Photo: A woman buying halal meat from a stall at the Dato Keramat Wet Market in Kuala Lumpur, Malaysia, on July 13, 2019. Afif Abd. Halim/Shutterstock

Halal Industry

How can Malaysia achieve halal food security and self-sufficiency? One expert submits her plan

Food security and self-sufficiency have become increasingly urgent amid the COVID-19 crisis during which the movement of goods and people have either been halted or restricted. During this time as well, physical halal auditing and certification processes have been suspended, potentially leading to the risk of shortages of halal-certified ingredients, foods and beverages, as well as inauthentic halal supplies.

Halal expert and professional Roziatul Akmam Osman has a plan she believes can help Malaysia achieve a sound level of halal self-sufficiency moving forward. She submitted her plan online on April 6 to the Secretariat of the Economic Action Council (via its co-chair the Economic Planning Unit) that was established March 11 to address what the government said are Malaysia’s “economic woes”. Rozi is waiting to hear back from the Council.

In this Q&A, the former General Manager, Group Halal & Government Relations for the Chemical Company of Malaysia (CCM), says her plan includes the government establishing a working group co-chaired by the Halal Development Corporation (HDC) and Department of Islamic Development Malaysia (JAKIM), a "Halal Trading House", and have both JAKIM and HDC leverage their extensive global and domestic reach.

This Q&A has been edited for language and brevity.


Salaam Gateway: What are the main challenges Malaysia needs to overcome to achieve self-sufficiency for key ingredients?

Rozi Osman: I managed to obtain a 2018 report on Malaysia’s self-sufficiency ratio (SSR), which had identified that 22 out of 36 selected agriculture commodities recorded SSR of more than 100%, the notable ones being chicken eggs, tuna, cuttlefish, in addition to some favourite local fruits and vegetables.

However, I believe that the ratios may be different now since two years have passed. Furthermore, with the effects from the COVID-19 pandemic, in my humble opinion, there would be some significant changes to the ratio.

This reflects that access to up-to-date data is very critical, and there is an urgency to expedite the use of technology to enable adequate access to essential data such as the SSR.

Then again, the self-sufficiency ratio is only focused on the primary/natural agricultural commodities. It does not reflect the final consumable products which the public are actually consuming. Thus, realistically and in my humble opinion, no country can make a statement of succeeding in achieving self-sufficiency through 100% domestic production.

As much as Malaysia, or any country for that matter, would like to be self-sufficient, we must admit and accept the fact that although we may have the natural resources for some of the key ingredients, the reality is that in processing these key ingredients into consumable goods we also have to be reliant upon the global supply of non-primary materials/ingredients, additives, flavouring, etc. We may not have the capacity nor the cost-effective capabilities and measures to venture into manufacturing these non-key, yet still, essential items.

Some examples of these items are gelatine, stearic acid, glycerol and enzymes, which are mostly derived from animal sources.

I believe you would have, of late, observed, just like me, that the top halal meat exporters are in the top listing of countries with the highest numbers of confirmed cases of COVID-19. This uncanny similarity is somewhat unnerving. There have been several headlines recently about drops in export volumes and even closure of meat processing plants.

It should also be noted that with the lockdown or movement control/restrictions being imposed in most countries to minimise the spread of COVID-19, physical halal certification inspections have been halted. It is, therefore, raising concerns on the integrity and validity of the halal certification of products of animal origin.

2. You’ve detailed a plan you believe can help Malaysia towards halal self-sufficiency, which begins with the formation of a working group.

This Working Group (WG) would be a platform to converge the knowledge, expertise and experience of the related experts in the field and decision-makers in the government. Its formation should be at the federal level due to the urgency of the matter which is nation-centric.

The working group will be specific, focus-driven and enables the members to work together with a shared commitment and a common goal. It should strategically identify, clarify and prioritise risks which may affect the final objective of making Malaysia reach a sound level of halal self-sufficiency, especially in the light of the effects from the COVID-19 pandemic.

It would formulate strategies to mitigate these risks and prevent, if not minimise, them from cumulating to become a disruptive event, i.e. a crisis. The tasks of the working group are to develop and execute strategies together with the corresponding action plans; monitor the progress of these executions on a timely basis and review the effectiveness of these strategies and action plans regularly to enable rapid implementation of enhancements and rectifications.

