Development of Halal Industry in Malaysia

Dato Seri Jamil bin Bidin, CEO

IMT-GT Symposium on Halal Science and Management Halal Products Research Institute, University Putra Malaysia 21 December 2009

Different Sectors of Halal Industry

Foods
Insurance
Pharmaceutical

Leather Products

Halal Product and Services

Toiletries & Cosmetics

Islamic Finance

Food Additives

Drugs and vaccines

Food Supplements

Potential Size of Halal Market

Primary meat
10 35

Processed food & beverages

Potential Halal
market has been quantified as the target market that can potentially be captured

Pharmaceutical

23

Approximately 67%
of potentially Halal products are categorized as fast
5 9 12

Nutraceutical

Confectionery

Bakery products

Cosmetics & personal care

moving consumer goods (FMCG) Food FMCG and

primary meat together account for 62% of the market

FMCG sector

Source:

Euromonitor reports; FAOSTAT

3

Halal Value Chain

Protecting the integrity of the ENTIRE Halal value chain is of utmost IMPORTANCE
Feed & Farm Management
Ingredients Manufacturing/Processing Logistic R&D/Technology Finance Communication/Branding

Are the animal feeds from non-halal based products? Emulsifiers, gelatine, preservatives, colouring, flavouring Who monitors & how do you verify?

Warehousing, Transportation
Alcohol extraction methods, enzymes & Bacteria Haram sources of Income when there is alternatives

Vegetarian Brand? Is it acceptable to brand vegetarian pork as halal?

Through Halal Integrity

Employment opportunities for Muslims with skills in Syariah & Halal food technology

Initiatives
Placement of Halal compliance officers at every Halal producers premise. Training

Strategic Thrust
Create Halal training providers and Halal trainers Halal Integrity R&D Using R&D findings & market information to create new businesses, e.g. palm oil as an alternative to gelatine, Halal gelatine and consumer products

Increasing the number of trained certification auditors Certification Outsourcing of Certification activities such as laboratory analysis , auditing etc.

Through Industry Development

Malaysian Halal Champions
Create Malaysian Champions programme from a selected group of local producers with the potential to become global Halal players To target at least 10 companies/products a year using SMIDECs SCORE system Opportunities for Halal producers to increase their production and efficiency by providing the necessary infrastructure & amenities within the Halal Parks

Halal Parks Industry Development Trade Network

Create trade networking among Halal producers within the value chain Assist and develop Halal compliant service providers in logistics, cold chain and warehousing and packaging materials etc Networking through HDCs trading platform, affiliated partners, certified & accredited companies under the HDC- promoted standards to gain market access, seek joint venture partners, technology transfer, contract products & outward investments Integrating Malaysian companies into regional and global network

Industry Support

Create a HELP DESK to nurture and provide assistance to all SMEs in the country for Halal products

1-800 880 555

Through Brand Development

Nationwide Halal Road Shows throughout the country with the participation of SEDCs,UPEN, MNCs, local producers and industry players to identify potential halal producers

Events

Branding & Promotions

Branding

Increase awareness among people of all faiths and culture on Halal, HDC, and Halal Malaysia for Malaysian halal products to gain distinct competitive advantage Identify potential Halal brand names and provide the necessary assistance in terms of branding

Market Intelligence

Provide the most up-to-date market intelligence on the worldwide Halal markets Publication on HDC Halal Directory 2008 with the listings of Halal producers in operation in Malaysia Conduct Market Intelligence Study and Publish Halal Profile : Malaysia 2008

Components of an Effective Halal Hub

Current Situation
(Zero GDP Value)

Halal Ecosystem / Hub

(High GDP Value)

Halal Reference Centre

Certification Halal Training R&D+I Standards Development

Halal Reference Centre

Production

Specialty Processed Food Ingredients Pharmaceuticals & Personal Care Products Integrated Farming

Enablers
Human Capital Legislation Incentives

Services Islamic Banking & Finance Halal Logistics Halal Tourism

Phase 2 : Implementation Programme

Phase 2: 2010- 2015

Establish Malaysia as one of the preferred locations for Halal-related businesses

Halal Reference Wealth Creation

Establish Malaysia as the global knowledge base on Halal matters

Promote 3 main industry-specific Halal clusters nationally

Promote global recognition of Malaysia Halal brand Halal ingredients Halal processed foods Halal personal care Page 9

