New Zealand: $3 trillion industry challenges New Zealand firms

By Indian Newslink

The New Zealand Trade and Enterprise (NZTE) has identified Halal as an emerging global trend that holds great promise particularly for New Zealand’s food and beverage as well as cosmetics and beauty products.

NZTE recommends companies stay up to date with this rapidly changing global market said to be worth $2.95 trillion. Food products comprise 61% pharmaceutical products 26% and cosmetics 11%.

At the World Halal Forum held in Kuala Lumpur in 2011, there was a strong emphasis on the convergence of the Halal goods and services industry and the Islamic finance into an integrated Halal economy.

The potential Muslim market is huge and growing.

Islam is the second largest religion worldwide, with 1.57 billion followers or 23% of the global population. Many of the world’s Muslims live in rapidly growing emerging markets such as Indonesia and India.

Halal Certification

There is no international consensus on Halal standards and certification.

The International Halal Integrity Alliance (IHIA) was set up in 2007 to work with industry, governments, research institutions and other organisations to develop an internationally recognised standard.

Ten modules that make up the standard are under various stages of development including topics such as food service, logistics, animal welfare and animal slaughter and processing.

Once the standard is complete, the IHIA will seek endorsement by the Organisation of Islamic States.

Discussions are still underway to get this standard approved.

In the meantime, supervision of Halal Certification is often carried out by religious bodies in each market and represents that country’s individual expression of Islamic beliefs.

As such, getting agreement between countries on a global Halal standard has been very difficult.

In New Zealand, the New Zealand Ministry of Agriculture and Forestry (MAF) has oversight of companies exporting Halal meat products.

New legislation

In November last year, the Ministry released the ‘Animal Products (Overseas Market Access Requirements for Halal Assurance) Amendment Notice 2010.

MAF also certifies approved Halal organisations in New Zealand who offer assessment, approval and certification services, with the approval of the importing country.

New Zealand and Malaysia signed a new Halal meat arrangement in December 2010 negotiated between MAF (formerly the NZ Food Safety Authority) and Malaysia’s Department of Veterinary Services (DVS) and Malaysia’s Department of Islamic Development (JAKIM).

This provides a framework to reconcile Malaysia’s Halal laws with New Zealand’s animal welfare requirements, including that all Halal meat products in New Zealand are derived from animals stunned prior to slaughter.

A unified Halal standard across the Gulf Cooperation Council (GCC) comprising Bahrain, Kuwait, Oman, Qatar, Saudi Arabia and the United Arab Emirates may be eventually developed.

Halal finance

Another opportunity for New Zealand companies in the Middle East is the growth in Islamic finance.

The Islamic finance market currently accounts for only 1% of total global financial market, but is growing at 15% per year.

Islamic funding is also a major source of investment across the Muslim world.

Islamic banks from the Middle East are expanding their operations to Malaysia and Singapore. HSBC also offers Sharia compliant products, as does Lloyds TSB in Britain. France, Luxembourg and the UK have passed laws to ensure tax neutrality for Islamic finance.

The recent global financial crisis has increased interest in Islamic finance though there have also been calls to ‘demystify it’ and to emphasis its links with other forms of alternative finance.

The Challenges

NZTE believes there are challenges for New Zealand companies wanting to participate in Halal markets including

1.      Uncertainty whether the concept can reach beyond religious and racial  boundaries and become a mainstream trend

2.      The lack of a globally-recognised Halal standard, resulting in higher operational costs and tedious certification processes

3.      The market potential still limited to Muslims because Halal certification is not a meaningful standard for non-Muslims

4.      The purchasing power of Muslims in markets like Europe is still relatively low combined with their preference to buy low-cost bulk foods

5.    Marketing of Halal products can be challenging and costly due to various schools of thoughts within Islam. Non-Muslim sensitivities must be considered if the product is meant for a wider market.

Source: New Zealand Trade & Enterprise