The identification of these risks must take into consideration the whole spectrum of the supply chain, especially with regards to the sustainability, integrity and affordability of the global upstream supply of authentic halal-certified materials, ingredients, additives, etc. That is why there is a need for both HDC and JAKIM to co-chair this working group because both the assurance of supply and halal integrity have the same degree of importance. 

3.  What would this working group be responsible for?

I propose that the primary responsibility of this working group is to develop and execute the “National Halal Risk Management Strategic Plan”.

It emulates the concept of the Enterprise Risk Management (ERM) onto the national level during this period of unpredictable business environment.

I believe most multinational corporations (MNCs) and local large companies (LLCs) would have adopted this model in their organisations, especially during the present pandemic situation. Unfortunately, in my humble opinion, the small and medium enterprises (SMEs) may not have the resources nor the capabilities to do so. 

Therefore, in these unprecedented times, the learning curve needs to be exponential - even faster and steeper than the COVID-19 positive cases chart. I genuinely feel the federal government, through HDC and JAKIM, must take the lead and provide this platform to be the impetus for the industry players, especially the SMEs, with the MNCs and LLCs contributing their resources, expertise and experience. This can be an opportunity for a more comprehensive Halal Risk Management Strategic Plan to be developed as a national initiative for the benefit of the whole ecosystem and all its stakeholders.

4.  One of the initiatives that you propose is a “Halal Trading House”. What exactly is this, and how would it work?

A Trading House is a commercial intermediary run by international trade experts. This type of entity specialises in importing, exporting and trading. It purchases and sells products at both international and domestic level, for and to other businesses. Thus, a “Halal Trading House” will be providing these specialised services but focusing only on halal-certified goods. 

As time is of the essence in this period we are currently in, it is definitely not possible to start the Halal Trading House from scratch. Therefore, I would suggest for the government to form a consortium of established and reputable trading houses operating in Malaysia that are already providing their services to the halal sectors of the various industries operating here. 

Each of these established trading houses should optimise their expertise together with their international and domestic networks to facilitate effective and efficient multi-industry upstream-downstream supply chains which are also sustainable and affordable. The consortium should additionally be responsible for ensuring and upholding the halal integrity throughout the ecosystem. 

This consortium should be guided and monitored by the lead working group so that there will be no monopoly. Instead, the escalating manufacturing costs can be mitigated somewhat by all manufacturers, especially the SMEs. It should, at the end of it, assure that the finished goods will be priced reasonably and still within the affordable range of the targeted consumer groups.

In order to get the best bargaining power, this consortium should be making the relevant orders in bulk for the consumption of Malaysian manufacturers. This bulk purchasing will not only ensure price competitiveness but can also, at the same time, demonstrate to the international market that there is a high demand for such authentic halal-certified items. In this current global limitation of movement due to COVID-19, our manufacturers, especially the SMEs, will undoubtedly face difficulties if they are still going to place the orders on their own/individually.

If there is firm backing and support from the government, this consortium would be able to facilitate and ease out matters relating to international trade documentation requirements through Government-to-Government (G2G) negotiations especially for new sources and new countries of origin for the required authentic halal-certified materials/ingredients, additives, flavouring, etc.

The government also needs to revive the “Malaysia Incorporated” concept of public-private partnership specifically to address the risks in the upstream supply of authentic halal-certified ingredients, materials, additives, etc. to ensure the halal-certified consumable products are available for the nation. However, instead of focusing on a single organisation, the concept should be adopted for a consortium of established and reputable trading houses.

5.  You suggest JAKIM could use its network of global halal certifying authorities to gain access to the sources of halal-certified raw materials, ingredients, additives, etc., and that the International Halal Authority Board (IHAB) should be used as the platform to matchmake the demand and supply of these items. JAKIM is not an organisation that engages in trade, and this appears to be out of its expertise.

By “gain access” and “matchmake the demand and supply”, I am inferring that JAKIM should optimise its network and position in the International Halal Authority Board to facilitate the identification of potential new sources of the upstream supply of authentic halal-certified ingredients, materials, additives, etc. 

I would think that through discussions with halal authorities and halal certifying bodies that are members or observers in IHAB, the exchange of ideas and solutions would surface. These would facilitate the endeavour of sourcing of new, or even sustaining the existing supply of, authentic halal-certified items required for the production of consumable goods.

