It is the new defining market force. From food to fashion, farming to pharmaceuticals, banking to branding, and most things in between, Halal is starting to make its global presence felt.
With Muslims now making up close to a quarter of the world’s population, it should really come as no surprise that Halal is starting to have a significant impact on global markets. This new market force is driven by several factors. Firstly, many Muslim nations are reaching a stage of development whereby they can begin to impinge on world markets, both as producers and consumers. Secondly, and significantly, items such as Halal meat and Islamic banking services are increasingly popular among non-Muslims, enhancing the wide-spread rapid growth in these industry sectors.
But perhaps the most important engine of growth of the Halal is a shift of perception. Halal food, for example, has been around for over fourteen hundred years, but it is only in recent decades, and particularly in multi-cultural societies, that the labelling and branding of Halal products has developed.
Similarly, Muslim women have dressed with that distinct combination of flair and modesty that has fascinated the world for centuries. Only recently has the term ‘Islamic Fashion’ been coined, but the speed with which both the industry and its consumers have responded to it speaks of a bright future.
In Kuala Lumpur, for example, the suggestion of holding an Islamic fashion show at MIHAS in August 2004 has developed into Islamic Fashion Week 2005, an event that already caught the attention of Tourism Malaysia as a means of bringing in more tourism revenue.
Similarly in the food industry, consultants have pointed out that Halal certification is in itself an important – and under-utilised – value-added element. If, in addition to increasing local Halal food production, this was applied to down-stream production and processing of imported raw materials, it could increase Malaysia’s Halal food exports, and improve the food bill deficit.
With food and finance leading the way for Halal growth, other industries are already starting to follow. The health-care and pharmaceutical industry is one of the biggest sector’s world-wide, and it is only a matter of time before it too develops its own fully-fledged Halal sector.
Halal is such a multi-dimensional arena. Islam is growing in popularity around the globe, and also the public’s awareness of it is increasing at such a rate that we can expect to see dramatic growth in all Halal sector’s.
We are witnessing the emergence of a new market paradigm. In much the same way that the impact of the internet on commerce lead to the market paradigm of recent decades, we are now participating in the paradigm that will define the coming decades; the impact of Islam on commerce.
Industry 1: Food
Value Added Food Products to Make Industry Viable
By Hayati Hayatudin
Food production needs to diversify to strengthen the up and coming Halal food hubs.
Industries keen on going large scale in food production should look at the endless possibilities of value added products, but should not confine themselves to food of their ethnic origins only, but must broaden their horizons to food from other cultures.
This idea is share by a leading manufacturer of Halal frozen delicatessen, Prima Agri-Products Sdn Bhd (Prima Agri). Apart from marketing Malaysia’s very own satay across the globe, it has also successfully included value added products like Halal salami, pepperoni and cold cuts – food out of its Malay ethnic origin – in its delicatessen repertoire. “We cannot limit ourselves to local products alone. We must expand to other tastes [like pepperoni, salami and sausages],” says Prima Agri group chief executive Datuk Jamaluddin A. KAdir.
Malaysia is not competitive in selling raw materials but it has the elements to be a trading nation. Currently, Malaysia is more of a commodity exporter of palm oil and the likes. “But we have the capacity to be a food exporter,” he says. What Malaysia can do, he suggests, is to bring in raw materials, turn them into Halal value added products like cold cuts, cakes and pastries, and sell them to global market.
This is where the Halal hubs play their role. “They can produce these value added products on a large scale,” says Jamaluddin. Halal hubs are currently being developed in Pulau Indah in Selangor, Pedas in Negeri Sembilan, Terengganu and in Gambang, Pahang by Prima Agri Products. “Halal hub means export capable. Therefore the Halal hub and the food production sector should complement each other,” he points out.
Malaysia’s projected food import bill for 2005, according to the Seventh and Eight Malaysia Plans, stands at RM22 billion. Under the Ninth Malaysia Plan and Third National Agriculture Policy, the Agriculture and Agro-based Industries Ministry wants to transform Malaysia into a net food exporter by 2010.
