Malaysia Veterinary Forum (Archive)

Dr. TanDY

Seizing opportunities in lucrative HALAL business

Source: Business Times

May 6 2006

THE global halal consumer market is worth trillions of ringgit and ripe for the picking, but Malaysian manufacturers and suppliers must act fast to reap the potential returns.

The reality, however, is that despite the Government's seriousness in wanting Malaysia to become a hub for halal products and feeding the international supply chain, in actual operations much strategising is still needed.

Existing players in the halal food sector, for instance, said there are not enough competitive manufacturers in Malaysia to meet the growing global demand.

For a Muslim country like Malaysia, it is also a surprise to hear from the Ministry of International Trade and Industry that government funds for food manufacturing and halal produce are not aggressively taken up by the Bumiputeras, most of whom are Muslims.

Malaysia exported some RM6.5 billion worth of processed food last year, just 1.2 per cent of its total manu- factured exports.

The size of the global halal food and non-food (such as financial services, pharmaceuticals and cosmetics) industries is estimated at RM7.98 trillion, of which the food sector alone is worth RM570 billion.

In South-East Asia, the halal products industry is driven by bustling production, high consumption, lots of competition and cheap labour.

The European market, meanwhile, is pulling for halal products to provide for two billion Muslims worldwide within the next decade. There are about 30 million Muslims in Europe.

The Tesco chain, for example, wants to open halal sectors in selected supermarkets in France and is asking for some 350 halal products ranging from fresh and frozen food to drinks and snacks.

"International hypermarkets like Carrefour and Tesco are interested to use Malaysia as the halal hub for their global operation. In fact, these hypermarkets want 40 per cent of the products sold to be under their own label because that is where the profit margin comes from," said Abdalhamid Evans, the director of communication company and organiser of the World Halal Forum, KasehDia Sdn Bhd.

Unfortunately, in Malaysia these hypermarkets can only fill up to 20 per cent halal products under their label as there is a lack of compatible local food manufacturers to supply them.

"These multinational retailers are interested to export halal products from Malaysia through their chain worldwide. If this materialises, it will make Malaysia the centre for halal excellence," he said.

KasehDia managing director Jumaatun Azmi said the potential for small- and medium-scale enterprises (SMEs) to tap the opportunities from these multinationals is enormous.

"These hypermarkets give tremendous opportunities to SMEs through contract manufacturing. They also provide the training and standards," she said.

"This way, it would definitely fast- track their entry into the global halal market," she told Business Times in Kuala Lumpur.

Another huge potential lies in the certification of halal food, an area which experts said Malaysia could well explore.

In the production of meat, for example, instead of competing with the established producing nations such as Argentina, Brazil and New Zealand, Malaysia could provide instead facilities for halal certification and become a hub for food processing and logistics.

"We don't have the land to rear cattle and sheep. What we should do is to get the raw materials here, do the branding and processing and then export them," Jumaatun said.

Yet another promising area is the halal products supply chain where the evolving industry is creating entirely new sectors, such as logistics, warehousing, packaging, shipping and outsourcing.

Major ports like Rotterdam in the Netherlands opened a halal products gateway last February. Locally, Westports Malaysia has undertaken the lead to be a halal service provider.

Shipping giant MISC Bhd is investing some RM70 million to develop a 90,000 sq metres multi-modular storage and processing facility to act as a halal logistics hub. The hub, which will offer both dry and chilled areas, is expected to be ready late this year.

The Selangor State Government is investing up to RM4 billion over the next eight years to develop 121.4ha into a halal hub at Pulau Indah in Klang.

"The halal supply chain is becoming a reality. People not only want to know if the food is halal in the farm, abattoir or supermarket, but also if it is halal on the truck, plane and in the cold storage facility," Jumaatun said.

"There is an explosion of ideas on halal products. Each respective sector is now emerging as a profit centre in its own right within the lucrative halal products industry," she added.

The huge potential of halal products coincides with rising awareness among the Muslims. As they become more educated and knowledgeable, Muslim consumers will start to question the security of the halal supply chain upon realising that almost 90 per cent of the halal market is controlled by non-Muslims.

"Halal is not only about the way an animal is being slaughtered. It is more than that. It is about handling, packaging, storing and the entire chain," Jumaatun said.

Dr. TanDY · Posted: Tue May 09, 2006 12:02 am Post subject:

Another Follow-up

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May 08, 2006 22:15 PM

M'sia Ready To Lead In Further Developing Global Halal Industry

KUALA LUMPUR, May 8 (Bernama) -- Malaysia is ready to take the lead in further developing the global halal industry, says Prime Minister Datuk Seri Abdullah Ahmad Badawi.

As a nation fast developing in both economic and social spheres, and with its diversity of communities, cultures and religions, Malaysia has seen the increasingly important role that "halal" plays in its society, Abdullah said.

"We can assist in extending this role beyond the traditional markets to the wider world," he said at the World Halal Forum gala dinner here Monday night.

Abdullah said Malaysia could play a leading role in forging the exchange of ideas and to encourage greater collaboration between the various participants in the halal industry.

He said it was no secret that Malaysia has for some years now expressed its aspiration to become a global hub for the production and distribution of halal goods and services.

"To start with, Malaysia has continued to develop its capabilities and expertise to become a market leader in the field of Islamic financial services," Abdullah said.

"Based on this experience, we seek to extend our role further by working towards developing global standards and best practices within the larger halal industry marketplace," he said.

As the halal market continues to grow in strength and diversity, the Prime Minister said the need for globally accepted best practices and standards for auditing and certification of "halal" has become increasingly apparent.

He said the need to ensure that both investor and consumer interests are protected requires all stakeholders to work together to create standards and procedures that would allow the industry to continue to grow strongly.

"This is a marketplace that has enormous potential, with plenty of room for participants from all sectors and from all countries," he added.

Abdullah said the next stage of growth of the halal industry would require a new, higher level of effort and cooperation between the major stakeholders to achieve the desired results.

This, according to him, would also require a focal point for thinking and discussion, and for collaboration and action.

"In this case, we strongly believe that Malaysia can play a leading role in forging such an exchange of ideas and to encourage greater collaboration between the various participants in the halal industry," he said.

Abdullah said halal represents all that which is lawful and halal products, as well as Islamic financial services, are already being used not just by Muslims, but also by people of all religions and cultures.

In this regard, he said the concept of halal must be broadened to make it that much more appealing and applicable in the global marketplace.

The Prime Minister said halal stands for that which is good, healthy, safe and of high quality in all aspects of life.

He said halal also represents just and fair business transactions, as well as caring for animals and the environment.

Abdullah said in Malaysia, the halal industry comprised of all segments of society, with the local Chinese community playing a strong part in the production of halal food.

"This diversity is reflected in the wider global picture, with many non-Muslim nations playing leading roles in the production of halal food, particularly in the rearing of cattle, sheep and poultry," he said.

"Indeed, we welcome such participation from all quarters in our desire to see the halal industry -- locally, regionally and globally -- go from strength to strength," he added.

Touching on the World Halal Forum, the Prime Minister said he was pleased to note that a number of agreements were reached and many tie-ups confirmed.

This included a memorandum of agreement signed between Malaysia's Prima Agri-Products Sdn Bhd and Australia's Comgroup Supplies Private Ltd.

This agreement will see the formation of a new entity, Comgroup-Prima Sendirian Bhd, that will supply beef patties to the leading regional fast-food chains.

Commending such an international collaboration, Abdullah said he hoped that it would be the forerunner of many more ventures to come.