Setting an International Standard
As a predominantly Muslim nation with a strong track record in promoting Islamic finance and halal standards, Malaysia is uniquely positioned to capitalise on this burgeoning market. The country’s comprehensive approach includes regulatory frameworks, industry development, international collaborations, and leveraging its Islamic heritage to establish a leadership role in the global halal economy.
One of the key strategies is the establishment of a robust regulatory framework and standardisation process for halal products. The Department of Islamic Development Malaysia (JAKIM) plays a crucial role in this regard. JAKIM’s halal certification is internationally recognised and is considered one of the most stringent and reliable halal certification processes globally. This certification assures consumers that products and services comply with Islamic law, thus fostering trust and credibility in Malaysian halal products.
Moreover, Malaysia has developed the Malaysia Halal Certification (MHC), which sets high standards for halal certification and ensures consistency and quality.
The MHC is not limited to food products but extends to pharmaceuticals, cosmetics, logistics, and even tourism. This comprehensive certification system is a cornerstone of Malaysia’s strategy to dominate the global halal market, as it guarantees that all certified products meet strict halal requirements, thereby enhancing their appeal to Muslim consumers worldwide. The Malaysian government has also been very proactive in promoting the halal industry through various development programs and incentives. The Halal Industry Master Plan (HIMP) outlines the strategic direction for the industry’s growth, focusing on innovation, technology adoption, and capacity building. The plan aims to position Malaysia as the global hub for halal products and services by leveraging its existing infrastructure and expertise.
Widening Market Access
It is quite calming in trade fairs and halal expos, and even organising one like the Malaysia International Halal Showcase (MIHAS), these initiatives provide a platform for local businesses to showcase their products to an international audience.
Furthermore, Malaysia has established strategic partnerships with other countries to harmonise halal standards and certification processes. For instance, collaboration with countries in the Gulf Cooperation Council (GCC) and the Organization of Islamic Cooperation (OIC) ensures that Malaysian halal certifications are recognised and accepted globally. Such collaborations not only facilitate market access for Malaysian halal products but also strengthen the country’s position as a leader in setting global halal standards.
Embracing Challenges
Despite its comprehensive strategy, Malaysia faces several challenges in its quest to become a global halal leader. Competition from other countries, particularly those in the Middle East and Southeast Asia, is intense. Countries like Indonesia, Thailand, and the United Arab Emirates are also investing heavily in their halal sectors and are emerging as strong competitors.
To address these challenges, Malaysia must continue to innovate and adapt to changing market dynamics. This includes enhancing its research and development capabilities, embracing new technologies, and maintaining the high standards of its halal certification process. Additionally, increasing consumer awareness and education about halal products can further drive demand and acceptance in non-Muslim markets.
What the Future Holds
The future outlook for Malaysia’s halal market is promising. With a growing global Muslim population and increasing demand for halal products, Malaysia is well-positioned to capitalise on these trends. The country’s strategic approach, encompassing regulatory excellence, industry development, international collaboration, and cultural influence, provides a solid foundation for sustained growth.
Malaysia’s strategy to become a global leader in the halal market is multifaceted and robust. By leveraging its strong regulatory framework, fostering industry innovation, engaging in international collaborations, and capitalising on its Islamic heritage, Malaysia has laid the groundwork for success.
While challenges remain, the country’s proactive and comprehensive approach positions it as a formidable player in the global halal economy. As the demand for halal products continues to grow, Malaysia’s leadership in this sector is poised to expand, bringing significant economic benefits and enhancing its global standing.
Investments
- Total investment of the industry increased from RM8.9 billion in 2015 to RM16.1 billion in 2020, driven by Foreign Direct Investments (FDI). In 2021, total investment rose slightly by 1.3% to RM16.3 billion, fuelled by Domestic Direct Investments (DDI). This growth trend continued into 2022, with total investment reaching RM16.6 billion, marking a 1.7% increase from the previous year
- Overall, the industry’s growth can be attributed to notable increase in investments in the Halal F&B segment, the rise of the Islamic digital economy, the impact of MIHAS and other events and the escalating demand for Shariah-compliant investment and finance products
Exports
- In 2020, the Halal industry exported RM30.5 billion worth of products, increased by 19.0% to RM36.3 billion in 2021 and in the following year, total exports surged significantly by 63.9% to RM59.5 billion
- F&B exports were the primary contributor, accounting for 46.8% of total Halal exports while other major contributors to total Halal exports included the Halal ingredients and cosmetics and personal care sectors
- The growth in industry exports can be attributed to increased exports of Halal F&B, cosmetics, personal care, and pharmaceuticals.
Employment
- In 2020, employment in the Halal industry amounted to 18,841 individuals and experienced a 2.1% growth in employment in 2021, reaching 19,238 persons.
- By 2022, industry employment continued to rise, reaching 19,580 individuals, marking a 1.8% increase.
- The increase in employment can be attributed to the growing number of companies obtaining Halal certification, which in turn created job opportunities within the manufacturing and services sectors, as well as supporting roles like finance and human resources.
Source: New Industrial Master Plan (NIMP) 2030 – Halal Industry
An Opinion by
Zaidel Baharuddin is a founder and partner at Cent GPS – Centre for Governance and Political Studies, a think tank and research outfit based in Kuala Lumpur. He specialises in IFN market research, policy research and advocacy.