And the country seems to be on the right track. Malaysia has been widely recognised for its excellent Halal standards, which are further strengthened by the Islamic Development Department of Malaysia’s (JAKIM) Halal certification. “[Our Halal internationally, recognised,” its department’s director general Datuk Mustafa Abdul Rahman says.
JAKIM’s Halal certification can be divided into three categories: food products, food premise and slaughter houses. Up to now, it has certified almost 300 slaughter house s all over the world. This has helped strengthen Malaysia’s image as an authority for Halal certification and its products. The Halal endorsement began in Malaysia in 1971 and the Halal certification was introduced in 1994. In 1997, this certification system in Malaysia was made the basis for the Codex Alimentarius Commission in developing the General Guidelines for the usage of the term Halal.
The United Nations has also recognised Malaysia as the best example in producing Halal food products. In 1993, JAKIM was awarded the leader in Halal certification by IFANCA and in 2004 the same award was given by the Islamic Food Council of Europe. In August 2004, JAKIM, with the Standards Department Malaysia launched the Malaysian Halal Standards MS1500:2004, being the first Halal standard in the world developed based on international standards. “We are very proud to be seen as leaders by other Muslim countries for our Halal standards,” he says.
Currently, JAKIM is busy making Malaysia’s aim as the global Halal food hub a reality. “[That] is the ultimate goal for us and the Malaysian government,” says Mustafa.
Even though the business of Halal hub falls under the purview of the International Trade and Industry Ministry, JAKIM is very excited about the project as it will be setting up shop in each and every Halal hub in the country. “We will be certifying the products manufactured in the Halal food hub itself,” he says. This move, according to Mustafa, is to facilitate Halal certification and to make the process more transparent. “Most importantly [we want to] cut the red tapes,” he says.
The Malaysian government had, since May 2003, ordered JAKIM to stop issuing Halal certificates to products manufactured out of Malaysia. “This move is to protect local products because foreign companies use JAKIM’s Halal certification and logo to export their products to Muslim countries, especially in the Middle East,” he says. To solve this problem, JAKIM beefed up its enforcement at food production factories, which have received its certification, to ensure they adhered to conditions. “[JAKIM’s] Halal certification and logo is a service to the private sector in line with Malaysia’s vision of becoming a global Halal food hub,” he says.
Many countries – be they Islamic or non-Islamic – want to be the number one player of the world’s Halal industry. Malaysia is one of them. International Halal industry players acknowledge Malaysia’s competitive edge: it has been recognised as an Islamic country; with raw materials, supporting infrastructure as well as state-of-the-art processing technology; internationally-approved JAKIM Halal certification; and a strong backup and blessing from the government. There is no stopping Malaysia from reaching its goals. The industry just needs to inject a little effort, and as many great world leaders would say, work hard.
Industry 2: Pharmaceutical
More Effort Needed to Produce Halal Medicine
By Hayati Hayatudin
It is the duty of a Muslim to produce Halal pharmaceutical and medicinal products for the society. The Halal Journal learns from an interview with Tun Dr Mahathir Mohamad while some industry players reveal hard facts about gelatine use.
Muslims have to fully utilise their country’s resources if they want to be leaders in the pharmaceutical and medicine industry. At the same time, if they do not have the know-how to develop Halal medicine products, they should look for the means to acquire that knowledge in order to make them more competitive.
That is the view of world-class leader and former Prime Minister of Malaysia Tun Dr Mahathir Mohamad. Malaysia, according to him, has a ‘tremendous potential’ to further develop the bio-technology industry. “We are among the richest [countries] in terms of genes that can be utilised for various purposes. So if we do not do it ourselves, others may come in and pick up some of the things they can develop,” he says. “So we must make use of the resources in this country. That is why we promote this [bio-technology and pharmaceutical industry] because it is another source of wealth to the country”.
Dr Mahathir. Who was the Prime Minister of Malaysia for 22 years since 1981, had spearheaded the bio-technology industry during his tenure. The industry was positioned to be an engine of growth for a society geared towards the sciences.
