Globalisation of the Halal Industry

Globalisation of the Halal Industry

The market for halal products is a fast-growing, interconnected industry of global proportions. There are over 1.6 billion Muslims worldwide, making for a sizable consumer base. Meanwhile, the halal market, comprising both food and non-food products, generates an estimated $2.1 trillion per year.

This industry deserves attention in a range of sectors (not just from meat producers) in countries all over the world, Muslim and non-Muslim alike. Illustrating this broad appeal, some of the global halal meat market’s top players, such as the United States, Australia and Brazil, are not Muslim-majority countries.

Halal is the term used to denote lifestyle choices that are permissible in Islam. It is most frequently used to describe meat products that do not contain pork and have been prepared according to specific guidelines. The halal industry is much broader than just food, however, as it comprises an entire range of commodities that contain animal byproducts including cosmetics and pharmaceuticals.

As a relatively young entity, the halal industry features a number of unresolved questions pertaining to standardisation of industry practices and certification of halal products. Consumers in some markets demand more stringent protocols, while others are less exacting. Some argue for a universal system for certification, while others favor a system that would differentiate according to consumer preferences. Meanwhile, the halal issue has been used in political discourse in some non-Muslim-majority countries to perpetuate xenophobia and cultural differences. But just as the newness of this market comes with unanswered questions, it also brings tremendous untapped opportunities.

One such opportunity lies in Asia, which is home to 65 percent of the world’s Muslims. Reflecting these demographics, Malaysia has emerged as a leader in the halal field, hosting the annual World Halal Forum since 2006. Most recently, it has undertaken an initiative to create the Tanjung Manis Halal Hub (TMHH) in the state of Sarawak.

A component of a larger infrastructure projected called the Sarawak Corridor of Renewable Energy (SCORE), TMHH will offer 77,000 hectares for halal agriculture, aquaculture, and processing facilities upon completion in 2020. The hub will be a home to halal businesses operating in the fields of food production, pharmaceuticals, cosmetics, and biotechnology. It will also aim to develop best practices and set industry standards in areas such as logistics and shipping.

TMHH hopes to bolster its role as a center for these key sectors of the halal industry by creating incentives for potential investors. The project includes provisions for significant infrastructure development, including water, electricity and transportation plans. Meanwhile, the Malaysian Investment Development Authority (MIDA) has pledged to offer tax incentives for facilities operating in TMHH. The state of Sarawak itself, located on the island of Borneo, is an attractive destination for investment. With an A-rating from Standard & Poors, it pulled in $1 billion in foreign direct investment in January and February 2013 after drawing $10.6 billion in FDI in 2012. The Tenth Malaysia Plan has committed $7.3 billion to Sarawak through 2015.

Some investors have already moved to take advantage of this opportunity. On June 12th, Inside Investor held the Inside Sarawak 2013 launch, an event designed to showcase investment opportunities. Among the attendees was a delegation from Qatar, including representatives from Masraf Al Rayan, a leader in Islamic finance. The Qataris expressed a special interest in pursuing joint ventures in the halal food sector. Qatar’s interest in Sawarak reflects an emerging trend: as TMHH and related projects progress, Malaysia will welcome expertise and funding from international entrepreneurs and investors.

Categories: Economics, International

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