Malaysia: Concern over Labuan’s RM86m Halal Hub

2013_Labuan_18cLABUAN: The Ministry of Federal Territories is concerned about the RM86 million Halal Distributing Hub because it is being increasingly viewed as a “mega economic investment flop” of the island since it had failed to make a single export to domestic or local market.

The ministry’s concern was well reflected when the Deputy Minister Datuk Dr. J Loga Bala Mohan made a quick trip here last week to visit the facility and get a first-hand updated report on its operations.

Chairman of MIC here Ramasamy Rangasamy who accompanied the Minister at the briefing when contacted confirmed the Deputy Minister’s mission was to find out the problems faced by the hub was hindering its progress and the solutions to it”.

Ramasamy said he was told that a three-month deadline had been set for the hub to move ahead and possibly new investors would be brought in to breathe life into project. He said the Ministry felt that there was great potential to develop the hub and make Labuan a centre for the export of processed halal-compliant meat such as beef, mutton, fresh fruits and vegetables to Japan, Taiwan and Korea.

Labuan could secure the supplies of such products from Sabah and Sarawak. The halal-processed products could also be supplied to offshore platforms and supply boats as there was a growing demand for such items these days.

Recently MASKargo Sdn. Bhd. delivered its first halal consignment to UK. The one-tonne fresh vegetables was flown from Kuala Lumpur to London. It was generally felt that such shipments could also be made from here to the East.

Concern over the Halal Hub was recently exposed by the FT Minister Datuk Sri Tengku Adnan Mansor during his visit to the island. It is believed that the Deputy Minister’s visit was a follow-up action.

The decision to build the Halal Hub here was due to the huge global halal market and good fishing grounds around the island. According to statistics from the Halal Industry Development Corporation (HDC) the value of the global halal market was US$2 trillion. While Malaysia itself imported RM28 billion worth of halal food products and exported RM17.9 billion in 2008.

The Labuan Halal Hub is managed by Labuan Halal Hub Sdn Bhd which is under the Labuan Corporation. The facility is spread on a 25-hectare site at Kiamsam and has modern processing facilities, storages and offices.

The ground-breaking ceremony for the hub was made by former Prime Minister Tun Abdullah Ahmad Badawi in 2009. The first phase of the project was completed in 2012 after the Audior-General’s 2011 report criticised it by stating it had caused the loss of millions of ringgit by remaining idle and having no competent management team.

Despite the new attention given by the Ministry on the status of the hub many fear that whatever action taken it would be challenging for the Labuan Halal hub to achieve the desired level of success. This is due to the high cost of logistic support in Labuan compared to hubs in other zones.

For instance the facility in Tj Manis in Sarawak is sprawled on 77 hectares which was almost three times the size of Labuan facility. The Tj Manis hub had also lured high-spending investors from Taiwan namely – Sea Party Group. It would require much efforts for the Labuan hub to catch up.