Halal companies opt for larger market to set up business

Although Malaysia has a strong base in the halal industry, other countries are catching up fast, says expert


Despite a strong fundamental in the halal economy, local companies are opting for countries with a larger market and better talents to establish their businesses, according to a business consultancy.

Ipsos Business Consulting country head Kiranjit Singh said while Malaysia has a comprehensive ecosystem in developing the halal business, some companies are choosing Indonesia and the Philippines to set up their manufacturing base.

“Companies are looking to tap into the larger domestic market, although we have strong support from the government in the form of various aids and funds.

“Perhaps they set up factories in Indonesia because of the RM300 million market potential, compared to Malaysia’s RM30 million,” he told The Malaysian Reserve at the Halal Lifestyle Conference and Expo 2017 in Kuala Lumpur yesterday.

Kiranjit said companies are moving their research operations or outsource from other countries such as Singapore which has innovative technology, given that research and development is key in business.

“The companies say that they seek better talents and that is the reason they move or outsource,” he said.

He said the halal industry is no longer a niche market, seeing that halal products are largely accepted in non- Islamic countries.

“The halal industry is no longer catered to Muslims only. In 2016, the top 10 halal exports destinations revealed only one Muslim country — Indonesia.

“It’s safe to say that the industry is growing,” Kiranjit said.

The Malaysian government projected the country’s halal industry to reach RM50 billion in trade exports by 2020, with a growth rate of 5% to 6% by the end of 2017.

Kiranjit said other non- Muslim countries are catching up with their own halal products.

“Although Malaysia has a strong base in the halal industry, other countries are catching up fast.

“The Philippines, for example, which is a predominantly non-Muslim country, has made this industry’s products one of its economic drivers, attracting a lot more companies from halal-producing countries,” he said.

Kiranjit said while food and beverage represents the largest sector in the global halal industry, personal care products have been growing at a super fast rate since 2013.

“The global market for modest apparel and halal cosmetics are estimated to register RM1 trillion, with the compound annual growth rate of personal care products standing at 13.3% in 2016,” he said.