Malaysia Aims To Be the World’s Halal Industry Hub

Malaysia has been at the forefront of the global Halal industry for the past few decades. Now, it aims to be the leading hub for the global industry. The question is whether it could achieve the lofty goal. What needs to be done to make the country the largest hub for the global Halal industry? What are the specific steps the country has to take to achieve its objectives? What are the gaps in the market? How can they be filled so that it is able to attract the required resources to meet its objectives?

The Halal industry holds great potential in driving growth. Halal products and services encompass a wide range of industries such as food and beverage, pharmaceuticals and health supplements, cosmetics, toiletries, personal care, textiles and apparel, finance, hospitality, and tourism which have strong linkages among producers and end users.

Accordingly, the prospects for expanding the domestic and international markets for halal business are significant. To succeed we must do two things.

We must first create a higher awareness of adopting Halal as the foundation of healthy lifestyles not just in Malaysia but also all over the world. The second is to leverage the 4th Industrial Master Plan (4IMP) — 2021-2030 — and National Fourth Industrial Revolution (4IR) policy.

The acceleration of technological change, especially in digital technology, has made our personal and work life increasingly connected.

Hence, digital or smart media can help to strengthen awareness within and beyond the national borders of Halal as foundational to healthy lifestyles.

Before explaining the role of the 4IMP, let us examine the 3IMP (2006-2020). The 3IMP categorically underlined raising the competitiveness of Malaysia’s halal industry.

Several strategic thrusts are articulated, one of which is to manage regional competition capitalizing on our standards and well-developed manufacturing infrastructure.

In this regard, there are two specific measures. One is to encourage Malaysian Halal food and non-food companies which have acquired marketing capabilities, to expand their operations in identified markets.

Another is to support Malaysian companies in creating recognized and reputable Malaysian Halal brands in overseas markets through strategic partnerships, mergers, and acquisitions.

The Halal industry development is given prominence by way of a dedicated chapter in the 3IMP.

This indisputably affirms the significance of the halal industry in contributing to the nation’s economic growth on the one hand, and the distinctive advantage of Malaysia’s halal certifications on the other.

Leveraging 3IMP’s achievements, the 4IMP can give added emphasis on soliciting inbound foreign investments as an intrinsic part of intensifying the halal industry.

In this regard, the inherent advantage of our gold standard halal certificate and mature manufacturing infrastructure will continue to lend appeal.

This emphasis will also serve to align the 4IMP with the aspiration to internationalize Malaysia’s halal ecosystem expressed in Halal Development Corporation Berhad’s (HDC) Halal Industry Master Plan 2030.

Many multinational companies (MNCs), especially those in food and beverage manufacturing, recognize this advantage and have established facilities to manufacture halal products to meet our domestic demand and for their international markets.

The depth in other core areas like an educated workforce and fiscal incentives also strongly reinforces our advantage.

MNCs with reputable global and regional brands that are manufacturing halal products in Malaysia include Ajinomoto, Kellogg, Coca-Cola, Kewpie, Nestlé, Hershey’s, and Charoen Pokphand.

These MNCs leverage our country as their halal manufacturing hub. Their success attests to the call for giving added focus to the 4IMP to incentivize more foreign investments into Malaysia’s halal sector.

Halal products are not confined to food and beverage although they are sure of immediate importance; especially with growing consumer sophistication and activism, the shift in demand for halal products has widened with cosmetics and personal care products gaining increased prominence.

Fortune Business Insights estimates the global market size of halal cosmetics in 2020 is at US$21.2 billion. This sector will grow to US$77.3 billion by 2028. Our strength — halal certification, and hard and soft infrastructures — positions us well to claim a big slice of the pie.

There are three more aspects we must not ignore. Firstly, 4IMP needs to incentivize foreign investors in the halal industry not only to produce for our domestic market but also to export those products to the international market.

Secondly, our country must support MNCs in the halal industry to catalyze continuous development and growth in local small- and medium-sized enterprises (SMEs). Local SMEs can form an integral part of the MNCs’ supply chains.

The ensuing collaboration facilitates the transfer of world-class knowledge and technology creating a platform for SMEs to reach, develop and attain world-class standards.

Thirdly there is a large and growing addressable global halal market — estimated by HDC to be US$5 trillion in 2030 — indicative of the vast opportunities available.

The 4IMP can and should further strengthen the foundation to firmly make Malaysia the world’s halal industry hub.