Halal: An Industry with a Bright Future

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It makes good business sense today to “go halal”. But managing expectations and perceptions is always a challenge.

For eight years now, the Penang International Halal Hub (better known as Halal Penang) has been setting the trend for the halal industry both domestically and beyond. More than half a billion ringgit worth of investments has flowed into the state’s halal industry since 2008, leading the state government to convert prime industrial land in Bukit Minyak into the Penang Halal Industrial Park.

Datuk Abdul Malik Abul Kassim, Halal Penang chairman and state minister for Islamic Religious Affairs, Domestic Trade and Consumer Affairs says that the most common misconception about halal is that it’s just about food. “For eight years now, we have been telling people that halal is a lifestyle – an ecosystem of our life – which includes insurance, fashion, travel, medical, cosmetics and Islamic finance. It’s a universal concept that guarantees quality and cleanliness and is relevant to both Muslims and non-Muslims.”

Guided by its vision to “position Penang as the location of choice for investments in halal-based industries, destination of choice for halal/family-concept tourism, and residence of choice for halal/ family-concept lifestyles and sustainable living”, Halal Penang has spearheaded the development of the halal industry through a strong tripartite model of collaboration between government agencies, the private sector and academia.

Halal Penang has been widening the scope and the potential of halal products across the globe. Besides its emphasis on a Muslim lifestyle, it is pitching additional assurance for global consumers and branding Penang as an international halal hub in the process. “You see, halal is a holistic concept; it gives quality, cleanliness and safety assurance to everyone,” Abdul Malik adds.

(From left) Datuk Seri Dr Ahmad Zahid Hamidi, Chief Minister Lim Guan Eng and Abdul Malik during the launch of Halal Penang in March 2009.

A Robust Industry

The Global Islamic Economy Report for 2015-2016 estimates that the international halal and lifestyle market will be worth US$3.7 tril by 2019.1 And according to the Ministry of International Trade and Industry (Miti), Malaysia’s halal exports stood at approximately RM42bil in 2015, and created around 218,000 jobs.2 The number of halal-certified companies also grew from 2,336 in 2011 to 5,726 in 2015.3 Surprisingly, non-Muslims own 68% of these.

Malaysia also has a comprehensive institutional framework to drive the halal development agenda, made up of dedicated government agencies, an industry development framework and a comprehensive database. Stakeholders such as Miti, SME Corp, the Malaysian Investment Development Authority (Mida), the Ministry of Science, Technology and Innovation (Mosti), the Malaysia External Trade Development Corporation (Matrade), the Department of Islamic Development Malaysia ( Jakim) and Standards Malaysia are routinely collaborating to develop the industry.

The key export destinations for Malaysian halal products are China, Singapore, the US, Indonesia, and Japan. These exports include: F&B (RM15.5bil), ingredients (RM12.2bil), palm oil derivatives (RM5.3bil), cosmetic and personal care (RM2.3bil), industrial chemicals (RM1.9bil) and pharmaceutical products (RM500mil).

To link investors and businesses to the most integrated supply chain solutions, the Penang state government has been 26 | NOVEMBER 2016 cover story working closely with agencies such as the Halal Industry Development Corporation (HDC) to create a “halal ecosystem”. HDC, which coordinates the overall development of Malaysia’s halal industry, claims that Malaysia offers a complex ecosystem covering production, services, government support, human capital and infrastructure. HDC also gives other incentives: 100% income tax exemption on qualifying capital expenditure for a period of 10 years or income tax exemption on export sales for a period of five years; exemption from import duty and sales tax on raw materials used for the development and production of halal promoted-products; and double deduction on expenses incurred in obtaining international quality standards.4
More than a Trade Expo

Earlier this year, the state government hosted the seventh Penang International Halal Expo and Conference (PIHEC), which aspires to be a platform for East Asia, West Asia and Europe to come together to promote halal consumable and non-consumable products.

Inaugurated in 2010, PIHEC is packed with activities and appearances by local chefs and retailers, interactive seminars, entrepreneurial workshops, halal conferences, a Muslim lifestyle exhibition, product demonstrations and business networking sessions.

The conference has indeed become a medium for sharing industry experiences and research findings. This year’s seminar focused on food security and had several important takeaways. Conference speakers spelled out the following five criteria for halal policies:

1. They should have transparency and be holistic. Halal certification and the use of the halal logo have huge potential to brand food across the globe. Hence, halal policies must be expanded from Muslim exclusivity to global inclusiveness.
2. Easy accessibility to halal products and services.
3. Affordable for all strata of society.
4. They must consider the people’s purchasing power.
5. High standards of quality and the wholesomeness of “Halalan Thoyyiban” should be observed among halal entrepreneurs, whose motivation should not merely be profits.


PIHEC will be back at Setia SPICE (formerly Pisa) from February 24 to 26 next year. Over 60,000 visitors and 350 exhibit booths are expected during the three-day event. A day-long halal conference will also be held, where internationally renowned speakers will discuss issues and solutions, the latest research findings, and emerging technologies and trends in the halal industry. According to Abdul Malik, visitors come in two groups: consumers and traders. Traders are usually interested in the seminar, workshop and conference for knowledge sharing and networking.

Their biggest task, according to Abdul Malik, is to add new attractions and features every year: “We started the Battle of the Halal Chefs three years ago. In the second year, we added the World Curry Festival and for the third year, we had the Muslim Hijab fashion show. We have to keep the interest of our visitors.”
Syerleena Abdul Rashid


Shaping Perception and Battling Exploitation

The annual halal expo received a warm response from non-Muslim exhibitors and business owners. Non-Muslims form the majority of owners of halal-certified companies.

Are there any reservations or resistance to the idea of halal certification?