Muslims are very particular in Halal and Haram issues, therefore if the industry can supply them with products that do not make them suspicious, it should do so. Many may term this obligation as fardhu kifayah which is an ibadah or act, which will benefit the community and society at large.
Dr Mahathir says Muslims should consume the Halal products provided by the industry. On the other hand, he says, “Of course when [the product] is not available, you may question whether the capsule [or medicine to be consumed] is Halal or not, but when you are dying, you should not do so.” Islam teaches us that life is important but when in an emergency – or darurat – and faced with a choice of life or death, the issue of whether a medicine is Halal or Haram is not of prime importance. “What is important is your life,” he says, adding that the Halal product needs to be consumed if it is available.
However, Dr Mahathir goes on to say that Muslims have a responsibility to make available and produce Halal products while consumers in response, should support the industry by purchasing them. Malaysia may not have the full capacity to produce Halal products yet, but if one feels very strongly about it, it is their responsibility to acquire the knowledge. “Go learn and open up a factory,” Dr Mahathir challenges.
On what Malaysia can do to make its Halal standards be accepted worldwide, Dr Mahathir says that, when describing Halal food, it should not be defined as ‘Islamic Food’. “We should explain that the food or product is prepared the Islamic way. And it is very clean. Therefore people will take it,” he says. It is the same as Islamic banking where the banks lend out money the Muslim way. The non-Muslims have no problem accepting this. “In fact, many non-Muslims are patrons of Islamic banking,” he points out.
The issue of Halal or Haram does not arise for non-Muslims as it is only a concern for Muslim clientele. Therefore if Halal products are produce, it would be benefit the manufacturer as he would not lose out on the non-Muslim market would in turn gain the confidence of the Muslim market.
There are several companies who have successfully produced and marketed Halal pharmaceutical products in Malaysia. A perfect example is a Halal vaccine for hajj pilgrims, produced by Finlay-Heber-Bioven Sdn Bhd. The Malaysian company, a subsidiary of Bioven Holdings Sdn Bhd, worked with the Centre for Genetic Engineering and Biotechnology in Cuba to develop the vaccine to treat meningococcal meningitis. The collaboration, which will involve experts from Universiti Sains Malaysia and other local universities, is hoping to market the vaccine globally, especially to the Organisation of the Islamic Conference countries.
Another company that has successfully produced Halal pharmaceutical products is Halagel (M) Sdn Bhd, which is currently a leader supplier and distributor of Halal gelatine ingredients for food and pharmaceutical manufacturers in Malaysia. Incorporated on August 19th, 1997, Halagel is the sole importer and distributor for Halal gelatine, Halal empty hard gelatine capsules and dicalcium phosphate, which is widely used in toothpaste.
Its business development manager Muhammad Azhar Abdullah says, Halagel is the only company recognised by the Islamic Development Department of Malaysia and the Islamic Central Committee of Thailand for gelatine and empty hard gelatine capsules. “Many people may not be aware but gelatine is used in various products and is not limited to food or pharmaceutical products,” he says. Some of the non-food and pharmaceutical gelatine usages include photo film, paper and photogravure printing, x-ray film for photography, box making, paper manufacturing and fingerprinting for technical industries.
More than 50 per cent of the total world’s production of gelatine is used in food manufacturing. The world population of gelatine production in 2002 is estimated at 270,000 metric tonnes. Some of the biggest producers are European countries, the US, South America and also Asian countries like Indonesia, Thailand, Japan and China. From this amount, 41 per cent of the gelatine is sourced from pigskin, 28.5 per cent from bovine hides and 29.5 per cent from bovine bones.
“There are two types of gelatine from pigskin and from bovine sources such as goats, buffalo and cows. The former is preferred because it takes a month to process compared to the latter’s three months, therefore making it cheaper to produce,” Muhammad Azhar says.
And this is where Halagel fits in. Its chief executive officer Mohamad Yakob Munshi Deen said Halagel’s objective is to provide Halal alternative products to create Halal alternative brands. In 2003 and 2004, Halagel imported 250 metric tonnes of gelatine and 200 million capsules in 2004 alone.
