Malaysia, A Dominant Islamic Economy Player: The Way Forward
Thanks to its continued efforts starting from 1974, Malaysia has become a dominant player in the global Islamic economy sectors of halal food, Islamic banking, modest fashion, halal cosmetics, and Muslim-friendly tourism. The progress it has made, especially, in the last two decades is impressive. It has successfully established a comprehensive ecosystem to promote the halal, Islamic finance and other Islamic economy sectors globally. This healthy ecosystem supported by well-designed halal certification systems, standards and regulations, incentives, highly-skilled human capital, and vigorous Islamic banking, has helped achieve its strategic goal to become a dominant player in the global Islamic economy.
However, we are seeing other formidable challengers emerging on the global stage, trying to grab the ever-growing share of the pie of the $3.8 trillion Islamic economies by the year 2023. Other leading national Islamic economy ecosystems such as the UAE, Bahrain and Saudi Arabia have been supporting Islamic economy companies in their respective jurisdictions to strengthen their foothold in the global Islamic economy. Especially the UAE seems to be the biggest threat to Malaysia in terms of strong Islamic economy organizations operating in most of the halal economy sectors mentioned above.
According to the latest Global Islamic Economy report published by Thomson Reuters, it seems Malaysia still has the leading Islamic economy ecosystem. However, in the last few years, the UAE has made impressive inroads across various sectors of the Islamic economy and, now is ranked No. 2 in the ecosystem. Bahrain is a close third in line, thanks to its advanced Islamic finance ecosystem. Although Saudi Arabia, being 4th in the list, has a lot of potentials to become a leading player in the Islamic economy, it has not yet been realized fully.
Malaysia started establishing its Islamic economy ecosystem in the early 80s by formulating robust halal standards, establishing halal free zones, training halal manufacturers, strengthening Islamic finance industry, providing a robust investor ecosystem, and pushing halal product exports to other OIC and non-OIC countries.
The UAE, likewise, has been strengthening its halal products ecosystem and exporting the same to different countries of the world for quite some time now. It established a free trade zone called DAFZA to facilitate trading activities in various sectors of the Islamic economy. To fully grab the global halal economy opportunity, it also launched Goodforce Labs, a startup incubator focused on ethical startups in the burgeoning Islamic economy and halal sector. This has made the UAE a truly global halal trade hub in the region.
The Prime Minister of Malaysia, Tun Dr. Mahathir bin Mohamad said that Mihas, the Malaysian International Halal Showcase was created to help Muslims uphold the Islamic injunctions wherever they may be. “Mihas will contribute to a better understanding of Islam and facilitating the practices in countries and places where such practices are uncommon.”
Minister of International Trade and Industry of Malaysia, Y.B. Datuk Ignatius Darell Leiking stated that “Malaysia has been recognized as the leading nation in the global halal industry, and, probably, the only nation in the world that boasts of a comprehensive ecosystem for the halal industry.” According to him, this comprehensive ecosystem is “supported by an effective framework from governmental institutions”
Malaysia need not be afraid of the competition in the global Islamic economy. The reason being is that the total volume and size of the global Islamic economy is getting bigger with every passing day. Malaysia needs to focus more on the overall strengthening of its Islamic economy institutions, halal standards, and cement relationships with other countries which might be able to get expertise from Malaysian halal standards organizations such as Halal Development Corporation (HDC) and Malaysian Islamic Development Department (Jakim). It also needs to bolster its halal manufacturing standards, boost its human capital by training in various facets of the global halal trade, and actively look for the sectors in an Islamic economy which can help the country remain competitive in the global Islamic economy ecosystem.
It also needs to cement its business relationships with countries such as Japan, South Korea which look forward to Malaysia as a leader in the global halal economy.
The overall Islamic economy is getting bigger. There is a room for every aspirant to grow and grab the countless opportunities the global Islamic economy presents as it is expanding exponentially. Instead of focusing on its rankings in the various Islamic economy sectors, Malaysia has to focus on the overall expansion of the halal economy worldwide.
Another important issue which the country needs to consider is to work on those sectors of the halal economy which are growing fast but are currently being controlled by countries which do not yet have robust halal standards.
In fact, the leadership in the global Islamic economy is not a zero-sum game. It allows countries of various sizes to work with their full potential to take advantage of the ever-growing opportunities the global Islamic economy is throwing upon the countries which have been operating in the halal ecosystem.