belt and Road Initiative (BRI).

China’s Foreign Ministry said the funds will be used for animal vaccine projects, agricultural development, science, disaster prevention and, surprisingly given the absence of foreign visitors amid a raging Covid-19 outbreak and political crisis, tourism.

But while the funds are a rounding error in the financial context of the two sides’ wider relationship, replete with multi-billion dollar plans for rail, road and port development, they represent a potential game-changer for Mekong nations including Myanmar.

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Deputy Prime Minister Hor Namhong said that China has provided about $140 million in grants for urgent development projects in the Kingdom.

The grant came as Chinese State Councillor and Foreign Affairs Minister Wang Yi gave a diplomatic note to the Kingdom at a meeting on Sunday with Namhong during his two-day visit to Cambodia.

In a statement yesterday, Namhong said the grant will be used for projects in Sihanoukville, including a submarine optical fibre cable to Hong Kong, construction on National Road 71C, rural power transmission lines and to boost rice production and export.

He said that the money will also be used for irrigation and flood protection projects in Kampong Speu province’s Prek Tnaot river and expanding and upgrading National Roads 41, 33 and 31.

Wang was quoted in Namhong’s statement as saying that after COVID-19, China and Cambodia will develop a joint development plan, adding that China will expand cooperation in other fields.

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India will fund seven water management projects at a cost of around $350,000 in four Mekong Delta provinces.

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