Signs of wider acceptance
MALAYSIA’S rich ethnic diversity has not only exposed individuals to acknowledge, experience, understand and respect the cultures, customs and traditions of the various races and religions but, in itself, represents a unique circumstance that can lead to marketing and commercial inroads into a broad range of industries.
Among them is the halal economy. While many non-Muslims are familiar with the term and often see its emblem printed on packaged food products at the supermarket or proudly displayed at eateries, the truth of the matter is that halal goods extend beyond food to include cosmetics, medicine and clothing.
Based on commentaries by international economists, the rising global population of Muslims and the demand for halal products the world over, it is safe to conclude that the halal industry is likely to grow and remain on this upward trend for many years to come.
It is little wonder then that the New Economic Model and Halal Industry Master Plan (HIMP) were launched as the industry is recognised as an important economic driver for the country.
With lucrative and exciting opportunities unfolding within the halal economy, professionals may want to consider taking up halal-focused courses to not only upgrade their business acumen but familiarise themselves with halal procedures, norms and requirements.
Maximising the opportunity
The biggest draw factor of the halal industry is the growing international demand. The global Muslim population was recorded at 1.6 billion in 2010 (roughly 25% of the total population) and is expected to rise to 2.8 billion by 2050.
Even in Europe where Muslims are the minority, the general halal market is growing at a rate of between 10% and 20% annually and countries such as China, Japan, the United States and Brazil are also showing interest in halal products.
At the American Muslim Consumer Conference in October last year, it was announced that the global syariah-compliant market generates more than US$2 trillion (RM8.53 trillion) annually, taking into account halal products and services such as Islamic banking.
The halal food market alone accounts for 16% of the global food industry and translates to roughly US$632bil (RM2.69 trillion).
The notion that the halal industry is merely a niche market will not hold true in the future as the industry slowly creeps its way to becoming mainstream.
Wide breadth of products
Besides food, halal products can also cover items such as cosmetics, skincare products, haircare products, pharmaceuticals and clothing.
The concern lies in the production of substances and materials that may contain alcohol, animal fat, gelatine or other animal residues that do not comply with syariah law.
In a global opportunity analysis and industry forecast for 2014 to 2022 published by Allied Market Research, the global halal cosmetic market is expected to reach US$54.16bil (RM230.85bil) by 2022.
Saudi Arabia, Iran, the United Arab Emirates, Malaysia and Indonesia were highlighted as potential growth opportunities due to an increasing younger population, higher disposable income and rising interest in fashion and makeup trends.
A report produced by Thomson Reuters claims Muslim consumer spending on clothing in 2015 came up to US$243bil (RM1.035 trillion).
Famous international fashion brands such as H&M, Uniqlo, DKNY and Dolce & Gabbana have recognised the potential of the market and have started selling modest wear to attract the new market while Nike’s Pro Hijab range will hit stores next year.
The most promising aspect for product manufacturers both large and small is that even though their products are generally aimed at Muslim end users, these products are perfectly suitable for the wider market and there is nothing stopping people from purchasing these items.
In addition, as Muslim consumers will continue to stick to brands with credibility or products that hold the necessary halal certification and accreditation, food producers and product manufacturers are assured of market security for many years to
Based on commentaries by international economists, the rising global population of Muslims and the demand for halal products the world over, it is safe to conclude that the halal industry is likely to grow and remain on this upward trend for many years to come.
come should they conform to the stringent and thorough halal quality control assessments.
Looking internationally
In a CNN report late last year, neighbouring Brunei is moving away from its oil and gas dependency and has started building its international presence as a halal producer.
Recognising that it does not possess ample land for large-scale animal agriculture, the Bruneian government has acquired farms in Australia to not only produce halal beef but create a big enough supply that is exported to the United Kingdom and sold at supermarket chains such as T es co and Asda.
For Malaysian producers, the key benefit is that the country is already seen as an international leader in the halal marketplace, a benchmark for halal certification and a major exporter of halal ingredients, food and beverage.
Not only is Malaysia a halal hub, it is also the organiser of the world’s largest halal trade event, the Malaysia International Halal Showcase, which attracts industry players and halal experts from around the world.
The Asia Islamic Fashion Week 2017 that was held in Kuala Lumpur at the end of March attracted fashion houses from France, the Netherlands, South Africa as well as New York-based ELLE columnist and Haute Hijab chief executive officer Melanie Elturk.
Compared to many international halal producers, Malaysian companies are also at an advantage as a large portion of their target market is right at their doorstep, eliminating long-distance logistical problems and cutting supply costs.
There is also a good business ecosystem involving the private sector and the Government, with local producers and manufacturers receiving the training, support services and backing of agencies such as the Malaysian Investment Development Authority, International Trade and Industry Ministry, Malaysian Islamic Development Department, Finance Ministry, Malaysia Productivity Corporation and SME Corporation Malaysia.
This expertise is highly regarded internationally and the Halal Industry Development Corporation (HDC), for one, is exporting knowledge to other countries that seek guidance in setting up their own halalcertification processes and frameworks.
Limiting the potential
While Malaysia is on the right track, there is still much room for Malaysia to grow and this is where individuals, including nonMuslims, who deal in the related businesses should familiarise themselves or take up some courses focusing on the halal industry so that they may lead their organisations in entering this exciting market.
In 2015, former chief executive officer of Malaysia External Trade Development Corporation Datuk Dzulkifli Mahmud said to The Star, “Most of the local producers of halal products are small and medium enterprises (SMEs), which lack the capacity to meet the demand and supply of the halal market globally.
“This is why big corporations and SMEs should join forces and create strategic collaborations.”
Among the three key performance indexes highlighted in the HIMP that are to be achieved by 2020 is to have 1,600 SMEs listed as active halal exporters, but the current number of companies is only half of that as of November last year.
Among the possible scenarios is that smalland medium-sized producers do not see themselves as international players or do not have the vision to take their businesses abroad.
Oftentimes, smaller companies shy away from the thought of going international because they believe in expanding in small steps or are daunted by the grand scale of international operations.
Another possible reason is that proprietors do not have the right qualifications or business skills to become successful in the international halal market, even when the market is booming.
There may also be companies who have the labour, resources and suitable products but do not know the procedures and legalities involved in halal trade.
Propelling change
It is for these reasons that a halal-focused postgraduate degree should be considered. Similar to how the corporate circle would encourage managers to seek postgraduate qualifications such as an MBA or master’s in marketing or international studies so that managers can introduce new business models and changes to grow a business, proprietors of halal products should consider investing their time and energy in taking up such courses.
The end results include the broadening of business networks, having a better grasp of key management and entrepreneurship concepts, familiarisation with halal certification and national halal regulations as well as an understanding of cross-border legalities.
Pairing the knowledge of the halal industry with traditional business concepts, managers will be better prepared to not only introduce more suitable products in the market but have a better idea of how to market their products to appeal more to not only the halal markets but the wider audience.
Furthermore, it will help companies recognise the strengths and weaknesses of their businesses, highlighting more reasons for them to partner with other companies both locally and abroad for a common gain.
While international success stories in the halal industry are few such as that of Brahim’s Holdings Berhad that now provides in-flight catering for a host of international airlines, including Etihad, Cathay Pacific, China Airlines, Japan Airlines, Thai Airways and KLM, it is not out of reach for Malaysian businesses and this should thus be the goal.
Malaysia has a good support system for halal proprietors and the onus is now on them to equip themselves with the right knowledge and take the bold step in matching the demands of the market that is already waiting for them.