The Power of Brunei Halal Food Policy

| 13/01/2009 | Reply

THE (UNREALIZED) POWER OF BRUNEI HALAL FOOD POLICY

Brunei Darussalam is one of the few Asian countries which already have
policy to take advantage of the growing global Halal food market, known
as the Brunei Halal Brand policy. Launched under the auspicy of
Department of Agriculture, Ministry of Industry and Primary Resources
(MIPR), this policy aimed to put Brunei in the global arena of Halal
industry.

Brunei
is largely known for its wealth due to its high GDP backed by revenue
from oil and gas. In terms of food consumption, Brunei is amongst the
highest in Asia. For chicken meat for example, the annual per-capita
consumption exceed 50 kg per year, which factually amongst the highest
in the world. As the country to certain extent largely dependent on its
oil and gas export, the current volatility and drop in global oil and
gas demand could affect the export revenue and GDP. Hence, investments
in the halal food industry could be beneficial towards the country’s
vision of diversifying the GDP away from hydrocarbon resources as
envisaged in the Brunei’s Five-Year Development Plan which always been
reiterated by His Majesty Sultan and Yang Dipertuan Brunei Darussalam,
Sultan Haji Hassanal Bolkiah.

In this respect, Brunei could take
advantage of the superiority of the production factor that the country
has, namely capital resources to take advantage from the structure and
situation of the global halal food industry. The current financial
meltdown has affected many multinational food companies in terms of
capitalization value as most stock market’s indexes in the world has
dropped by almost half, which means that, there could be a ‘fire sale’
and a good investment analysis could reveal a bargain price for a good
and well known multinational food companies.

With its capital
resources, Brunei can acquire multinational food companies and this
will have a dramatic effect to the global halal industry as well as the
local economy, such as:

  • The country’s halal policy could
    progress and develop quickly. Experiences in the other countries have
    shown that after more than a decade after launching Halal policy, not
    much can be achieved as the complexity of the issue being raised is
    never being understood and expected in the early stage;
  • After
    the acquisition process is completed, Brunei should move the target
    acquisition company’s headquarter to Bandar Seri Begawan, capital of
    Negara Brunei Darussalam. This will make Brunei able to control the
    overall activities of the company, or to become the ‘Chain Captain’
    while all the factories or production facilities can be spread all over
    the world;
  • When the Headquarter located in the country,
    hundreds or even thousands of (new) employment position can be filled
    by the local citizen, although it may need to be on a gradual step,
    thus it will resolve the unemployment issue in the country;
  • The
    nature of having a headquarter of big multinational food company and
    being a ‘Chain Captain’ is that the employment creation is on the
    skilled workforce, which exactly matched with the current structure of
    domestic labor market in Brunei Darussalam;
  • After the shifting
    of the acquired company’s headquarter, Brunei Darussalam shall then
    announce that the products of the acquired company gradually will be
    completely Halal in the whole production chain, and Brunei Halal Brand/
    logo will be used in all the company products. As this will not have
    any effect to packaging, label, taste, etc; only a new logo will be
    added, the negative effect is minimal, while the positive effect is
    much larger;
  • By doing this, Brunei has doing a favorable step
    to all consumers of Halal foods & Muslims in the world as the
    availability of Halal foods will be increased in almost every parts of
    the world, by the fact that the acquired company is a multinational.
    This will enhance Brunei’s prestige in the Muslim world and communities
    all over the world;
  • After the announcement, Brunei practically
    will have the only Halal multinational food company in the world. Thus,
    Brunei, in a single drastic move which taken earlier by acquiring a
    multinational food company, will become the center of Halal industry in
    the world. This will also raise the profile of the country in the world;
  • The
    local companies and SME’s in Brunei will be greatly benefits from this
    action, as they can supply to this new Halal multinational food
    company. It is widely known that most of multinational food companies
    have linkages with hundreds or thousands of small and medium scale food
    companies all over the world, to supply parts of the products such as
    raw materials, packaging, ingredients, etc;
  • The spill over
    effect in terms of technology transfer, knowledge and information
    dissemination and the effect of relocation of the company’s headquarter
    is enormous. Economic sectors such as construction, property,
    education, logistics and many others will be ignited to grow and thus,
    the positive effect on diversification policy and GDP growth will be
    high and also sustainable.
  • In doing the above action, Brunei
    can also galvanize support from the other interested and ‘friendly’
    Muslim and Sovereign Wealth Funds from the Middle-East. What is
    important is, Brunei take the lead in the acquisition process in a
    collaborative manner.

Investment in halal foods is also
beneficial as even during times of economic turbulence, people will
still spend on food. When the Asian financial crisis happenned in
1997/1998, the decline in GDP growth is much less in agriculture and
food sector compared to the other sectors such as oil and gas;
manufacturing; construction and others. The added advantage of halal
food is that this is food products which can be consumed by everyone
and not only those of Muslims. The ‘correct’ Halal food industry and
products are for everybody in the world, as it has the elements of
quality, safety, product integrity, respect to animal welfare as well
as fair trade.

We all know that many ASEAN countries already have
announced their Halal policy, some did it formally while other
informally or hidden behind the other food policies. The logic of ASEAN
cooperation inhibits that this should entails collaboration between
these countries, but what happenned in reality is exactly the opposite.
ASEAN Cooperation in Halal Foods, where a single Halal food logo has
been envisaged a decade ago has become a history cause no one willing
to share their perceived prestige and advantage of their own strength
in Halal logo. So, while declaring collaboration in some technical
elements such as training and workshop, the bigger objective will never
being met. Hence, it is logical step for each country to try to do
their best according to the superiority of their own production
factors.

For Brunei Darussalam, the superiority in capital
resources, in doing it alone or in collaboration with other ASEAN or
Gulf countries, creates a timely opportunity to act in the way modern
economy and globalization entails, acquisition and take over. This has
been done hundreds times in many other economic sectors by many other
companies in many other countries. Therefore, to do it in the context
of Halal food industry, is nothing to be surprised. And when we look at
the current situation, the time is right. So, the suggestion is; just
do it…

Category: Asia

Leave a Reply

Pin It on Pinterest

Share This