Malaysia: Localising halal for Malaysian SMEs

“HDC was set up with the objective of accelerating the growth of Malaysia towards becoming a global halal hub across various industries with world-class standards." - Hasni Zarina Mohamed Khan

MALAYSIA SME® Newspaper Issue 157: May 16- May 29

While the halal industry is still in its infancy, the Halal Industry Development Corporation is spearheading the halal initiative for local SMES across the board

Malaysia, May 28: The halal industry is still a growing one in Malaysia and this applies to a cross-section of sectors and industries. Yet, one local organisation is determined to spearhead it to reach its full potential by building a strong foundation among the various local SMEs in Malaysia.

Halal Industry Development Corporation (HDC) deputy CEO Hasni Zarina Mohamed Khan shared with MALAYSIA SME®, “HDC was set up with the objective of accelerating the growth of Malaysia towards becoming a global halal hub across various industries with world-class standards.”

“So far since our inception back in 2006, HDC has made much headway in its mission with the successful integration of various halal standards in the respective sectors. However, we do realise that the way forward for HDC will be through further engagement and co-operation with SMEs.”

“This is almost a no-brainer as given that local SMEs make up the overwhelming majority of businesses in Malaysia, the only way forward thus would be to engage these SMEs. It is with this understanding in mind that HDC has come up with the three thrusts of our SME engagement and development plan.

In efforts to reach out to Malaysian SMEs, a huge proportion of whom are engaged in the trade of halal goods of some kind, Hasni and HDC are looking to go big. She said, “The first thrust in this plan is the industry development thrust which entails a series of programmes specifically designed to meet and address the needs of local SMEs in the halal industry. Our flagship programme, the Halal Business Transformation (HBT) programme for example is aimed at increasing the capacities and skills of local SMEs in order to help them grow their business to the next level.

“This next step for an SME business differs depending on the nature and capacity of the SME as some may be keen to expand overseas, while others are still trying to get a foothold in the local market. So it is a highly-tailored and specific programme designed to accelerate the growth and development of each individual SME as a unique entity.”

Speaking on the need for certification, Hasni noted, “Another key driver when it comes to local SMEs is certification. Many local SMEs are unsure or worse still, unaware of the specific certifications necessary for their business, specifically in regards to halal. So this is where HDC comes into the picture in providing advisory services to local SMEs to help them navigate the processes and procedures in obtaining comprehensive halal certification.”

“However, it is important to note that HDC does not specifically dispense these licenses which are the domain of the Department of Islamic Development (JAKIM), even though HDC works very closely with JAKIM in the research and development involved in creating the various halal standards.”

“The second thrust forming the tripartite SME halal development programme involves the development of local talent in the various SMEs. Just as in any other venture, talent forms the backbone of halal development as without the right people to run it, the best halal systems and standards would amount to nothing more than words on paper.

In order to groom and develop the right talent, HDC has created many training centres dedicated to the training of halal executives. These executives will be responsible for ensuring that proper and stringent implementation of various halal standards are observed throughout the organisation.

She went on, “The programmes are comprehensive in addressing the many sectors that halal SMEs operate in including hospitality, logistics and management as well. Thus far, the programme has been picking up with good momentum with over 700 fully trained halal executives now serving in various SMEs all over Malaysia.”

“However, recognising that the needs of the industry are ever-changing and evolving, we are also developing various new comprehensive courses in areas such as finance and investment, agriculture, cosmetics, medicine and tourism which are targeted to be out by the end of this year onwards.”

The final thrust of the SME halal development programme spearheaded by HDC was in the area of marketing and branding. Speaking on this, Hasni said, “We at HDC recognise that many SMEs are facing difficulties in expanding their brand awareness even outside of the realm of halal, due to a variety of issues such as lack of finances, manpower as well as awareness of the various branding tools and platforms currently available.

“So, in order to overcome this issue, HDC has developed various programmes and initiatives designed to bridge this gap for SMEs, which include the likes of our Halal Outreach Programme (HOPE) which is designed to provide local SMEs with a platform to showcase their products while concurrently growing their business network through tailor-made business networking sessions.

“Other areas that HDC assists local SMEs in are breaching into the highly lucrative market of supplying to various large departmental stores such as Tesco, Mydin or Giant. These stores often have very stringent and comprehensive requirements that many SMEs may find daunting or overwhelming.”

It is at this point that HDC steps in and assists SMES to navigate the various requirements successfully in order to help them gain that vital competitive market advantage by supplying for the various huge local chain stores. Another local industry booming with potential for local SMEs is in halal logistics.  Although the numbers may be small at present, there is huge potential for local SMEs. Hasni said, “At the moment, the total number of SMEs involved in halal logistics is only a miniscule 31.

“However, the potential for local SMEs in this industry is huge given the nature of halal and the logistics industry. The nature of halal is such that it is crucial for not only the product to have followed the requirements of halal, but it is also necessary for the entire distribution and transportation process to be conducted in a manner fulfilling the requirements of halal.”

“So, this is where the potential for halal logistics comes into the picture as all halal products will have to be transported according to halal requirements providing a huge business potential for local SMEs in the halal logistics industry.”

That being said, there is a particular recurring problem for many local SMEs. The fact that the halal standards for logistics are not required across the board puts halal logistics operators at a comparative loss due to the additional costs of adhering to halal logistics standards.

Hasni noted however, “Nevertheless, HDC recognises this problem and is committed towards reducing the burden on local SMEs by providing full assistance in expediting these processes in an effort to reduce the overall costs for local SMEs. Indeed, these efforts form part of the larger umbrella of initiatives at HDC which are aimed towards increasing and improving the potential of local SMEs in the halal food and beverage-related industries.”

Expounding further on these initiatives, she said, “However, these initiatives are not confined to the food and beverage industries alone, but also encompass various other areas such as halal cosmetics, halal ingredients as well as halal livestock. Traditionally, these four sectors have been the focus of HDC, but with recent changes in the demands of the halal industries, a new sector has been added under this master plan.

“The recent rise in demand for services such as halal medicine, halal tourism and halal finance has driven HDC to recognise the importance of these sectors and subsequently introduce a new pillar under our master plan which is named halal services. The demand in these sectors is equally comprehensive ranging from devices, advisory services as well as peripheral services.”

“So, these are also up and coming sectors that local halal SMEs should further delve into given its huge business and growth potential in the years to come. However, all these sectors are highly diverse in their nature, thus a central mechanism which brings them together is highly necessary.”

With this need in mind, HDC has developed an all-encompassing system which provides SMEs and other users with up-to-date and real-time information on the halal industry. Hasni told MALAYSIA SME® that the system is named the Global Halal Support Centre (GHSC) which is a “one-stop centre for anything and everything halal.”

Said Hasni, “Such a centre is crucial for local SMEs as it provides them with information needed in order to complete the halal supply chain. As mentioned, halal standards are industry-wide and do cover all processes involved throughout the entire supply chain process. Furthermore, this responsibility falls on all suppliers and distributors to ensure that their upstream and downstream supplies are halal-compliant.”

“This is where it can be challenging for many smaller SMEs to ensure or even secure halal-compliant suppliers and distributors throughout their entire supply chain. GHSC can help with this by providing SMEs with all the necessary information to be able to make such decisions in a quicker and more efficient manner.”

“Thus, as a result of this, GHSC is spearheading the way for many local SMEs throughout various differing and unique industries to be able to become halal-compliant with greater ease and efficiency, which is also in line with HDC’s overall goal and vision of grooming Malaysia to become the leading global halal hub.”