“Well, Penang is a success story,” Abdul Malik says. “We started with only about 80 halal-certified companies, and now we have close to 1,000. And a big portion of these are non-Muslim establishments. I look at it from two angles: one is obviously for business, and the other, which is more important, is the value-added factor. Halal and toyyiban, meaning wholesome, add value in terms of quality and safety. That is why advanced countries look out for halal certification.”

In other words, a win-win situation for everyone. But then there are parties that want a new halal logo to differentiate products made by Muslims from those made by non-Muslims. This was jointly proposed by the Malaysia Institute of International Islamic Cooperation (Ikiam) and the Rubber Industry Smallholders Development Authority (Risda).

It’s not that easy. “Firstly, they can’t legally implement it because it contravenes the law that says only federal and state religious bodies can issue halal certifications. If they want to do it, they have to take it to parliament,” says Abdul Malik, referring to the Trade Descriptions (Certification and Marking of Halal) Order 2011 that states that only Jakim, the Department of State Religious Affairs ( Jain) and the State Islamic Religious Council (Main) are the competent authorities for issuing the halal certification – a fact that was reflected by Jakim in their statement to repudiate the proposal.5

“Secondly, we have to consider if there is a need to make that differentiation. For me, it is not necessary because the standards of halal are universal and internationally recognised.”

Penang is a success story. We started with only about 80 halal- certified companies, and now we have close to 1,000. And a big portion of these are non-Muslim establishments.

Murali Ram, who was previously corporate advisor of Halal Penang, echoes Abdul Malik’s views and says that the proposal needs to be confronted at the national level. “Unfor tunately, there are those who would indeed seek out only products from Muslim operators. The proposed new halal logo will in fact claim that Muslims should only buy from Muslims, which is not right. And it will not stop there.”

The 2nd World Curry Festival at the halal expo in January this year.

Hijabs on dislay. Halal is more than just about food, it is also a lifestyle.

 
The halal industry is particularly prone to exploitation by people who use religion as fast-track branding. Rayani Air, which branded itself as fully syariah-compliant and offered halal products, went defunct after a mere four months. Complaints of flight cancellations and delays, non- payment of salaries, pilot strikes and maintenance issues engulfed the airline. In reaction to the fiasco, Deputy Minister of Religious Affairs Asyraf Wajdi Dusuki warned the public not to use Islamic credentials as a selling point to gain popularity, and that “Islam is not a label to be bought or sold ... its principles, values and morals need to be met.”6

Murali, who is presently the programme director for ThinkCity Butterworth, says that there is a general acceptance of halal certification. “Ultimately it’s business. There is incentive for non-Muslim businesses to take up halal certification because it would actually open up their market share. We make a lot of headway with the pork-free and no-alcohol operators, and they are quite open to it so we have no problem with the perception.

“As a non-Muslim, I am happy to use these products as I know the trader is serious about business because it is open to inspection and audit. Even foreigners in Europe are seeking the Jakim halal certification as it is well regarded due to its stringent requirements.”

The “Muslims should buy Muslim products” sentiment quick leads to isolationism. Local entrepreneurs who promote halal products and services should instead be more confident in market competition and try instead to raise the quality of their products. The push for halal products and services can give us substantial economic benefits, but any effort that is motivated by demarcation will not bear any fruit.

Chicken Meat: From Farm to Table

In theory, halal meat must be blessed before it is killed by hand by an ahle kitab (a Muslim, in the Malaysian context) butcher. The process of slaughter involves slitting the animal’s throat, windpipe and the blood vessels around its neck with a surgically sharp instrument in order to reduce the pain of the animal and to ease its death. “The knife must not be lifted before the cut is complete and the cut must be below the Adam’s apple,” says the UK’s Halal Monitoring Committee.

Karen Lai

Abang Zul.

Afterwards, the blood should be completely drained from the animal. It is the blood that carries toxins, germs and bacteria, and when left inside the body of the animal, could potentially make people sick. At the very least, it could make the cooked meat quite tough. According to some, a perk of cooking and consuming halal meat is the tender texture and delicious taste.

To see how chicken meat is produced, we met a local fresh poultry businessman at Kampung Melayu in Air Itam. Abang Zul helps run his family business which was established 30 years ago. Every day, he and his workers would wake up at 5.30am. “Our customers are not only Malay-Muslim communities, but non- Muslims too – especially old local Chinese folks who prefer the quality of our meat,” says Zul.

On average, they slaughter 300 chickens a day. This amount increases during weekends and public holidays. In addition, the workers are all certified by Jakim with the right to slaughter animals.

The question still remains – was the animal was treated well or not. According to Zul, “the process of slaughtering is done by two or three workers. They ensure that the knife is well sharpened and that the chicken is dead before proceeding to the next step, which is to insert the chicken into a machine containing hot water to remove the feathers. Other workers will cut the chicken into parts and separate the waste before the meat is washed by clean water.”

This last process is done by expert workers to ensure that the meat is clean and ready to be sold and distributed.

“ During holiday season, especially if there are weddings going on, orders for chicken meat increase to 600-700 birds a day,” says Zul. It is because of the apparent strict quality control that customers have confidence in his shop.

References
1 “More Trying to Take a Bite Out of Global Halal Market”. Channel News Asia. 6 April 2016.
2 “Status of the Halal Industry”, Ministry of International Trade and Industry. 2 February 2016.
3 Ibid.
4 “Halal Parks and Halal Incentives in Malaysia”. Halal Industry Development Corporation.
5 “JAKIM: New Halal Logo for Muslim-made Products Illegal Without Our Certification”. Malay Mail Online. 26 September 2016.
6 “How It All Went Wrong for Malaysia’s ‘Hala Airline”. Al-Arabiya English. 15 April 2016.



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