Halal to the world: Malaysia’s HDC gearing up to provide consultancy to foreign governments

KUALA LUMPUR - Malaysia’s Halal Development Corporation Berhad (HDC) is getting ready to announce several government-level collaborations with other countries to help develop their national halal infrastructures.

Salaam Gateway understands that nations including Russia, Taiwan and Senegal, as well as some republics in Central Asia, have called on HDC, the government agency that promotes Malaysian expertise overseas, to advise on building their halal capabilities.

These countries are working with HDC’s Halal Consultancy business unit in a bid to devise frameworks for the development of their own halal industries so they are better placed to tap into the global halal market.

According to HDC chief executive Hairol Ariffein Sahari, these intergovernmental collaborations are part of a new strategy this year that will allow Malaysia to capitalise more on its halal expertise.

“For years, Malaysia has been very successful in promoting halal to the rest of the world through its certification, which is now seen everywhere as the gold standard. But we are yet to benefit from this in terms of trade,” Hairol Ariffein told Salaam Gateway.

According to figures quoted this year by MATRADE, Malaysia’s external trade promoter, of the near 7,500 companies involved in the halal industry, only a quarter export abroad.

Hairol Ariffein himself recently admitted that Malaysia had a trade deficit in halal products, with $25 billion in imports, compared with exports of just $10 billion.

“The Malaysian halal ecosystem needs to be better connected to halal ecosystems in other countries through a robust supply chain,” he said.

“To address this, we have entered into a strategy that will position us at the centre of the global halal industry, and part of this will be by helping other countries develop their competence.”

HALAL MASTERPLAN

The strategy is part of HDC’s Halal Industry Master Plan 2030 that sets out to deliver a two-thirds increase in Malaysia’s domestic returns from the halal industry by 2030, while also increasing its contribution to GDP to 11%, from 7.4% today. It is expected that the plan’s goals will be revised upwards later this year.

In addition to offering a more internationally focused Halal Consultancy, the masterplan also seeks to help halal industry workers to network in new markets by training them as third-party auditors through HDC’s Halal Training Institute.

More productivity is hoped to come through an expanded network of halal manufacturing and services parks in Malaysia, while a software platform under development aims to provide an online marketplace for 200,000 local halal SMEs.

By establishing soft power at the highest level in countries with a strong interest in developing their halal ecosystems, Malaysia will be able to ingrain its certification and instill greater dependence on its systems and supply chain in those markets.

“For this year, our business unit has been focusing more on getting companies ready for JAKIM certification, introducing consulting services for halal-certified companies and other halal establishments, and helping all entities to come up with their halal strategies,” said Dhaliff Anuar, head of HDC’s Halal Consultancy.

“So we have been bringing this outside of Malaysia and we want to help other countries to develop their halal economies by imitating what Malaysia has done. By tapping into our knowledge, we’ll crack it for them—we can help them and guide them through their objectives,” said Dhaliff, who was previously manager for halal industry and integrity service at PwC Malaysia.

JAKIM CERTIFICATION INTERNATIONAL VALUE CHAIN

If Malaysia wants to increase the amount of its halal trade, and in turn reduce its deficit, it will need to produce more goods backed by its certification system. But to manufacture processed food, which MATRADE believes amounts to 70% of Malaysia’s halal industry, it needs imported ingredients that JAKIM demands be traced all the way back along the value chain. This can be expensive and time-consuming for the 98.5% of Malaysian businesses that are SMEs.

By using its influence and the weight of JAKIM certification in other parts of the world that supply Malaysia with ingredients, there can be traceability throughout a halal value chain that has Malaysian standards across every link. It is also likely that the country will entice more foreign businesses to invest in manufacturing on its soil.

China’s biggest tea brand, Tae Tea, is one such company. It sees new opportunities among Muslim consumers in Southeast Asia, the Middle East and Europe through halal certification and has ambitions to expand its production into Malaysia.

“Our plan is to have new products that are halal-certified. We are interested in entering the Malaysian market, as it is a very important hub connecting Asia with the Middle East and neighbouring countries,” Dennis Wu, deputy general manager of Tae Tea, told Salaam Gateway.

Tae Tea was introduced to HDC by the Malaysian consul general in Kunming earlier this year. With its vast plantations, several factories and a lengthy supply chain, the company’s scale necessitates guidance through the certification process, while Halal Consultancy’s involvement will be sure to help open doors in the market.

“The halal segment is our biggest potential market for a new group of consumers. If everything goes okay, we will proceed to build a factory in Malaysia, from which we can distribute more product overseas.

“We are doing this to get easier access to Muslim markets from Malaysia. We are working to get through the halal certification process, and then we will see if our products are accepted by halal consumers,” Wu added.

GOVERNMENT LEVEL HALAL CONSULTANCY

Dhaliff said Halal Consultancy is the “support system for Malaysia’s initiative to go forward and convert all players into participating in the halal economy”. Governments and national religious officials have recognised this and some have approached Malaysia through diplomatic channels to call on its halal experience.

“Most of the enquiries we have received are from countries that want or need to somehow develop their own individual halal national framework so they can acquire more halal trade,” Dhaliff said.

“They intend to gain a deeper and better halal ecosystem, or halal economy, in their countries. Normally, we would propose for them to have a masterplan or blueprint or action plan. The service we provide include compiling studies, analyses, reports and statistics. It’s kind of normal consultation work, just that what we provide is the halal essence to it.”

Halal Consultancy is currently in talks with Russian authorities ahead of signing a partnership. It is likewise discussing engagement with Senegal, which is also representing the 15-country Economic Community of West African States (ECOWAS).

“This government-to-government agenda will probably take some time to position with the consulting,” Dhaliff added.

In Taiwan, where HDC has already been working with the country’s Food Industry Research and Development Institute to develop its halal industry, a consultancy pitch is on the table. And in China, where it has a representative office and there is a strong trade ministry focus, the emphasis has been on encouraging big companies like Tae Tea to adopt Malaysian halal certification.

“We will tell these countries what they need to do to go forward, to form up, to establish their halal framework and all that; whatever gaps that they need to fill. This is where our consultancy helps. We can transfer the knowledge because Malaysia has that expertise,” Dhaliff added.

(Reporting by Richard Whitehead; Editing by Emmy Abdul Alim emmy.abdulalim@salaamgateway.com)

*Correction: HDC's name in the opening para was corrected from Halal Industry Development Corporation to Halal Development Corporation Berhad. HDC was corporatised in December 2019.

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