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Halal Industry

Malaysia sets out halal trade agenda for the new year


KUALA LUMPUR - Boosting halal business overseas will once again be a priority this year for Malaysia, which is being positioned by officials as the world’s convenience store for Islamic commerce.

Aside from its longstanding expertise in halal and its gold-standard certification, the country will put its prowess as a centre for sourcing halal ingredients and materials into focus.

This will be done with the support of the Malaysia External Trade Development Corporation, better known as MATRADE, whose deputy chief executive told Salaam Gateway: “Malaysia will be the place to do the sourcing. It should be the meeting point for all halal players.”

To reinforce the narrative, Mohd Mustafa Abdul Aziz said delegations will support Malaysian businesses at many of the main global food and beverage shows, including Gulfood in Dubai and Paris’s Sial.

MIHAS, the annual Malaysian halal trade showcase MATRADE organises, expects to see double the number of foreign buyers when it returns on April 1. This is in a bid to “position Malaysia as a halal hub for importers and distributors,” Mohd Mustafa added.

But to achieve this, bigger numbers of halal companies need to start exporting, armed with Malaysian halal certification.

According to the government’s international trade agency, there are 8,120 companies involved in the halal industry, of which 70.4% are in food and beverage and 23% are in services such as logistics and financial services.

Of the halal-certified companies, only around a quarter, or 1,847, export their goods and services overseas, though Mohd Mustafa said the numbers had been improving.

“When you look at the numbers, it keeps on growing and we should capitalise on this opportunity. It is an industry that everybody is looking at,” he added.

Countries in the East Asia, Central Asia and beyond have been rapidly raising their interest in the segment.

Mohd Mustafa’s boss, Wan Latiff Wan Musa, last June hailed Japan, Taiwan, Chile, Kazakhstan and Uzbekistan for their interest in calling on Malaysia's experience in certification and the halal ecosystem.

“A lot of countries would like to learn from Malaysia and we need to leverage and capitalise on the strength we have by supplying our expertise over there, and helping them understand the global supply chain,” said Mohd Mustafa.

Japan and Taiwan signed an agreement with MATRADE in 2018 to develop the halal industry in their countries.

Now Taiwan is working towards a collaboration with various Malaysian agencies, including MATRADE and the Halal Industry Development Corporation (HDC), to boost halal in the country, Mohd Mustafa said.

Japan will launch a halal tourism campaign in conjunction with the Tokyo Olympics in August.

MATRADE predicts this year will see 5% growth in halal exports from Malaysia this year. This is a similar target to the one it gave for 2019, based on HDC’s estimation of $45 billion of exports last year, though an actual figure has yet to be released.

The deputy CEO has bigger ambitions, however. He wants Malaysia to become one of Asia’s tiger economies, and take its inspiration from elsewhere.

“We need to address our challenges by looking at the biggest trading nations in the world,” said Mohd Mustafa.

"We need to look at what Singapore is doing, and use the UAE, Hong Kong and even Qatar as models. We really need to be really aggressive in terms of putting us on the right track.”

STATE-LEVEL STRATEGY

On a state level, Invest Selangor is contemplating a year of changes.

The trade promotion agency of Malaysia’s most economically powerful state has just installed a new director to oversee halal segments, among others, and is nearing the completion of an action plan that will be enacted up to midway through this year.

Details of the plan are guarded prior to its public release, though it will cover all components of halal, from food and beverage to finance, pharmaceuticals and cosmetics.

It will set out how the agency “can implement better strategies so [Selangor] can become a hub for some of them,” Sven Schneider, director of trade and investment and strategic planning at Invest Selangor, told Salaam Gateway.

“We will try simply to specialise and certainly strengthen the local ecosystem further. It’s very diverse here, there is no real specialisation. The plan will take at least five years—maybe even longer—to execute a number of projects to strengthen each of the components.”

Invest Selangor is well-known locally for its active programme of promoting businesses from the state at overseas trade events. This will be central to this year’s strategy, though consideration was also given to promoting more business-to-consumer trade.

The idea was shelved after it became apparent how easy it is for companies to sell products through platforms like Lazada and Shoppee. Business-to-business will be the leading focus at a time when competition for halal products from overseas is growing.

“We have had a good two years, mainly due to the trade war [between the U.S. and China]. But now, when it comes to halal products, there’s quite a bit of competition from a bunch of other countries like Thailand, where you wouldn’t expect it to come from. Everybody wants to become a halal hub,” said Schneider.

There are no official figures for Thailand’s halal exports but as an indication, the country exported around $5.8 billion worth of food in 2018 to Muslim-majority countries.

“We are looking at all of this and trying to understand what our competitive advantage is. This is something we need to spend a bit of time on, instead of just pushing ahead with something that is not well-founded in research and a clear strategy,” said Schneider.

Like MATRADE, Invest Selangor has great hopes for business with Japan, ahead of and after the summer Olympics. Some of the companies it supports have been talking to Japanese counterparts to provide support for catering and other aspects of Tokyo 2020.

“We are banking on this. We have been a lot to Japan and we have been talking to a lot of Japanese companies who are involved in the Olympics. And halal is a big topic with them.”

(Reporting by Richard Whitehead; Editing by Emmy Abdul Alim emmy.abdulalim@salaamgateway.com)

*This story was updated on Jan 20 with updated numbers from MATRADE submitted on Jan 18. The number of companies involved in the halal industry was updated from 7,438 to 8,120 and the number of companies that export was updated as 1,847, from "a quarter" as previously stated. 

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Richard Whitehead