Halal hub opportunities go abegging
OF LATE the talk on halal hub resurfaces again in the local media, after the “now you see, now you don’t” show of enthusiasm by the relevant authorities and corporations in Sabah and the Federal Territory of Labuan.
I hope I am right to suggest that they have just woken up from their dreamless siesta. What happened to the vibrant talk of potential halal hub by Labuan Development Authority, Kota Kinabalu Industrial Park (KKIP), Brunei Bay Halal Hub, to name a few? They are still remaining “potential” after so many years.
Let me recall. In September this year, the Ministry of Federal Territories expressed concerns over the RM86 million Labuan Halal Distributing Hub. The investment was branded as a “mega economic investment flop” of the island, since it had failed to make a single export to domestic or local market.
The facility which started in 2009 located on a 25-hectare site at Kiamsam and boasted to have modern processing facilities, storages and offices are no way acceptable in economic vocabulary as far as the investment is concerned, at least for now.
Accordingly, the Ministry was convinced that there was great potential to develop the hub and make Labuan a center for the export of processed halal-compliant meat such as beef, mutton, fresh fruits and vegetables to Japan, Taiwan and Korea as the island could secure the supplies of such products from Sabah and Sarawak.
The halal-processed products could also be supplied to offshore platforms and supply boats as there was a growing demand for such items these days. Alas! Nothing materialize!
As a modern Islamic country at the forefront of economic development, Malaysia has unique potential. With a progressive living and operating environment boasting political stability and consistent economic growth, we are fast becoming a business hub of choice for all industries.
We have unique advantages in developing and promoting the halal products and services industry for many reasons. Sabah and Labuan, being in the center of the logistics routes, we are at the advantageous position compared with other states in Malaysia. But are we taking up the challenges to tap the ample opportunities?
Statistics from the Halal Industry Corporation (HIC) recorded that the value of the global industry for halal food and lifestyle products was US$2 trillion while the world’s Muslim population, estimated at 1.6 billion, is a catalyst to the exponential expansion of the world halal industry.
We need to pull our socks up if we are serious in the Halal endeavors, producing halal products and services through the efficient supply chain management.
In the Islamic countries, the majority of the population is believed to adhere to or prefer to adhere to halal products, especially foods, when possible. Halal food means more than just making sure Allah’s name was pronounced during the slaughter of the animals. It transcends this and includes an area that has been of great concern worldwide: food safety.
Halal food means food that has not been contaminated or cross contaminated with non-halal products, exposed to harmful materials or environment while in storage or in transit. This is where halal logistics comes in.
This farm to fork food safety principle explains why halal food is the latest fad in most Western countries and its consumption of halal food is growing among non-Muslims.
Similar to kosher practices, Islam requires the animal is killed with single slash to the throat while alive. It is intended as a way for animals to die swiftly and minimize their pain. However, as with most issues in religion, opinions vary greatly over what is permissible and what is not.
Despite attempts by international Islamic bodies, such as the World Halal Food Council, to achieve worldwide guidelines, there are no global standards for halal certifications. However, like music to our ears, Department of Islamic Development Malaysia or JAKIM’s recognition programme for international Halal bodies is the most stringent and sought-after bilateral halal system recognition programme in the world with over 50 international bodies registered to-date. The iconic Malaysia Halal logo is the most sought-after, globally-recognized hallmark that serves as a visible symbol for the country’s reputation as the world’s leading halal hub.
Malaysia is in a strong position to become the global halal hub by 2020 with almost 4,500 companies having the halal certification in the country as of March this year, a 35.5 per cent increase over the 3,319 companies during the same period last year. So far Sabah has 249 companies only that are halal certified with 105 being Bumiputera-owned.
To economically take advantage of the halal industries, logistics arrangement is paramount in protecting the Halal status of any given product through proper transportation, storage and handling along the supply chain, until it reaches its final destination.
Hence the integrity of Halal products, from ‘farm to fork’ relies very much on logistics service management capabilities. The wholeness of the logistic service management requires the effective and efficient collection, consolidation, storage handling, value added, track and trace and controls of the movement and storage of Halal products.
For these purposes, Supply Chain Management plays a crucial role in realizing this goal for the Halal industry. Segregation goods from Halal and non-Halal goods for cross-contamination avoidance are the main element of protecting the Halal status.
Among the elements of controlling ‘Halal’ in logistic activities are monitoring Halal performances controls in transportations activities and the movements by any type of transportation mode must comply with the principle of Syariah.
There is a risk of cross contamination of Halal product with Non-Halal during transportation operations. Among the issues are sharing containers, poor visibility into what inventory is in which containers, where the container is transit, history of immediate suppliers, history of immediate maintenance and segregation allocation space between Halal and non-Halal goods in same containers increased the risk towards Halal integrity being compromised. While concerning on this main issues, maintaining the Halal performance responsibility during transportation process also a big challenge.
Some academicians believe that, to achieve a Halal supply chain compliance product is almost impossible. This is because the Halal supply chain service offered by the Halal logistic service providers is guaranteed only when the products are in their custody. Once the products are transferred to the third party, the chances of breakage in chain are higher when the other party is not practicing Halal supply chain.
The lack of information sharing among suppliers and community is also one of the possible causes of this sad state of affairs. This situation is more critical at the retail level especially the small retailers due to lack of control and monitoring by the responsible institution at their level.
Monitoring Halal integrity of product is very crucial and the potential of Information and Communication Technology or ICT to improve the Halal services in logistic activities.
The use of ICT, which is fairly new, may increase the effectiveness and organization of the Halal supply chain.
It is understood that the concept of adopting visibility technologies for security management purposes such as radio-frequency identification or RFID and global positioning systems or GPS is still new despite the fact that the demand by logistics end-users who expressed their interest in the use of RFID and GPS as forms of logistics security management is high.
The use of technology in logistics is currently focused on warehousing, bar coding and transportation management systems. The low adoption of RFID system is due to the high initial set up cost and less mature of such technology across the region.
To date, Malaysia is the leading global halal hub with an annual export value of RM35.4 billion for halal products, which contributes approximately 5.1% of the total exports for the country. The Malaysian halal standard is now being widely used by several renowned global multinational companies (MNCs) including Nestlé, Colgate Palmolive and Unilever. Malaysia’s halal portfolio has also expanded beyond food and beverage, venturing into various other sectors such as cosmetics, logistics, pharmaceutical and most recently, tourism.
There is no end to the variety of halal products and services that can be found in Malaysia; from halal food to Islamic banking, Malaysia provides end-to-end Halal goods with universal appeal. This, coupled with a conducive environment and Governmentbacked policies and initiatives, strengthens Malaysia’s position as the reference point of the global halal industry. Malaysia Boleh!