Develop strong market/industry capabilities and capacity

Market access connecting to global supply chain

Optimum scale of operations

Increased innovation capabilities

Compliance to international standards

Market share of cosmetics and personal care companies

Source : Euro Monitor

Ingredients commonly used in cosmetics and personal care products

Source: Ethos analysis

Global Market for ingredients by country, 2005

100%= USD 30.4 billion

Source : Euro Monitor

Opportunities for Malaysia through palm oil

Source: Ethos analysis

Incentives
HALAL PARK OPERATORS
Income Tax Exemption(100% tax exemption for 10 years) OR Investment Tax Allowance (100% for 5 years) Exemption on import duty for cold room equipment

HALAL LOGISTIC OPERATORS

Income Tax Exemption(100% tax exemption for 5 years) OR Investment Tax Allowance (100% for 5 years) Exemption on import duty for cold room equipment Compliance to the min infrastructure requirements for Halal Logistic Operations

HALAL INDUSTRY PLAYERS

Income tax exemption on export revenue (100% for 5 years) OR Investment Tax Allowance (100% for 10 years) Exemption from import duty on raw materials Double Deduction on expenses incurred in obtaining international quality standards such as HACCP, GMP, Codex Allimentarious, Sanitation Standard Operating Procedures etc.

Key Halal Parks Development

Port Klang Free Zone (PKFZ)

An integrated 1,000-acre international cargo distribution and consolidation centre situated on Pulau Indah, Port Klang. It was develop by The Port Klang Authority (PKA), the owner of the site, is undertaking the development of PKFZ.

The development consists of: 50 acres industrial land 60 units of ready built light industrial units (LIUs) The open industrial land activities focused on several business activities such as; Distribution of frozen meats Manufacturing of condiments and food products Manufacturing food and beverages Manufacture and distribute pharmaceutical and healthcare products. On LIUs, the main businesses include: Manufacturing of herbal products Processing and bagging of lentils, dhal, spices, chilies and beans Manufacturing foods and beverages, packing palm oil (edible) and mineral water Manufacturing of processed meats and foods. PKFZ Sdn Bhd also offers a multi-storey business complex, hotel and convention hall which serves as the business centre. The business arrangement with PKFZ is only for lease and the rate are as follow: Land RM1.80 per sq ft per annum LIU RM18.00 per sq ft per annum (5,487 sq ft) Business Complex RM22.80 per sq ft per annum

PKFZ Sdn Bhd in cooperation with HDC has dedicated an area of PKFZ as the Halal Flagship Zone in 2008.

Key Halal Parks Development

Selangor Halal Hub
Facilities Centralised storage for regional distribution Freight management Haulage, transportation and distribution Packaging / Labelling Transhipment centre Sterilisation and Fumigation Product inspection and lab test service Frozen and chilled storage for regional distribution Halal logistics services

The Selangor Halal Hub in Pulau Indah was officially launched in 2003. It is fully endorsed and supported by the Selangor State Government. Central Spectrum (M) Sdn Bhd (CSSB), a subsidiary of Kumpulan Hartanah Selangor Bhd is the developer of the Selangor Halal Hub. A total of 325 acres will be developed for the Phase I, 390 acres for Phase II, and 281 acres for Phase III.

Repackaging and processing

Certification for export markets - European Union / U.S. / Middle East Shipment Consolidation Reefer Distribution-domestic and regional Ocean freight, Distribution, freight forwarding and cold / dry warehouse Industrial lots at the Selangor Halal Hub are available for sale at RM22.00/sq ft.

The Selangor Halal Hub has the following infrastructure and amenities: Site clearing and earthworks Roads and roadside drains Water reticulation to the vicinity of the plot Electricity reticulation mains to the vicinity of the plot Telephone ductworks and manholes to the vicinity of the plot

Key Halal Parks Development

Tanjung Manis
The Tanjung Manis Halal Hub in Sarawak is the largest halal hub in Malaysia for upstream and downstream halal food and manufacturing activities. It covers an area of 77,000 hectares with integrated planning by its operator Tanjung Manis Halal Hub Sdn Bhd. With 77,000 hectres of land available, Tanjung Manis Halal Park offers investors tremendous potential and opportunity to capture the growing demand for halal products from both Muslim and non-Muslim markets globally. Strategically located on the west coast of Sarawak the fastest growing and dynamic state in Malaysia one of its advantages is its fast-track approval for halal ceritifcation. For Phase I of the project, about 600 acres will be developed into various components that would include: R&D Center - Tilapia hatchery - Chlorella culture Tilapia pond and cage culture Downstream processing industries - Fish fillet - Collagen and gelatin Chlorella industries - Bio-tech prawn farming

