Opinion: A slice of the Halal cake

By Michael Kang, President, SME Association of Malaysia

Halal certification is something that local businesses should strive for because Malaysia’s halal stamp is universally recognised and confers a definite advantage in the export markets.

The first halal standards released in 2000 was an important milestone for Malaysia, as it became the first country to have a documented and systematic assurance system. The country has come a long way since then, and the necessary policy framework, institutional support and infrastructure for the industry are already in place.

Malaysia’s halal certification and logo are now universally recognised and accepted.

With the growing Muslim population in the world, the growth opportunities for halal industries are enormous. Today, there are 1.6 billion Muslims comprising 23% of the global population. By 2030, the Muslim population is expected to rise to 2.2 billion or 26%.

During the 8th World Halal Conference 2015, the Malaysia Halal Development Corporation (HDC) proposed the concept of “Global Halal Hub-to-Hub”, which connects the hubs of major Muslim regions through trade in products and services. Under the proposed concept, Malaysia and Dubai would be made the procurement hubs for halal products and services.

The two countries would work closely with major ports in East Asia, the Middle East and Europe to set up centres to further distribute halal products and services to neighbouring markets. This would enhance multilateral trades among the countries involved and create opportunities for SMEs to integrate into the global halal supply chains.

Our SMEs would enjoy comparative advantage vis-à-vis foreign enterprises in terms of competition in view of the fact that Jakim’s recognition programme for international halal bodies is the most stringent and sought-after bilateral recognition programme in the world, with over 50 international bodies registered to-date.

Hence, local SMEs enjoy the advantage of accessing and obtaining halal certification.

Nevertheless, challenges remain for Malaysian SMEs.

Halal is not merely about compliance with regulations set by authorities and getting the relevant certification in order to sell products and services. If businesses think that securing a Jakim logo guarantees success for their products in the global market, they are in for a surprise. These products and services must also meet international standards of supplying quality products consistently in order to be embraced by consumers in international markets.

The real challenge for local food-producing SMEs is to be able to ensure consistent quality and supply as demanded by the big retailers. Some of the difficulties faced by these SMEs are rising business costs and availability of raw material supplies. This is where government support is needed to provide measures to assist SMEs to overcome the issues.

But, yes, there certainly are plenty of opportunities to tap the halal industries. The fact that Malaysia is a net food importer suggests that there are huge opportunities for SMEs even in the domestic market. Businesses that have established brand recognition locally can build on their strengths and venture into exports.

SMEs should also look into other sectors of the halal industries that offer good opportunities.

The personal care, cosmetics, toiletries, education, healthcare and pharmaceutical sectors all offer opportunity, and indeed some local SMEs have been very successful in them.

The Government has allocated RM100mil in grant for the halal industries in Budget 2016 to be used to assist SMEs elevate the standard and quality of products and services.

SMEs should take initiative to apply for the grant and utilise the financial resources to improve the quality of their products through attaining halal certification, as well as those of international standings like the Good Manufacturing Practice (GMP).