In my humble opinion, such interactions and exchanges of ideas do not put JAKIM or even any of the IHAB members and observers into being directly involved in trade. Instead, they act as the conduit to facilitate in easing out any bottleneck in the upstream halal supply chain.

A larger, global collective demand for halal-certified raw materials/ingredients, additives, etc. would prove to suppliers that authentic halal-certified goods are indeed required worldwide.

At the same time, as I mentioned earlier, the COVID-19 pandemic lockdown or movement control orders are halting the halal certification process. Both desk and field audits are now on hold, putting the integrity and validity of halal certificates at the risk of being compromised. JAKIM should take the lead role in resolving this for both the domestic and international halal certification process. Appropriate and reliable alternative(s) must be developed urgently and swiftly to ensure that the authenticity of halal certificates remains intact.

In these trying times, Islamic countries should endeavour to work together, collaborate and join forces to optimise each other’s manufacturing strengths for the benefit of the Ummah, especially Muslims in countries most in need, those in the non-Muslim majority countries as well as refugees.

As this precedented calamity is affecting the supply of permitted animals (cows etc.), there should also be discussions about spawning off new industries for synthetic materials such as gelatine, stearic acid, glycerol and enzymes. Such endeavours are where Islamic countries can focus their R&D efforts, i.e. to create new industries that are sensitive to the needs of Muslims.

Another initiative which perhaps would take lesser time would be to conduct R&D in both Shariah and Science to enable the meat by-products from the annual hajj sacrifice activities in Makkah be utilised to produce the animal-sourced ingredients.

6.  Additionally, your proposal with regards JAKIM’s suggested role sounds like it would step on a lot of privacy laws, especially if access to databases of halal certification bodies are requested. Do you see this as a concern?

I believe that in preventing a dire situation from occurring, collaboration and synergy are vital to ensure a successful implementation of initiatives and action plans. 

I would suggest that upon reaching a common understanding and a shared commitment to mitigate the potential bottleneck in the upstream authentic halal-certified supply chain, the IHAB members and observers who are in agreement with this initiative, would, in turn, discuss with their respective halal-certified companies to obtain their buy-in and consent to be part of this global initiative. Only then will these companies be recommended to the consortium for its members to negotiate trade. 

Thus, I opine that there should not be any concern about privacy. It is not JAKIM that will access the databases. It is the respective halal certification authorities and bodies that will directly contact the relevant companies in their individual databases.

I believe it is a win-win initiative – the halal-certified companies of the IHAB members and observers would have the opportunity to supply to new or expanded customers in Malaysia. On the other hand, the halal-certified manufacturers in Malaysia are assured of the authenticity of the halal-certified supplies as these items have been audited and approved by halal certification authorities/bodies recognised by JAKIM.

As you would have noticed, I have now changed from referring this proposal from a Malaysian initiative to a global one. I believe that once the relevant parties have understood the rationale for this initiative, they too would want to adopt and implement similar efforts in their respective countries for the benefit of the Ummah.

7.  Your proposal also includes HDC to gather industry feedback to tabulate inventory and stock requirements. You have industry experience, having been with the halal-certified CCM for many years. Do you believe the private sector would be amenable to your proposal?

Having been in a position to provide data and feedback when I was holding the office in Finance and when I was spearheading the halal Initiatives in CCM, honestly, if it were a pandemic-free, zero recession-risk period, I would not be agreeable to this proposal myself since it is such a cumbersome and time-consuming activity.

However, upon observing how data plays a very significant role in the decision-making, actions and even inactions taken by the authorities with regards to managing the spread of COVID-19 effectively, I believe that with clear communication and explanation, sufficient buy-in can be obtained from the industry players to garner participation which would provide credible data which can then be analysed to develop the National Halal Risk Management Strategic Plan.

Furthermore, with the involvement of key industry players in the working group and sub-working groups, ideas can be sought in prioritising key questions and elements for the survey without being too burdensome for their respective teams to respond, in light of their present workload and ease of access to data should they be restricted from going to the companies’ premises. Besides, by adopting this prioritising approach, the collection of data and feedback can be made in phases so that adequate consideration can be made to weigh urgency versus ease of access, in order to be fair to the respondents.

The working group should also develop a communication action plan to effectively communicate the need for such feedback and data so that buy-in can be obtained from other industry players as well as from their relevant staff/personnel. Their understanding and interest to participate are essential in ensuring that the data and feedback given would be credible and reliable for an effective decision making process that shall benefit all stakeholders.

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