An Exclusive Interview with Chairman EFU General
By SHABBIR H. KAZMI
Saifuddin Zoomkawala currently Chairs Boards of Directors of EFU General Insurance Limited and Allianz EFU Health Insurance Limited and Director of EFU Life Assurance Limited. EFU is the largest insurance group that underwrote a combined premium of over Rs.35 billion during 2015. He also created a Joint Venture with Allianz of Germany bringing in direct foreign investment of US$5 million, for introducing Health Insurance for the first time in Pakistan. He has been member of various Task Forces of the Government on Insurance. Besides this he is Chairman SAARC Chamber of Commerce & Industry Council on Financial Services and Insurance, Member Executive Committee, SAARC Chamber of Commerce & Industry, Member, IBA Advisory Council, Aga Khan Resource Committee, Shaukat Khanum Memorial Trust and Research Centre, Member Trustee, Board of Governor, Burhani Hospital, Karachi and Sindh Institute of Urology and Transplantation, Karachi.Eurasia Review: What are your immediate comments on CPEC?
Saifuddin Zoomkawala: The China-Pakistan Economic Corridor (CPEC) is a game changer project for the region because 1) Pakistan and China are time tested friends and over the years China has invested in the country in mega size projects including nuclear power plants. Construction of Gwadar deep sea port is yet another example of this friendship. Pakistan has not been able to exploit real potential of Gwadar port due to the lack of supporting infrastructure i.e. roads and railway track. This is evident from number of ships anchoring at Gwadar since commencement of its commercial operations. CPEC is aimed at exploiting real potential of Gwadar port that will help in increasing transit trade without putting additional load on two of the sea ports located in Karachi.
Two of the arteries connecting twin ports of Karachi with rest of the country, National Highway and Super Highway, pass through main cities and often face traffic jams. Exploitation of Gwadar port will add to Pakistan’s capacity to handle transit trade as the country offers the shortest and cost effective route to China as well as the Central Asian countries. While road and rail networks linking Gwadar and rest of the country are strengthened, the added advantage is that the twin ports of Karachi are ready to handle additional quantum of cargo, to begin with. As the proposed infrastructure gets ready the load can be diverted without any interruption.
Eurasia Review: Are you sure that CPEC will help in addressing some of the contentious issues facing Pakistan?
Zoomkawala: For considerably long time experts have been saying that Pakistan is a ‘natural corridor for trade and energy’. However, lack of resources remained the most contentious issue in turning this dream into reality. Ironically, railway, a globally accepted efficient and cost effective mode of inland transportation went from bad to worse in Pakistan and despite construction of motorways, roads network face depletion and congestion. With the rise in global oil prices, public transport using high speed diesel (HSD) also became expensive. Over the years Afghanistan remained the only country using Pakistan for its transit trade. The central Asian countries could not use Pakistan’s ports because of prevailing lack of comfort that goods passing through Afghanistan were not secure.
The second contentious issue facing Pakistan is lack of uninterrupted supply of energy products at affordable cost. Not only that electricity and gas tariffs are high, prolonged outages also erode competiveness of ‘Made in Pakistan’ products. Part of CPEC allocated funds will be used for augmenting electricity generation, transmission and distribution facilities. It is hoped that with the reduction in electricity and gas tariffs there will be no incentive for pilfering these products and consumers will also be able to pay their utility bills in time and in full.
Since Pakistan will be able to earn extra foreign exchange through transit fees, country’s foreign exchange reserves will also increase. In fact Pakistan will be able to pay off expense debt, which will help in containing budget deficit due to the reduction in debt and debt service charges. It is also expected that opening up of new road and rail routes will also usher enhanced economic activities.
Eurasia Review: You are in the risk mitigation business; will the CPEC open new vistas for the insurance industry?
Zoomkawala: The estimated size of CPEC is US$46 billion. Though, this amount will be spent over the years, one point is very clear that enhanced economic activities will open new vistas for the insurance sector. Projects will have to be comprehensively insured during construction as well as operational phases. Though, insurance of infrastructure projects has not become a norm in Pakistan, particularly in the public sector, I am confident that Chinese will insure each and every project during construction phase. EFU was the first ever insurance company to insure a bridge at ‘Natives Jetty’ (also known as KPT Flyover) constructed by Chinese.
Eurasia Review: Do you subscribe to the point of view that the projects covered under CPEC face greater security risk?
Zoomkawala: While one may say that projects covered under CPEC face greater security risk, the common sense says that every project of national importance should be insured against all sorts of risks, including ‘Terrorism’. My reply is based on the press reports of Modi’s government not only alleging Pakistan responsible for cross border terrorism but also threatening an assault on Pakistan. However, I strongly believe that both the countries being atomic power will not indulge in any adventurism. I also believe that the collect good of the people of this region Pakistan and India should focus on ensuring peace in the region a prerequisite for the betterment of their countries by accelerating economic growth and welfare of people rather than living in constant state of war. Had the amount being spent on purchase of arsenal were spent of economic development the two countries can also become the largest and fastest growing economies of the world.
Eurasia Review: Do you also subscribe to the views that Indian government is ‘over reacting’ to Pak-China cooperation?
Zoomkawala: Yes, in a way one may say that Prime Minister Modi has ‘overreacted’ as regards to CPEC. If he is serious in bringing prosperity in India, he should not feel threatened by Chinese investment in Pakistan, especially when China is also investing in India. Having said that, one should also take into account that India should feel perturbed by China taking over management control of Gwadar, which could undermines importance of Chabahar port. India has made huge investment in the construction of Chabahar port and road and rail networks to access Central Asia via Afghanistan. As I said earlier Pakistan offers the shortest and most cost effective route to Central Asia, Indian concern may be valid. However, economic issues needs to be settled by diplomacy and not warmongering.
Eurasia Review: With world super powers most likely to reach an agreement leading to an easing of economic sanctions on Iran by the end of this month and China taking over control of Gwadar port, do the prospects of the Iran-Pakistan-India (IPI) gas pipeline brighter?
Zoomkawala: Pakistan is a bridge that connects both two largest economies of the world but energy deficient countries India and China with energy rich Iran. If China can reduce the distance of carrying Iranian oil to 3,000 kilometers from 12,000 kilometers, India can also benefit from becoming a partner in IPI. The second proposed gas pipeline Turkmenistan- Afghanistan-Pakistan-India (TAPI) will also pass through Pakistan. Therefore, it may not be wrong to say that if IPI faces security risk because it passes through Pakistan, TAPI also faces the same threat. Since India is also taking active part in the development projects of Afghanistan, there is an urgent need to defuse animosity between the two neighboring atomic powers. A point Modi should not forget that China is also making huge investment in India and tension between Pakistan and India become a serious risk for China.
Interview by originally published in Eurasia Review