Cambodia’s halal strategy paves way to diversify economy away from troubled rice crop, says minister for Muslims

Photo: A Cambodian Muslim supporter takes a selfie with President of the ruling Cambodian People's Party (CPP) and Prime Minister Hun Sen (C), after a ceremony at the party headquarters to mark the 65th anniversary of the establishment of the party in Phnom Penh June 28, 2016. REUTERS/Samrang Pring

Just over a year after Cambodia unveiled new halal food regulations, the country’s minister for Muslims has declared he is satisfied with the progress the community has made.

“I’m very positive about Cambodia’s halal economy,” Dr Othsman Hassan, senior minister in the Prime Minister’s office in charge of Muslim affairs, told Salaam Gateway.

“Now we want to promote what we can do and ask [halal] companies to look at Cambodia because we have lots of opportunities.”

Starting with a “zero economy” in 1997, after the Cambodian People’s Party seized control of the country in a violent coup, the minister says the country has seen considerable overall GDP growth over the last 22 years.

According to the World Bank, the growth rate has run at an average of 7.7 percent since 1995, prior to the coup, making it “among the fastest-growing economies in the world”. Economic growth is expected to remain robust over the medium term, says the multilateral organisation.

Overall economic growth may be highly encouraging but Hassan says it is still too early for an accurate indication of halal trade figures.

Last March the commerce ministry unveiled new regulations to standardise halal certification. These were drafted with the support of Malaysian halal officials, who have developed an increasingly close relationship with Cambodia.

The nearby countries had begun collaborating on a halal strategy the previous year after Cambodian prime minister Hun Sen sought help from Malaysia to develop his country’s halal food industry in a bid to diversify exports and attract more tourists and investors from the Muslim world.

Economic diversification is increasingly important for Cambodia. Though it is the world’s biggest producer of rice, Cambodia has struggled to develop its infrastructure for the crop sufficiently in recent years, leading to reduced productivity and a lack of research and development.

It hasn’t helped that the European Union decided in January to impose new import duties on Cambodian rice to the bloc from Cambodia for three years. Previously, the country benefited from the EU’s “Everything But Arms” trade scheme, which allows the world’s least developed countries to export most goods there free from tariffs.

This was prompted by claims that imports of the longer-grained indica rice from Cambodia and Myanmar, another country that enjoyed tariff-free status, had risen by 89 percent over the last five rice-growing seasons, lowering EU producers’ market share to 29 from 61 percent. Cambodia challenged the move at the European Court of Justice.

NEW MARKETS, INVESTMENTS

Lawmakers see approaches to develop Cambodia’s halal economy will provide new access to markets while spurring more inward investment and boosting tourist arrivals from Muslim countries.

“We want to encourage halal training for Cambodian Muslim people and to encourage Islamic investors to come to Cambodia to promote halal food production for export. We also want to encourage investment in other sectors to contribute to speeding up Cambodia’s development,” Hun Sen told reporters after meeting Jamil Khir, then Malaysia’s minister of religion, in September 2017.

For his part, Jamil said the strengthening relationship between the countries would lead to an increasing number of Malaysian businesses investing in Cambodia.

Last year’s halal standards harmonise the halal certification process for food in Cambodia.

Certificates are issued by the Ministry of Commerce, which works closely with the Highest Council for Islamic Religious Affairs, Cambodia’s ulama council, and gets “good support” from Malaysia’s Department of Islamic Development (JAKIM). A draft of the new standards was even sent to the heavyweight halal authority for checking before they were implemented.

Previously, food companies that wanted halal certification had to look overseas because of a lack of internationally recognised certification bodies in Cambodia.

Plans to develop the halal sector form an important element of Cambodia’s 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 the halal sector opens up Cambodia to inward investments from countries including Thailand and Malaysia, which can come in with needed capital and expertise to raise Cambodia's food manufacturing standards to meet international requirements. 

Minister Hassan attributes plans to grow a segment that caters to fewer than five percent of the population to an integrationist government.

“Cambodia is not a Muslim country, we are only about 700,000 out of 16 million people. But the government takes care of the Muslim people of Cambodia,” said Hassan, noting that the country is now represented by two Muslim senators, two Muslim members of parliament, and 11 Muslim deputy ministers—civil servants who run government departments.

“We are able to promote the halal industry internationally and locally, to Muslims and non-Muslims, because we get the full support from the government to make policies and raise awareness of the benefits from halal,” he added.

(Reporting by Richard Whitehead; Editing by Emmy Abdul Alim emmy.alim@refinitiv.com)