Halal food hubs: failures, successes and building a real value proposition
Ever since Malaysia’s former Prime Minister, Tun Abdullah Badawi, in 2006 expressed an ambition to make Malaysia a global halal hub, there have been a string of halal hub projects.
The idea, drawing in part on Porter's cluster theory, is a sound one on paper. If you can create a Halal-only industrial zone in a strategic location, with some shared common facilities and good logistical infrastructure (warehousing, marine, land and air transportation), it could certainly simplify Halal integrity issues and provide a real competitive edge to the stakeholders who operate within the hub.
| YOUR PAIN POINTS ADDRESSED | ASK YOURSELF | |
|
Scenario 1: As a senior manager in a multinational halal food manufacturer, you have been asked by the board to look at the feasibility of setting up a facility in a Halal Hub
Scenario 2: As the CEO of a halal food SME, you need to consider the option of setting up your manufacturing plant in a Halal Hub
|
As a halal food manufacturer, should you be considering setting up a facility in a dedicated Halal Hub? |
Do Halal Hubs actually work? |
| What are some examples of effective Halal Hubs? | ||
| Could there be some potential disadvantages? | ||
KEY CONCERNS
Halal integrity in logistics becomes especially important as 91 percent of Meat and Live Animals imported into Organization of Islamic Cooperation countries (OIC) comes from non-OIC countries.
With recent halal integrity issues in China, pork DNA found in halal burgers in UK schools, horse meat scandals, and others, full traceability of halal products is increasingly becoming a concern.
Specific logistics costs associated with the core halal food category, Meat & Live Animals being imported by OIC member countries, is estimated at $225 million in 2013 by DinarStandard.
ARE THERE ANY SUCCESS MODELS?
Malaysia
Malaysia’s Halal Industry Development Corporation (HIDC) website contains comprehensive guidelines for all potential halal hub operators, and lists 13 halal hubs throughout the country that have HDC’s ‘Halmas’ approved registration. These range in size from 100 acres up to 77,000 acres in Tanjung Manis in Sarawak. There are another 11 that do not yet have Halmas status.
Some of the notable Halal Hubs are:
The Selangor Halal Hub in Pulau Indah at Port Klang was one of the first operational hubs to be developed, and now has 20 companies on location, covering a spectrum of food production companies from palm oil to meat processing.
The Melaka Halal Hub boasts over 40 food and snack manufacturers.
Techpark@enstek, established by JAKIM (the Department of Islamic Development Malaysia) specialises in biotechnology, covering vaccines, medical products, and laboratory facilities as well as some food manufacturers.
Penang International Halal Hub is owned and run by the Penang state government, and offers a fully-integrated range of halal facilities.
These, and more, reinforce Malaysia’s aim to be a halal hub, and these operational hubs certainly provide a range of working models that can be examined and compared.
Dubai
As part of the Dubai Capital of Islamic Economy initiative, the Jebel Ali Free Zone (JAFZA) is an ambitious project that takes full advantage of its strategic location and longstanding track record as a successful transhipment and manufacturing zone.
Developed by Dubai’s Economic Zones World (EZW), the park at JAFZA, and a second one at TechnoPark, covering 210 and 172 acres respectively, reportedly have around 700 companies engaged in the Halal food sector.
Clearly Dubai has certain advantages when it comes to halal hub development, such as its geographic location, government support and funding, and a long history of successful trading. Dubai also has the strategic advantage of being able to review Malaysia’s successes and failures.
Abdalhamid Evans, DinarStandard Associate Partner