“We have taken over 80 per cent of the gelatine market. There are still 20 to 30 per cent of non-Halal products in the market,” he says, adding that consumer products from Thailand and Indonesia used gelatine from non-confirmed sources. Mohamad Yakob says Halagel not only hopes to create branding but also aims to manufacture their own soft gel and other alternative for gelatine and capsules.
The demand for Halal pharmaceutical products is on the rise as awareness amongst Muslims all over the world is growing on the use of gelatine and other non-Halal contents in medicine and pharmaceutical products. Just as Muslims are beginning to demand more Halal food in various forms, they are also beginning to realise that Halal encompasses more than just food items.
It is the role and responsibility of Muslims to ensure there is a supply of Halal pharmaceutical and medicinal products in the market. The industry has shown it has the means to produce. It is just a matter of doing it on a large scale to ensure that the demand of the world Muslim population is met.
Industry 3: Islamic Banking
Raising the Stakes – An Islamic Banking Window of Opportunity
By Abdalhamid Evans
Islamic banking has grown out of its domestic market realm. It is an international market with a domestic sector.
2005 will see the emergence of six new Islamic banks into the Malaysian banking scene. Local banks RHB, BCB and Hong Leong will be launching their Islamic banking subsidiaries whereas overseas banks Kuwait Finance House, Al-Rajhi Banking & Investment Corp and Rusd Investment Bank (a Qatari-led consortium registered in Labuan), will be stepping onto the Malaysian stage.
Along with Bank Islam and Bank Muamalat, that will make a total of eight dedicated Islamic banks, plus all the ‘Islamic windows’ from the other banks, both foreign and domestic. This will make for a crowded and competitive market.
This is of course a double-edged sword, and it will require the domestic banks to raise their game in order to compete effectively. The key to this change will be, in essence, a change in the mindset of the local players. There is a limited number of Islamic banking products and services on offer, and there is actually not that much difference between one bank’s products and the next. Branding, marketing and customer service are likely to be the criteria that determine the sinkers from the swimmers.
Initially, this places the local players at a disadvantage. Accustomed to marketing in Islamic banking services to Malay Muslims, who wish to avoid riba- (interest) based transactions as far as possible, the local banks have been slow to develop their brands and customer service skills. It was deemed sufficient to offer the service, even if the terms were difficult to understand – even for most Muslims.
All this will have to change. Local players will have to raise their standards to compete in what is about to be effectively a borderless market. Information will have to be in English, terms and products will need to be explained and defined clearly, and staff will have to be trained to express themselves knowledgeably and coherently.
Islamic banking must not be viewed as a domestic market; it is an international market, not a domestic sector. And it is certainly not an exclusively Muslim market. For commercial Islamic banking services, the majority of customers are non-Muslim, indicating that these customers have bought these products and services simply on their merits.
Malaysia’s potential strengths in the Islamic banking sector lie in branding and standards. The products and services on offer, of course have to be world-class – this should go without saying. But the battle for market sector will be won and lost on branding and marketing.
Malaysia’s strength lies in its Islamic heritage. It is respected in both the Muslim and non-Muslim world as a standard-bearer and role model. Like the ‘halal’ logo, Malaysia Islamic banking standards are recognised (if not always agreed upon) throughout the world; and certainly in the South East Asian region, Malaysia is the Islamic leader.
In all industry sectors, we are now seeing that anyone can make a good product; the skill, and consequent market domination, lies in managing the branding and standards. In the Islamic banking sector, Malaysia has the opportunity to establish both.
The Islamic Financial Services Board (IFSB) is a world-class body entrusted with the much-needed international standards for Islamic banking. The secretariat is based in Kuala Lumpur, giving Malaysia the opportunity to be the place from the standards issue. This is a marketing man’s dream. Handled correctly, this gives Malaysia a real – and unique – opportunity to establish itself as the regional Islamic banking hub, if not a global one.
Singapore may have a superior banking infrastructure and an international banking reputation, but ultimately, like everyone else, will follow the standards set by the IFSB in Malaysia. If, in addition to banking services, Malaysia is established as a centre for training in the appropriate standards, management skills and product development, Kuala Lumpur will quite naturally become a hub for Islamic banking.
