September-October . 2021 | @ Halal
Industry
25
As a thriving ecosystem , halal boosts the economy and is also in a position to provide a more meaningful recovery to each stakeholder via further training , developments and collaborations .” – Hairol
we have partners among other ministries and agencies at federal and state levels to assist us in reaching this target . It ’ s not during that one week event but we need to continuously implement the project , monitor the progress and report over two years time to the main stakeholders .
So we would like to tackle a couple of strategic initiatives over there . Earlier this year , we signed a Memorandum of Understanding ( MoU ) with the African Institute of Islamic Finance ( AIIF ) to make Senegal the gateway for our halal products and services to penetrate the ECOWAS region , the Western Africa continent . There are plenty of opportunities over there .
Number two , we are going to establish a halal trade and supply chain fund with an international Islamic finance institution to finance halal products trading activities , supply chain developmental activities , focusing on Malaysian companies who are extending their global product reach and foreign companies who are planning to set up their operations in Malaysia , making Malaysia as a gateway to enter ASEAN market .
We had previously launched the Go Halal Fund , with Bank Islam , but that one is for the local market . So together with this international financial institution , it will be in USD so it will cover international business . The idea here is for HDC to work with our financial institutions to raise dedicated funds to develop our halal industry . We try our best to reduce our dependency on government grants .
The third one , we would love to capitalise on our partnership with the Chartered Institute of Logistics and Transportation ( CITL ), Malaysia and international , to get their members to be halal-certified , especially the multinationals . So , we are going to develop a system to trace and track halal products throughout the world . Because under the CITL , they have hundreds of members , among others are Nippon Express , DHL , all these big names . So if all these big names adopt halal standards , we can work with them on how to trace and track product movements from one port to another . So , by doing this , we are trying to increase the integrity of the product and services throughout the supply chain internationally .
Other than that , the usual business , where we will bring along selected Halal Park operators to meet the pre-identify potential investors and business matching activities in collaboration with MATRADE .
HDC partnered with the Department of Statistics Malaysia ( DOSM ) to use research and data analytics in the halal industry . Could you elaborate more on this ? The partnership with DOSM is about halal data analytics . Restructuring efforts , covering various activities related to halal including production , manufacturing and services for both food and non-food items .
We are putting proper definitions on all halal related industries and the sub segments . So , the idea here is to unlock the actual contribution by our halal industry to the national economic performance , especially on trade , investment , employment and contribution to the GDP as a whole .
The ministry wants us to really deep dive into these data analytics to know what really drives the industry , which product , which segments . So , we want to be more informed when making decisions and policies . So , in the future , all decisions and policies must be made through data analytics and also more informed .
The initiative between HDC and DOSM is going to be the first in the world . So , if we did it successfully , it will be a reference to other countries on how to measure halal industry contribution to their respective economy . So , we are able to make an apple to apple data driven comparison . We will know which country is leading and which is not . Not for the sake of competing but to learn from each other . We will know the strength and weakness between one country to another , to learn the best practices over there which we can adopt .
Exactly a year ago , HDC set a benchmark of US $ 100 billion in export value for Malaysia ’ s halal products by 2030 . How are we in reaching that target ? When we set the benchmark , it was done based on an assumption that the pandemic will be over by the end of 2020 . Unfortunately , it is not . However , we would like to retain that target because it is good to set an optimistic target and work hard to achieve it . Continuously innovate our approaches , we will try to secure more strategic partners , we try to internationalise our halal products and services because we believe that transformation is not about minor tweaking , it ’ s a big thing .
So , it ’ s okay to set an Olympic target . This is what my guru , Dato ’ Seri Idris Jala taught when he gave a talk about his transformation . It is not about minor tweaking . Set an Olympic target . If let ’ s say you failed to go to the Olympics , at least you have three gold medals at ASEAN sport . That is already an achievement .
So if by the end of the day , we only managed to score on 50 per cent of the target , say around RM200 billion , that is already more than six times better compared to what we have achieved today . Today we have achieved around RM31 to RM35 billion . So , that is much much better . So for HDC , efforts will be focused on increasing the number of certified halal companies , increasing the number of exporters and also increasing the pool size of competent talents .
HDC now has six core services in place , namely Halal Integrated Platform , Halal Training Institute , Halal Consultancy and Advisory , Halal Parks , Halal Knowledge Centre and Halal Event Management . So if we promote them right , more players will want to onboard the halal economy .
Considering all that has happened since early last year , that is now a treacherous path paved with multiple obstacles . Surely , there must be distinct milestones set too . At which stage are we ? Let ’ s look at three periods of time , prepandemic , pandemic period , and now the pre-recovery period . So during the prepandemic period , around 2019 , we targeted
Like the second half of last year , there was around RM400 million new investment recorded . And in the first half of this year , we already received an additional nearly RM400 million investment into our Halal Parks . Interestingly , a big majority are domestic investments . This is very , very interesting . It seems like our resilient local players are expanding .”
around RM42 billion worth of export , and we achieved RM41 billion . Direct investments recorded into our Halal Parks were between easily RM1.5 billion to RM2 billion every year , without fail . More than 300,000 employment opportunities created , 10,000 certified Halal companies . So it was fantastic .
But during the pandemic , the supply chain got disrupted , that ’ s what happened . When we look at the numbers , the demand was not going down , it was the supply chain that was disrupted . So manufacturing activities got halted , no new halal certificates being issued , renewal processes also went slow due to the MCO . So as a result , the export went down , the number of certified halal companies decreased and almost no new investment came to the Halal Park .
But the economy started moving into a positive direction during this pre-recovery phase . So between July 2020 and June 2021 , HDC observed more active export activities and if things continue moving along this path , we should be able to achieve around RM32 billion exports this year . That is already good news for our economy . Investments too are getting more traction .
Like the second half of last year , there was around RM400 million new investment recorded . And in the first half of this year , we already received an additional nearly RM400 million investment into our Halal Parks . Interestingly , a big majority are domestic investments . This is very , very interesting . It seems like our resilient local players are expanding . They are getting prepared to bounce back post pandemic phases later . So it ’ s a good sign for halal economic recovery and I will say it is aligned with the overall Malaysia ’ s economic recovery .
The Go Halal Fund was introduced with HDC ’ s HIP and Bank Islam ’ s SMExpert Platform . Could you share with @ Halal the implications and challenges in this collaboration , especially integrating all the critical components of the Halal industry ecosystem ? The most important thing is how to achieve a win-win situation . That is a key element of any partnership . Both HDC and Bank Islam have their own objective and face certain risks . But at the end of the day for HDC , it is all about complementing each other and working together to achieve a bigger target .
For example , Bank Islam wants more halal industry players to subscribe to Islamic financing tools as part of its corporate obligation . At the same time , they are also facing some risks in which not many players that are certified or verified halal knocking on their doors . As the target market is SMEs , the nonperforming loan ( NPL ) risk is always high .
As for HDC , we want to facilitate onboarding of industry players onto the Halal economy . So the onboarding process most of the time requires financing . At the same time , HDC has developmental programmes , including training , consultancy and business matchings . Through HIP , we can verify SMEs ’ readiness towards achieving Halal compliance . So , the question here is how the synergy works ?
Only members of HIP are eligible to apply for the Go Halal Fund . Why ? Because we want to monitor and continuously facilitate the business growth to ensure good loan repayment to the bank . Indirectly , the NPL risks of bank Islam will reduce significantly .
So , in short , we put aside differences , we identify common objectives , find ways on how to scope the collaboration , create the synergy , share the risk and achieve a win-win situation .