20
Industry Talk
@Halal | July-august. 2020
The global halal market has
emerged in the global economy
and forming a strong presence in
developed countries.
Halal transcends the traditional
geographic, cultural, and even religious
boundaries. The market for certified
halal products is developing robustly, both
domestically and internationally.
In this industry, Malaysia has become the
leader and centre of reference for the world.
Malaysia has consistently undertaken the
significant initiatives across regulation,
trade and production support to strengthen
the status as hubs in the trade-driven Islamic
economy.
The Halal industry is expanding fast and
is becoming the new market paradigm with
its own unique set of challenges and opportunities.
Halal certification plays a crucial
role in the food and beverages industry in
Malaysia.
This certification indicates that the food
product is assured in terms of religious
compliance, safety and hygiene.
Halal certification in Malaysia has many
benefits in terms of the higher market segment
(Liow, 2012; Husain et al., 2012; Said
&Elangkovan, 2013), hygiene and safety
(Syed Marzuki et al., 2012; Ahmad et al., 2013)
and potential to gain interest from Muslim
tourists all over the world to come to
Malaysia (Ab Rahman Ilyia et al., 2011; Syed
Marzuki et al., 2012).
Halal certification is crucial. The product
that has been certified by halal carries
out a proper halal status that is trusted by
Muslim consumers and attracts non-Muslim
consumers in term of halal-ness, wholesomeness
and high quality.
As demand for halal is increasing globally,
more manufacturers are aiming to be halal
certified.
From the Islamic point of view, some
studies highlighted the growth in business is
not in terms of materials (Vargas-Hernandez
&Noruzi, 2010; Muhammad et al., 2013; Faizal
et al., 2013). But the growth concept of Islamic
business stresses on the balanced satisfaction
of material and spiritual needs.
Howard (2006) outlined that business
growth is defined by the number of sales,
profit, geographic expansion and size of the
workforce.
Finally, business performance can also be
measured in terms of human capital; Sherman
(2007) defined business growth in three
different pillars; human capital, financial
capital and intellectual capital.
According to Carter and John-Evans
(2006), most research discussed the business
growth in terms of employment because of
the interest of public policymaker in facilitating
increase in employment activity.
Kaloo (2010) further explained growth
as an increase in the number of employees,
capital employed, the number of locations
and sales revenue.
The Halal industry has gained interest
all over the world, not only from Muslim
countries but other countries as well. The
impact of Halal products affects not only
Muslim countries, but also other countries
with Muslim population.
Muslim and non-Muslim consumers all
over the world are interested in purchasing
halal products because they clarify that the
By Azmi Abd Aziz
Technical Assoc Director, Global Haltech
Importance
of halal certification
Malaysian businesses can increase multi-fold if they are halal-certified
food preparation and final product is safe and
hygienic to be consumed.
Furthermore, the halal product has high
demand as Islam is currently the world’s
second-largest religion, according to Hill
(2008).
Issues
There is a significant lack of interest shown
by the business owners and those involved
in the food industry in Malaysia to apply for
halal certificates despite their awareness and
knowledge on the halal certification.
There is still limited information and
communication relating to the importance
of Halal certification in terms of economic
interest.
Due to the vital impact of halal certification,
some of the business owners are likely
to use fake certification logo, and most of
the industry use the logo only to grab the
business opportunities without actually
understanding the practices.
Halal certification is crucial due to its
impact on Muslim consumers; thus, the
industry must increase their confidence in
the product’s halal status, and Muslims must
consume halal products.
Along the way to obtain the certification,
it is a lengthy process with a lot of requirements
for the application. Some companies
have to wait for a long time and may even
give up mainly due to the time-consuming
process.
What is the main factor that contributes
to the halal certification in Malaysian
industry?
Global Symbol
The Halal certificate recently has been
described as a new defining market force. It
helps to boost the development of Muslim
nations as consumers and producers in the
global market.
Interestingly, not only the halal industry
affects Muslims, but it also gained interest
from non-Muslim users because it’s a global
symbol for quality assurance and lifestyle
choice.
Muslim Populations
In Malaysia, since 60 per cent of the populations
are Muslims, the halal certificate and
logo have advantages of capturing bigger
markets. By having a halal certificate in a
business, it will help the business to have
better market signals, Islamic attributes, and
marketing.
The values of a halal certificate in business
have broader appeal beyond religion and also
contribute to Malaysia’s position as a tourism
destination and a hub for the global halal
market as targeted by the government.
The halal
certificate
is seen as a
marketing
tool. It
provides a
competitive
advantage
for manufacturers
alongside
other
benefits
such as
consumer’s
confidence,
compliance
to Islamic,
and also
hygiene
and safety
requirements.”
Success Stories
Malaysian companies owned by Muslim
entrepreneurs that produced halal pharmaceutical
gelatins which gained halal
certification managed to expand the business
geographically to China, India, Turkey,
Sri Lanka, Canada, United Arab Emirates
(UAE), Brunei and Indonesia.
The halal certificate is seen as a marketing
tool. It provides a competitive advantage
for manufacturers alongside other benefits
such as consumer’s confidence, compliance
to Islamic, and also hygiene and safety
requirements.
As evidence for halal certification to
enhance business performance, there was a
business success in Singapore after the UAE
recognised the Islamic Religious Council
of Singapore (MUIS). The food export from
Singapore to UAE increased by 67 per cent
in a year, as quoted from the International
Enterprise Singapore website.
A company that produced frozen food
in Malaysia had widened its target market
by 100 per cent after obtaining the halal
certificate. It also conducted case studies on
a few companies. It found that a Europeanbased
company had broadened its business
geographically from the European market
to the Asian market because it has halal
certification.
Conclusion
The benefit of halal certification can be translated
in terms of a standard to be followed by
business owners to ensure compliance in
Islamic value, cleanliness and hygiene aspect,
as well as quality assurance.
While these factors are beneficial to the
business organisations, most of the business
owners will not be motivated to work hard
to get the halal certification because the
benefits are not translated in the growth of
their businesses.
Business organisations can expand their
business internationally after getting the
halal certificate. The certification is essential
to ensure a standardised system of Islamic
practice including the incorporation of safety
and hygiene.
It is also an innovation tool to help boost
business growth, especially in a country
where the Muslim population is dominant.
The halal industry is growing and attained
attention among industry players globally.
The comprehensiveness of the industry
makes it an attractive niche to invest in as
the opportunities are boundless. The halal
industry is expected to remain on this
path as it gathers more attention and exposure
worldwide. Finally, halal certification
can be considered as deciding factors to
ensure business growth of Malaysia in the
industry.