Privileges & Benefits

Brand Development Program Others International Marketing & Promotional Program
Privileges & Benefits

Information Technology Adopting Program HACs Mark

Knowledge Management Program

Financial Advisory Programme

Application for Financial Assistance

Customer / SMEs

Application

Request for recommendation Money disbursement

Screening / evaluate / recommendation

Reason

Process to disbursement / documentation

Approved

Process the application

Financial Institution

Process the application

Declined

Objectives of WHR Summit

To provide an international platform for researchers to introduce, explore and discuss latest updates on research findings, emerging technologies, trends, issues and challenges in Halal industry. To encourage more research on products; processes, services and standards relevant to Halal industry and to appreciate efforts taken in putting them into practices (i.e. commercialization).

Objectives (Ctd)
To establish an international network among scientists, researchers, academicians in developing a recognized International Reference Center in Syariah and Scientific research in Malaysia. To foster the development of knowledge based human capital which is vital for the growth of Halal industry in Malaysia and globally. To promote Malaysia as the centre for Research and Development (R&D) related to Halal industry.

Planning is already underway towards the 3rd Malaysia World Halal R&D Summit 2010, which has been set for 24-25 June 2010, in KUALA LUMPUR, MALAYSIA

LETS MOVE TOGETHER

MOVING TOGETHER
Indonesia Malaysia Thailand Growth Triangle (IMT-GT)
Developmental Plans from 2007-2011, with the following programmes:
Plaza IMT-GT for retailing and distribution Annual Halal Expo and Maulud Nabi Celebration Food Safety Project, Thailand Halal Highway Rantau, Malaysia Halal Trading Project Halal Science Laboratory Network Halal Hotel-Kitchen and Restaurants Halal Medical Hub International Halal Science Symposium Business Incubators for Halal Products and Services
Halal Industry Development Corporation

28

FUTURE POTENTIALS
IMT-GT countries need to work together to realise the Global Halal Hub (Halal Industries) Complement each other is the only way forward to add value to ASEAN productivity United we can fulfil the global needs but divided we are not going anywhere
Halal Industry Development Corporation

Malaysia
(Standard, Training, Certification, Logistics)

Thailand
(Semi-processed,

Global Halal Market

Indonesia
(Raw ingredients, Certification, Distribution)

Processing and Packaging)

29

Regional Clusters Inbound and Outbound

NORTH AMERICA (2.19%)

EUROPE (0.42%) ASIA (27.24%)

AFRICA (47.81%)

IMT-GT (ASEAN)

SOUTH AMERICA (0.42%)

OCEANIA (1.49%)

Source: World Muslim Population, Wikipedia

30

HALAL R&D SECRETARIAT -Road Map

-R&D Fund

IMT-GT HDC

EXPORTER OF HALAL PRODUCTS & SERVICES

INDONESIA

MALAYSIA

THAILAND

ASEAN: FUTURE WORLD HALAL BASE

Many ASEAN countries have low per capita trade-able food consumption. Indication: High potential in future demand.

Currently, chicken meat intake percapita in Indonesia is 4 kg/year. Forecast in 7-8 years, increase in intake per-capita to 8 kg/year, demand increases for chicken meat to 1.3 million MT.
With the increase in economy, rise in disposable income and increasing awareness on Halal; Halal products to be traded particularly meat and meatproducts will increase exponentially.

Halal Industry Development Corporation

32

NEW MARKETS
BRIC (BRAZIL, RUSSIA, INDIA, CHINA) Market Performance Past ten years BRIC + 267.4% Emerging Markets + 129.1% World Markets + -13.6% GDP Growth Projections for 2010 (%) Brazil 2.5 Russia 1.5 India 6.5 China 8.5 Advanced Economies 0.6 USA 0.8 Europe -0.3 Demographic and Economic Characteristics - Strong GDP Growth - High Infrastructure Spending - Increasing Middle Class - Rich Resources

SUMMARY
Halal is a business proposition, ready to be the next world market force Halal products is universal, suitable for everybody Require strategic marketing promotions and global networks Standard, knowledge and experience are crucial for Halal Competency Halal Training is important for human resource development in the Halal industry Integrity of Halal products from farm to fork is important and made possible by competent personnel and through halal certification United and complement each other is the way forward for IMT-GT Business Sector

THANK YOU