Malaysia – the world leader and coordinator of halal industry

Malaysia – the world leader and coordinator of halal industry

 

The local hoteliers, and also many others from the services sector saw an opportunity in trying to adapt its facilities and services to the halal way of doing business. Malaysian government believe that the country can become an attractive destination for Muslim travelers, as well as for (other) non-Muslim travelers.

Recently, Malaysia emerged as one of the most popular tourist destinations. According to some reports (Asean Travel and Tourism Competitiveness Report 2012) it was listed in the top 10 destinations in the world with as many as 25 million visitors a year (BERNAMA, 2011). That it is a case of only a recent phenomenon is confirmed by the number of foreign visitors wich in 2010 reached 24.6 million, when only a year before (2009) it  accounted for 5.5 million. This represents an increase of an incredible 347% within a years time.

Studies have shown that as many as 23.5% of total arrivals was made by Muslim tourists. Most of those tourists were from the Middle East, Iran, Indonesia, Singapore, Brunei, Pakistan, Bangladesh and Turkey. It is most likely that the secret of this enviable success of the tourism sector lies in the constant improvement and expansion of service supply and quality.

The local hoteliers, and also many others from the services sector saw an opportunity in trying to adapt its facilities and services to the halal way of doing business. Because of the increase in demand of Halal food and Islamic-oriented hotels, Malaysian government was right to believe that the country can become an attractive destination for Muslim travelers, as well as for (other) non-Muslim travelers. It is believed and well proved that the increasing number of Islamic-oriented hotel have a positive and significant impact on the country.

 

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The government of Malaysia has established the Halal Industry Development Corporation (HDC) in order to encourage entrepreneurs in obtaining the halal certificate and investors to invest in this market. HDC participates in international conferences, trade fairs and forums that are related to the Halal economy with the intention of creating awareness on the concept of Halal.

Recognizing the great potential of the halal business, Malaysia has decided to position itself as a world leader and coordinator of the halal industry. The government has established the Halal Industry Development Corporation (HDC) in order to encourage entrepreneurs in obtaining the halal certificate and investors to invest in this market.HDC participates in international conferences, trade fairs and forums that are related to the Halal economy with the intention of creating awareness on the concept of Halal.

In step with the development of tourism, hoteliers from Malaysia have encouraged the development of the economy, by creating new job opportunities and the use of many services from other sectors in order to complete the necessary modifications. Malaysia has unparalleled potential as a modern Islamic country at the forefront of economic growth. It has unique advantages in developing and promoting the Halal product and service industry formany reasons:

1. Free market

Malaysia is business-friendly to Muslims as well as to non-Muslims, what makes it a perfect place to start a business. Its gross domestic product has a growth rate of 4.6% for 2008, with a constant increase in domestic demand and continued expansion in private consumption. Today Malaysia is considered to be an export-driven economy by implementing high technology, knowledge-based and capital-intensive industries. As for its location, it is a strategically well positioned country within Asia Pacific, providing easy in-roads emerging markets in Asia and a domestic market with a population of more than 500 million consumers.

2. Government support

There are a lot of investor incentives being given by the government. Their goal is to enhance business in Malaysia. With the intention of creating a conducive operating environment, the government has introduced policies and an efficient institutional infrastructure to develop industry – Halal or otherwise.

3. Talent and people

An industry without talent, is simply said, asset-poor. The Malaysian talent pool is rich with young, educated and productive workers with skills necessary for science- and service-based industries. Malaysia is a multicultural, multiracial and multi-lingual country.

4. Infrastructure

The topography of Malaysia’s economic landscape is made up of a network of well-maintained highways and railways that links to efficient seaports and world-class international airports. And as part of HDC’s initiatives, Malaysia is also home to one of the world’s first Halal Parks.

 

The Investment Opportunities in Malaysia are various

 

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They include industrial land, which can be purchased or leased, already built factories and tax-free incentives for investors in HDC designated Halal Parks. These incentives can be obtained in 3 forms:

The first one is meant for HDC Halal Parks Operators, that are supposed to promote the attractiveness of the Halal Parks by using one of the following 2 incentives:

  • Full income tax exemption for a period of 10 years or 100% income tax exemption on capital expenditure for a period of 5 years

  • Exemption from import duty and sales tax on equipment, components and machines

The second one is intended for Halal Industry Players, with the aim of increasing Malaysian competitiveness in the Global Halal Market particularly for inward and outward investment into the country. The following incentives are to be granted to companies operating in the designed Halal Park:

  • 100% income tax exemption on capital expenditure for a period od  10 years or income tax exemption on export sales for a period of 5 years

  • Exemption on import duty and sales tax on raw materials used for the development and production of halal promoted product

  • Double deduction on expenses incurred in obtaining international quality standards such as HACCP,GMP,Codex Alimentarius (food standard guidelines of FAO and WHO), Sanitation Standards Operating Procedures and regulations on compliance on export markets

The third form of incentives is for Halal Logistics Operators, which are given in order to promote Halal Industry are:

  • Full income tax exemption for a period od 5 years or 100% income tax exemption on capital expenditure for a period of 5 year

  • Exemption from import duty and sales tax on equipment, components and machines

 

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Halal certificate – a marketing tool in promoting halal brand

The research indicated that the Halal certificate can be used as a marketing tool in promoting the Halal brand/products or services. Hotels with Halal certification in their restaurants and premises can give an added competitiveness advantage to the hotels as it attracts not only the foreign but the local tourists as well.

Halal certification is certified by the Department of Islamic Development Malaysia (JAKIM). JAKIM has been appointed as an authoritative body or organization that is responsible in handling local and international Halal certification process. The responsibility of JAKIM is to make sure that the Halal status of the products involved, includes the raw material to be maintained and monitored at all times as halal. Because of the fact that many raw material used in local food production are mostly imported products, it is required to appoint reputable and reliable foreign Halal certification bodies or organizations to keep in check the Halal status of these raw materials (JAKIM, 2012)

In carrying out its tasks, there are other government agencies with which JAKIM collaborates. Even so their roles are different. JAKIM has the authority to certify Halal certification for Halal products considering exports and imports, whereas other agencies only issue Halal certification to companies producing products and services for the local consumption using the same logo.

By the definition of JAKIM (2012), the Halal certification is defined as a process to obtain Halal certification through several steps to prove materials and production process are complied with the standard of Islamic principles. As it is the sole identifying mark that the product meets the Halal requirements, Halal certification is extremely important.

 

JAKIM listed 4 major benefits of Halal certification as following:

  1. confidence that allows the consumers to make an informed choice of their purchases

  2. given competitive advantage, which can be used by the manufacturers as a marketing tool

  3. quality aspect  in order to fulfill all requirements for obtaining the certificate, it is necessary to also follows strict hygiene and other practices

  4. authority wise– it is a mechanism, provided for auditing and monitoring Halal products, starting from the beginning of the process with the preparations, slaughtering, cleaning, processing, handling, disinfecting, storing and transportation

The halal certificate truly represents quality and is not that easy to obtain. Some investments are needed, but once owned, it accounts for great benefits on the market. Malaysia is the proof for it.