SAMENTA Urges Kelantan Govt to Reassess Halal Certification for F&B

In a recent call to action, the Small and Medium Enterprises Association Malaysia (SAMENTA) has urged the Kelantan government to reconsider its plans to enforce mandatory halal certification for F&B operators across the state. This move, set to begin in Kota Bharu before expanding statewide, has sparked significant concern among food and beverage businesses, particularly small and medium enterprises (SMEs).

The Push for Mandatory Halal Certification

The Kelantan government recently announced its initiative to require all F&B operators to obtain halal certification, emphasizing the importance of maintaining religious compliance in food preparation and sales. While the benefits of halal certification—such as building consumer trust and expanding market reach—are undeniable, the policy has raised questions about its impact on smaller businesses struggling to manage costs in a challenging economic climate.

According to SAMENTA’s national president, Datuk William Ng, the financial burden associated with obtaining halal certification is substantial. Small traders and SMEs, which form the backbone of Malaysia’s economy, face steep costs, including:

• Premises modifications: Ensuring compliance with halal standards can cost up to RM200,000 per location.

• Halal coordinator expenses: Businesses may need to allocate RM50,000 annually for a halal coordinator to oversee compliance.

• Employee training: Training new and existing staff to meet certification requirements adds further expenses.

For small-scale operators, these costs represent a significant barrier to entry. Many are already navigating a high-cost, low-margin business environment, leaving little room for additional expenditures.

SAMENTA’s Alternative Proposal

Instead of mandating halal certification, SAMENTA advocates for a collaborative approach. The association has proposed:

1. Promotional partnerships: Working with F&B operators to encourage voluntary adoption of halal certification.

2. Streamlining the process: Simplifying application procedures to make them more accessible and cost-effective.

3. Reducing fees: Addressing the high costs associated with certification to make it feasible for small businesses.

This approach, SAMENTA argues, would achieve the dual goals of promoting halal compliance while ensuring economic sustainability for small businesses.

Halal certification is more than a regulatory measure; it serves as a guarantee of quality and compliance with Islamic dietary laws. For Malaysia, a global leader in the halal economy, maintaining high certification standards is essential to its reputation and competitiveness in the international market.

A 2024 study by the Halal Industry Development Corporation (HDC) highlighted that the global halal market is expected to exceed $5 trillion by 2030, driven by demand from Muslim consumers and increasing awareness among non-Muslims about halal-certified products. In Malaysia, the halal industry contributes significantly to GDP, with F&B businesses forming a major segment.

Impact on SMEs and Small Traders

Despite its advantages, mandatory halal certification poses unique challenges for small traders. For many, the cost of compliance can outweigh the potential benefits, particularly in rural areas where profit margins are slimmer.

Small F&B operators, whether Muslim or non-Muslim, face logistical hurdles, such as sourcing halal ingredients, modifying premises, and adhering to strict operational standards. The financial strain is exacerbated by the additional manpower required to oversee certification processes.

While large chain restaurants can absorb the costs of halal certification and enjoy the associated benefits, small and medium enterprises often struggle to compete. Larger operators typically have more resources to invest in compliance, reaping the rewards of consumer trust and broader market access. In contrast, smaller players may find themselves priced out of the market.

Halal Certification Challenges

• Administrative complexity: The certification process involves detailed documentation, inspections, and renewals.

• Cost of compliance: From infrastructure upgrades to annual fees, the financial burden is substantial.

• Cultural diversity: Non-Muslim operators may require additional training to understand halal requirements.

• Limited access to resources: SMEs in rural areas often lack the infrastructure needed to meet certification standards.

Success Stories: Learning from Other States

Several states in Malaysia have adopted innovative approaches to halal certification. These initiatives serve as examples for Kelantan to consider:

1. Selangor: Offers subsidies and grants to help SMEs cover certification costs.

2. Penang: Conducts free workshops to educate F&B operators on halal standards and application procedures.

3. Kuala Lumpur: Uses digital platforms to streamline the application process, reducing time and costs for businesses.

These programs demonstrate that supportive policies can promote the widespread adoption of halal practices without imposing undue burdens on businesses.

Global Trends in Halal Certification

Around the world, the demand for halal-certified products continues to grow. Countries like Thailand, Indonesia, and the UAE have established comprehensive certification frameworks to cater to this burgeoning market. Thailand, for instance, has become a major exporter of halal products, with exports exceeding $12 billion in 2023.

In Indonesia, the world’s largest Muslim-majority country, halal certification is mandatory for all consumable products. However, the government has implemented measures to support small businesses, including financial assistance and simplified procedures.

For Malaysian businesses, halal certification is a gateway to international markets. By complying with global standards, operators can export their products to countries with significant Muslim populations, such as the Middle East, South Asia, and Africa. Halal certification also appeals to health-conscious consumers worldwide, further broadening market potential.

Recommendations for Kelantan’s Policy

To address the concerns raised by SAMENTA and support the growth of F&B businesses, the Kelantan government could implement the following measures:

• Subsidies for small traders: Providing financial assistance to cover the costs of certification.

• Simplified procedures: Streamlining the application process to reduce administrative burdens.

• Educational campaigns: Raising awareness about the benefits of halal certification among business owners and consumers.

• Public-private partnerships: Collaborating with industry associations to develop practical solutions.

• Phased implementation: Allowing businesses more time to adapt to new requirements.

A recent survey by JAKIM revealed that over 85% of Muslim consumers in Malaysia prioritize dining at halal-certified establishments. This preference underscores the importance of certification in building trust and ensuring compliance with Islamic principles. Non-Muslim consumers, too, often view halal certification as a mark of quality and safety, further enhancing its appeal.

The Role of Technology in Halal Certification

The integration of technology in halal certification processes is proving to be a game-changer. Digital platforms and mobile apps are now simplifying application procedures, enabling businesses to submit documents and track their certification status online. Blockchain technology is also gaining traction in the halal industry, offering a transparent and tamper-proof system to verify compliance across the supply chain.

For example, blockchain-based solutions can trace the journey of halal-certified ingredients from farm to table, ensuring that every step adheres to Islamic dietary laws. Such innovations not only enhance consumer trust but also reduce administrative overheads for businesses seeking certification.

Training programs tailored for SMEs can play a pivotal role in increasing halal certification rates. Workshops on food safety, hygiene, and halal compliance can equip small business owners with the knowledge and skills needed to navigate the certification process.

Moreover, partnerships with educational institutions can create specialized courses on halal certification, fostering a new generation of professionals adept at managing compliance requirements. By investing in education and training, the government can build a robust ecosystem that supports both businesses and consumers.

The Future of Halal Certification in Malaysia

As Malaysia continues to position itself as a global halal hub, striking a balance between regulatory enforcement and economic viability will be crucial. Policies that support SMEs while promoting halal compliance can drive growth in the F&B sector, benefiting both businesses and consumers.

By addressing the challenges of mandatory halal certification and embracing a collaborative approach, Kelantan has the opportunity to set a benchmark for other states. Ensuring inclusivity and sustainability will be key to maintaining Malaysia’s leadership in the halal economy.

The debate over mandatory halal certification for F&B operators in Kelantan highlights the complexities of balancing religious values with economic realities. A supportive and flexible approach can promote halal practices while safeguarding the livelihoods of small traders and SMEs. As Malaysia moves forward in the global halal industry, fostering an ecosystem that prioritizes collaboration and innovation will be essential for long-term success.