Statistics

The Global Halal Industry in Malaysia and Penang

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Malaysia ranks first on Thomson Reuters’ Global Islamic Economy Indicator [1], particularly in the Halal Food, Islamic Finance and Halal Travel indicators. The importance of Muslim consumers to Malaysia’s external trade is underscored by the size of national halal export values growing from RM23.85bil in 2011 to RM39.39bil in 2015 (Figure 1), making up 4.5% of total export value at the national level.

Globally, Muslim expenditure on food and beverage (F&B) is estimated at US$1,128bil in 2014, growing by 4.3% from US$1,081bil in 2013 and potentially rising to US$1,585bil in 2020. Muslim expenditure makes up 16.7% of global expenditure on F&B in 2014. Malaysia’s external halal F&B sector is of critical importance, as F&B was Malaysia’s top halal export (RM 19.5bil) in 2015, followed by palm oil derivatives (RM11bil) and halal ingredients (RM 5bil) [2].

Malaysia ranks first on Thomson Reuters’ Halal Travel indicator. Muslim global expenditure on travel is estimated at US$142bil or 11% of global expenditure, and is projected to rise to US$233bil in 2020. Tourism Malaysia data shows growth in visitors from Organisation of Islamic Cooperation (OIC) countries [3] from 2003- 2008, although this has since slowed to close to 4.5mil in 2015 (Figure 2).

As for Penang, the Penang Tourism Survey which records the country of origin of survey respondents was used as a proxy to gauge the importance of Muslim travel to Penang. Visitors from OIC countries
comprised 26.2% of respondents in 2014 and 19.6% of respondents in 2015 [5] , indicating that Muslim visitors form approximately a fifth of Penang’s foreign visitors.

 
Globally, the Muslim market for pharmaceuticals and cosmetics is valued at US$54bil or seven per cent of global expenditure. The cumulative average growth rate (CAGR) for this sector is 6.8% between 2014-2020. Malaysia ranks just behind Singapore and Egypt on this metric.

 


The Market for Halal

The Muslim proportion of Penang’s population is an indicator of the size of the halal market in Penang. Muslims make up 700,000 of Penang’s population of 1.56mil in 2010, and while the state has a smaller percentage of Muslims (44.6%) as a share of its population compared to Malaysia (61.3%), it is no less significant (Figure 3).

Apart from Brunei, Malaysia is the only other country in the world in which the government regulates the halal certification [6], which is the responsibility of the Department of Islamic Development Malaysia ( Jakim). Jakim issues halal certificates and enforces halal-related guidelines. The Malaysian halal certification scheme includes food products; beverages or food supplements; food premises or hotels; consumer goods; cosmetics and personal care; slaughterhouses; pharmaceuticals; and logistics [7].

 
 
 

The number of valid halal certifications in Penang rose from 55 in 2008 to 914, as of September 2016. In 2015 Penang halal companies made up 14.9% of Malaysia’s 5,726 halal companies [8]. As expected, food products have a high share of halal certifications (Figure 4), while other sectors make up the minority share of halal certifications.

The number of certifications doubled, tripled or quadrupled for all sectors except pharmaceuticals, cosmetics and logistics from 2008 to 2009 (Figure 5), and this is reflected in the year-on-year growth rate for all certification classes of 200% in 2008/2009 (Figure 6). The strongest growth observed for halal certification in this data is for consumer goods, which at least doubled year-on-year from 2009-2012.

In Penang, numbers for the certification of pharmaceuticals, cosmetics and logistics have emerged only from 2014 onwards. These categories were not available in publicly released data on halal certification at the national level for May 2014 [9]. Thus, the halving of halal certifications for two consecutive years is likely due to the reclassification of other categories to pharmaceuticals, cosmetics and logistics – in particular the consumer goods class, which fell from 84 certifications in 2013 to 21 as of September this year. In fact, in 2016 all certification classes have ended at higher numbers of certification than 2008, though the strong growth rates observed in 2008-2009 did not persist. Despite the general downward trend in halal certification growth rates for individual industries and in total, the large share of Penang companies certified in the Malaysian halal certification scheme shows that Penang has an important role to play in the halal industry at the national level.

 

  • [1]Malaysia scores 116 on the GIE Indicator, followed by UAE (63) and Bahrain (58)
  • [2]“Malaysia Halal Export 2015’, Halal Industry Development Corporation (2016)
  • [3]The OIC countries identified in the Tourism Malaysia database are Bangladesh, Brunei Darussalam, Egypt, Indonesia, Iran, Iraq, Kazakhstan, Kuwait, Nigeria, Oman, Pakistan, Qatar, Saudi Arabia, Sudan, Turkey, UAE and Uzbekistan
  • [4]In 2012 tourist arrival counts provided by Tourism Malaysia were given by nationality of traveller instead of country of residence (prior to 2012).
  • [5]The OIC countries identified in the Penang Tourism Survey 2014 and 2015 reports are Bahrain, Bangladesh, Brunei, Egypt, Indonesia, Iran, Iraq, Jordan, Kuwait, Lebanon, Libya, Maldives, Moroco, Nigeria, Oman, Pakistan, Palestine, Qatar, Saudi Arabia, Sudan, Syria, Tunisia, Turkey, UAE and Yemen. Source: Penang Global Tourism and author’s calculations.
  • [6]‘Consuming passions’, The Economist (2013).Available at http://www.economist.com/news/international/21578380-muslim-consumers-are-looking-beyond-traditional-religious-stipulations-meat-and.
  • [7]‘Malaysia’s Halal Certification Circular Number 2 of 2014’, Department of Islamic Development Malaysia (JAKIM) 2014.
  • [8]‘Status of the Halal Industry’, MITI (2016). Available at http://www.mihas.com.my/wpcontent/uploads/2016/02/WHW-2016-Status of-the-Halal-Industry.pdf.
  • [9]‘Halal Certified Statistics’, Halal Industry Development Corporation (2014). Available at http://www.hdcglobal.com/publisher/gwm_ industry_statistics
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