However, an Islamic heritage, training establishments and setting standards will be to no avail if Malaysia does not make an effort to brand itself as an Islamic banking centre. The success of campaigns such as ‘Malaysia Truly Asia’ internationally, ‘Cuti-cuti Malaysia’ on the home front have demonstrated that a well-conceived marketing campaigns can reap good rewards, and the same kind of thinking has to be applied to the whole concept of Malaysia as an Islamic banking hub.
Indeed the most effective strategy in this respect is to recognise that Malaysia’s ambitions to be a hub for Halal products and services; and for Islamic banking are not two separate ambitions. They are actually just different aspects of the same goal that will both benefit if they are viewed holistically, as parts of the same whole.
Halal goods and services, primary food production as well as downstream secondary services, halal logistics, storage and transport, Halal standards and certification, Islamic banking services, Halal investments and wealth management…all of these activities naturally belong together.
If all the sectors of the Halal market are recognised to be segments of the same pie, and if the marketing and branding strategies can be devised with this reality in mind, all Halal market sectors will benefit. One will strengthen the other, and all will benefit from being seen as part of a diverse, yet unified, market.
The Halal market sector has so much room for growth and development. Why is the great wealth of the high-worth individuals in the Muslim world still predominantly handled by the western banks? Why is so much of the Halal food production of the world in the hands of the non-Muslims?
These are great business opportunities for the rising generation of Muslim businessmen and women. To take advantage of them, we must first stop thinking and behaving simply as consumers. We are the holders of the standards; they were given to us as a trust so that we might establish them for the protection of all mankind.
If we do not rise to this challenge, we must not look surprised if someone else does.
Industry 4: Islamic Fashion & Textile
Modesty Unveiled
By Remi Yahya-Ishmael
Halal is the new green. When that is translated to Islamic fashion, the green could have a kaleidoscope shade of lime, leaf, jade, emerald and tropical. Throw in the likes of Marc Jacobses and Stella McCartneys of the Islamic fashion scene and your chances of getting noticed by at least 1.5 billion Muslims around the world are huge.
If you take into consideration five billion non-Muslims who seek modesty in their outfits, the success rate is preponderantly astronomical. Until now, fashion has been all about how much flesh you dare to reveal. In the past few ephemeral cycles of haute couture treadmill, we have seen split-to-the-waist Chanel goddesses come and go. Invisible tapes vanished from the backstage shelves. Micro mini dresses and gravity defying décolletage will soon become things of the past.
“The new look is all about being covered up. Modesty is back,” reports the Sydney Morning Herald’s online daily last December. Well, modesty is certainly not unique to Islam – just like you do not have to be Japanese to enjoy sushi.
Malaysia has understood the colossal potential of Islamic fashion by thinking out of the box. Halal, which signifies all that is clean and pure, is not just about food. It is a 360-degree radius concept covering business practices, trading and marketing methods, financial structures, systems and good governance. And fashion.
“I do not like the way Islam has been pigeon-holed and stereotyped. it is too universal for that,” said Jumaatun Azmi, coordinator of last August’s talk-of-the-town International Islamic Fashion Show (IIFS) 2004, in a previous interview with The Halal Journal. Perhaps, because of its rather limited range of participating designer houses, namely from Malaysia, Indonesia and Vietnam it fell short of a true international status like the recent Mercedes-Benz-sponsored Malaysia International Fashion Awards 2004. IIFS 2004 stirred curiosity more than it revolutionised the Islamic fashion scene, but its effort to include fashion in the vast spectrum of Halal is absolutely laudable.
IIFS 2004 started the ball rolling for another international event organised by a Malaysian company last December. Themed ‘Elegance in Modesty’, the International Muslim Women’s Textile & Apparel Conference 2004 – organised by Positive Grooming – was aimed to showcase and highlight the latest trends in the Muslim women fashion world as well as to provide a suitable trade and marketing platform for industry players. According to a document presented during the conference by the Malaysia External Trade and Development Corporation (MATRADE), exports of textile and clothing amounted to RM8.5 billion in 2003, ranking it as one of the top ten export earners for Malaysia. Textile and apparel accounted for 2.1 per cent, more than processed food and rubber products at 1.4 and 1.3 per cent respectively. Exports of this sector are expected to grow by more than three per cent in 2004-2005.
