Franchise sector to provide RM35b to GDP

The halal franchise biz offers good prospects as products have strong demand abroad


The franchise industry in Malaysia is on track to achieve its contribution of RM35 billion to the national gross domestic product (GDP) by 2020 on sustained strong growth.

Malaysian Franchise Association (MFA) chairman Datuk Radzali Hassan (main picture) said with support from the government and public, the MFA will not be surprised if the target is achieved earlier than expected.

“In 2017, the industry contributed RM27 billion to Malaysia’s GDP. This year, we are expecting an 8% growth,” he said at the press briefing of the Franchise International Malaysia 2018 (FIM2018) conference in Kuala Lumpur yesterday.

Radzali said the halal franchise business offers good prospects as Malaysia has developed expertise in this pace and the products have strong demand abroad.

“Countries like Japan were very hard to break into, and yet, we did it because of our halal industry. We are looking into Korea and India next, we need to understand the culture and move in,” he said.

MFA assistant treasurer Amran Shah Idris said Malaysia is recognised as the No 1 nation for its halal certification.

“Because we are No 1, it makes it easier for us to penetrate and expand into the Middle East and any Muslim nation. For example, Marrybrown (Sdn Bhd) is very successful in the Middle East,” he said.

The FIM2018 conference will run from April 20 to 22, 2018, and has targeted some RM370 million in transactions and deals.

Organised by MFA and the Ministry of Domestic Trade, Cooperatives and Consumerism (KPDNKK), FIM2018 is the largest annual franchise exhibition in South-East Asia and is a one-stop centre for entrepreneurs and the international franchise industry to promote their franchise products and services, while expanding their business network in the region.

In tandem with its national growth plans, Malaysia aims to become a regional franchise hub for South-East Asia by 2020.

Amran said since 1993, there have been 4,271 local outlets that have opened franchises worldwide.

“We have seen 65 local brands penetrate 66 countries so far, and we look forward to moving into more regions soon,” he said.

According to Radzali, the fastest way to start and grow a business is through franchising. However, the government plays a strict role to ensure risk management is handled well enough.

“Through franchising, there are standards to follow, as well as training and operating manuals to adhere to. This sets a guideline for businesses to grow.

“The government will want to see that a business is capable of having a franchise, able to sustain and can support the franchise. That’s why there is a requirement of a minimum of three years in the franchise industry for a franchisee,” Radzali said.

He added that KPDNKK contributes to the franchise industry yearly, with its most recent funding of RM26.6 billion in 2016.

FIM2018 has filled up 116 booths so far including 20 booths hosting local brands from small and medium-sized enterprises.

The event has drawn international participants from 12 countries such as the US, Canada, Australia, the UK, Japan, South Korea, China, Taiwan, Saudi Arabia, Thailand, Singapore and the Philippines.

Some of the overseas brands include Australian coffeehouse company Gloria Jeans Coffees and Philippine-based investment company RK Franchise Consultancy Inc.

FIM2018 also expects investors from Kazakhstan, Japan, Egypt, China, Taiwan, Indonesia, Uzbekistan, Thailand and Vietnam through its Franchise In-Buying Mission programme.

The programme, a new element for the conference, is a collaboration with Malaysia External Trade Development Corp and will aim to assist local brands to penetrate the international market.