Thailand, Malaysia wooing Cambodia’s nascent halal food industry
Photo: Cham Muslim women at a market in Mondulkiri, Cambodia on January 4, 2013 in Siem Reap, Cambodia. Idome/Shutterstock.com
*The original article has been updated throughout with inward investment goals and incentives
Malaysia and Thailand are helping Cambodia develop its own halal standards, at the same time pursuing food export and production opportunities in the country.
Cambodia established a halal steering committee in November last year and has invited Thai and Malaysian authorities to help in the certification process. However, no timelines have been given for the development of the halal standards.
Cambodia’s interest to develop its halal food industry is partly driven by the arrival of increasing numbers of tourists from neighbouring Muslim-majority countries and the need to provide halal food for its estimated 700,000 Muslim population.
Tourists from Southeast Asian neighbours Indonesia and Malaysia account for around 4 percent of total arrivals. Tourist numbers from these two countries rose 4.7 percent to reach 201,614 in 2016 from 192,536 in 2015, according to ministry of tourism data.
Tourists from other Muslim-majority countries make up a very small proportion of Cambodia's total international arrivals. The number of tourists from Pakistan and Bangladesh dipped to 3,478 in 2016 from 3,578 in 2015, and those from Gulf Cooperation Council (GCC) countries are far lower, with Saudi Arabia, UAE, Qatar, Kuwait, and Oman making up just 1,921 of the 4,775,231 tourists in 2015. In the following year this number dropped to 1,709.
A stronger driver for Cambodia is seeing the economic benefits of next-door neighbour Thailand's success in the halal food sector, with exports valued at $6 billion in 2014 and an Islamic economy ecosystem that ranks it second most Muslim-friendly destination among non-Organisation of Islamic Cooperation (OIC) countries on the Global Muslim Travel Index.
However, Cambodia's overarching driver to develop its halal sector is its industrial development policy 2015-2025 that aims to increase the percentage of the industrial sector to GDP, diversify the export of goods by increasing non-textile exports, and promote the export of processed agricultural products. The production of food products and beverages is one of the sectors earmarked with incentives for investors.
Developing its nascent halal sector opens up the country to inward investments from countries such as Thailand and Malaysia that can come in with needed capital and expertise to raise Cambodia's food manufacturing standards to meet international requirements.
Regardless of Cambodia's intentions, the opening up of its halal food sector means new export and production opportunities for both Thailand and Malaysia, which have separately been pursuing closer trade links with Cambodia.
Thailand has around 10 times more Muslims than Cambodia and started formally pushing national efforts to boost its halal industry in 2001 with a common halal standard. The country is now the largest exporter of halal-certified poultry in Southeast Asia. It has closer physical and cultural links to Cambodia than Malaysia and exports to its eastern neighbour were valued at $4.8 billion in 2015, according to most recent data from the World Integrated Trade Solution (WITS). Food products made up around $692 million.
In contrast, Malaysia sold around $235.5 million to Cambodia in 2015, with food products making up $44.7 million, according to WITS. Muslim-majority Malaysia is the more recognised Islamic economy powerhouse, with halal exports reaching 42 billion ringgit ($9.8 billion) last year, surpassing Thailand by almost $4 billion.
Seeking export opportunities and chasing cheaper halal food production and manufacturing costs, in June last year Malaysia’s Halal Development Corp reached an agreement with Cambodian authorities to explore investments in the country’s halal industry.
Thailand is also in discussions with Cambodia to expand its halal food production in the country and has lent its support by training Cambodian officials in the processes for halal production.
All things considered at this juncture, it looks like a win-win technical-capital-resource exchange for both Cambodia and the more developed halal sectors of Thailand and Malaysia.
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