Manet called the 180-kilometre (110-mile) project "historic" and vowed to "finish it at all costs".
"We must build this canal at all costs," Manet said at the project's launch ceremony before fireworks shot into the air and drums sounded after he pressed the launch button for the project.
The Funan Techo canal will run from the Mekong river, about an hour's drive southeast of Phnom Penh, to the sea in the Gulf of Thailand.
The government says the canal will offer an alternative to transit via Vietnam and will reduce dependence on Vietnamese ports, generating economic activity worth 21-30 percent more than its cost.
It would create tens of thousands of jobs in the country, which is among the poorest in Southeast Asia, though it has not provided detailed evidence for those forecasts.