“Fashion can bring in money,” said Malaysian Tourism Minister, Datuk Dr. Leo Michael Toyad, when launching the Kuala Lumpur – Asian Fashion Week 2004 in November. Though there are no official figures proving that Islamic fashion industry can benefit from the thriving textile and apparel industry, one could imagine the economic ripple effect it would create.
“We believe that you have to create the right textile for the right apparel,” said Positive Grooming’s founder-director, Yasmin Siddik. The textile and fashion industries, according to her, are not working together, which results in fashion designers creating out of whatever is available in the market.
Turkey may be a perfect example for Malaysia and other countries keen to tap into this vast Islamic fashion market. The clash between haute couture and religion could not be more obvious in the overwhelmingly Muslim but staunchly secular Turkey. Its strategic location between Asia and Europe provides it with the better of two cultures. Turkish women, who seek to be fashionable and religious, don head scarves to cover their golden locks – but also watch televised prêt-à-porter fashion shows in Paris and leaf through Italian fashion magazines.
“98 per cent of the Turkish population is Muslim,” says Umit Tanit, commercial counsellor of the Turkish Embassy in Kuala Lumpur, Malaysia, “but people have the freedom to choose whatever fashion they want to follow”. This specific necessity in fashion has been the leitmotiv behind the creation of a Turkish company called Tekbir Giyim, founded by director Mustafa Karaduman, who spotted the Islamic chic market more than two decades ago. Karaduman, a somewhat Turkish Yves Saint Laurent, made Tekbir Giyim into the most successful Islamic fashion house in Turkey. “[Turkish Muslim women] want to be as chic as French women while preserving their religious values,” said Karaduman in an interview with canoe.ca.
The fact that the Turkish textile and apparel industry is one of the most important sectors in its economy, in terms of gross domestic product (GDP), employment and exports, makes its Islamic fashion scene more advanced compared to Malaysia. The share of this sector in the country’s GDP is around 10 per cent. There are approximately 55,000 manufacturing companies, which employ a total of 690,000 employees. The Turkish textile and apparel industry has a share of 21.5 per cent in Turkey’s total manufacturing sector.
So how big is industry actually? Very big indeed. In 2003, the Turkish textile and clothing exports reached a behemoth amount of USD15.1 billion, which represents a 25 per cent increase compared to the previous year. Turkey ranks fourth in world exports respectively.
“People can have different choices [in fashion] and these choices have to be addressed by the business community,” says Tanit. Karaduman did just that: he catered to the needs of the Muslim women, who were flocking the work force in 1984 when the Turkish government encouraged traditional women to work.
“[With Islamic fashion], you both retain your morality and build a modern image for yourself,” said Ayse Saktamber, professor of sociology at Middle East Technical University in Ankara, to canoe.ca. Imagine how easy it gets for women from traditional homes to work in the modern sector – the fashionable cut to their clothes lets them feel comfortable in a secular office, while head scarves, long sleeves and skirts let them retain their families’ respect.
The rest, as they say, is history. Karaduman’s Istanbul-based company grew from a workshop with two sewing machines making 100 garments a week – to a blooming business that produces 10,500 garments a week and owns 10 stores in Turkey and one in Saudi Arabia. Tekbir and its sister brand D-8 are the leading names in Islamic fashion, with sales in outlets throughout Turkey and Europe.
In a country like Malaysia where the majority of Muslim women are moderately covered, the potential of expanding local Islamic fashion houses is substantial. Pair that with the on-going efforts by the government to establish Malaysia as an international Halal hub, and you will have an all-encompassing concept that can be the centre of a puissant market force.
**This article was first published in The Halal Journal Jan/Feb 2005 edition, and was written by various authors.
