Malaysia has quietly built a commanding leadership as a halal hub of choice for manufacturers, traders and consumers alike. Efforts in the halal field have led to the development of innovative halal solutions for a broad range of businesses.

by Nazery Khalid

Being a country with a majority Muslim population, strategic location and good trade facilities and infrastructures, Malaysia has, not surprisingly, emerged in stature as a key centre for halal products and services. It has put in place the necessary infrastructures and support base and to leverage on its advantages to become a premier hub for halal products. It has done well to capitalise on its strengths and advantages to position itself as a centre for investment, business, trading and distribution for halal goods and services, and has gained global recognition as an important hub for all things halal.

The country has grown from strength to strength from servicing merely the domestic market to catering to a wider marketplace not only comprising the Muslim diaspora but also other consumers worldwide. In the ASEAN region, Malaysia is the undisputed leader in halal trade and industry, and has gained global recognition for its efforts to facilitate the development of halal industry and trade. These include works in areas such as accreditation, certification, R&D, and dedicated halal shipping service.

Thanks to the sustained efforts of the government and strong public-private sector cooperation to promote halal industry in Malaysia, the country has been recognised as a business and trading centre for halal items of some significance. This is evidenced by the growing volumes and value of the production and trade of halal products in Malaysia.

Underlining Malaysia’s seriousness to strengthen its position as a leading halal industry centre, the government has set a target in the Third Industrial Master Plan (IMP3) for Malaysia to become a global halal hub. Evident of the strong institutional support by the government to develop and promote halal industry in Malaysia, several federal agencies have been mobilised to undertake this task. Chief of them are the agencies under the Ministry of Trade and Industries (MITI), namely Malaysian Industrial Development Authority (MIDA), Malaysian External Trade Development Corporation (MATRADE) and Small and Medium Enterprises Corporation (SMEC – formerly known as SMIDEC).

Blessed with ample natural resources, favourable weather and strategic location in a dynamic economic region and major shipping routes, Malaysia has taken advantage of its features and characteristics to build its name as an international halal centre. It is at the forefront on producing various products based on Sharia principles for the domestic and international markets, and providing halal-related services. Malaysia is widely recognised as a leader in Islamic banking and finance, and has pioneered the introduction of many Sharia financing products and structures. In addition, it also buys products and procures services from abroad to meet the demand and needs of its majority Muslim population, hence acting as a catalyst for the trading of halal goods and services.

The halal trade is not just confined to halal foods. There is a broad spectrum of activities based on Sharia principles that make up the halal industry in Malaysia

Following are the initiatives undertaken by the government ministries and agencies to promote halal industry:

• Hosting of Malaysian International Halal Showcase (MIHAS), coming into its sixth edition in 2009, by MITI. Organised by MATRADE, MIHAS has emerged as the world’s premiere halal event which provides a platform for the sourcing and trading of halal goods and services to producers and consumers around the world.

• Launching of MATRADE–MIHAS Incoming Buying Mission Program. Through this initiative, more than 500 buyers from around the world are brought to Malaysia to converge at the exhibition to establish business networking with local businesses and agencies involved in the halal industry. Through MIHAS, MATRADE has successfully promoted Malaysia as a key venue for halal exhibition and trading platform for halal goods and services.

• Development of entrepreneurial skills and marketing potential of the Malaysian halal business community through the initiative of Ministry of Entrepreneur and Cooperative Development (MECD).

• Financing for SMEs in the halal industry by SMEC. The funds are given through grants for the development and promotion of halal products through SMEC’s Halal Development and Promotions Grant. As of March 31, 2009, SMEC had approved RM 15.05 million to finance SMEs involved in halal industry.

• Organisation of various seminars, workshops and training programs to develop halal industry by federal and state government agencies, sometimes in cooperation with state government agencies.

• Participation of the ministry and agency officials in seminars and forums on halal industry worldwide, and organisation of road shows and trade promotion worldwide by government agencies to showcase Malaysia’s halal industry.

Malaysia’s advantages as an international halal hub

Malaysia has created a commanding position as a leader in the halal industry Following are the factors/advantages that led Malaysia to emerge as an international halal hub:

i) Being a country with majority Muslim population and surrounded by
sizeable Muslim population

Malaysia has a population of 27 million people, of which 60 per cent are Muslims. This provides a reasonably large critical mass for halal products. Serving this national base provides the springboard for Malaysia to cater to a significantly larger regional market in ASEAN and subsequently to the global Muslim population of 1.5 billion.

ii) Rich in natural resources

Malaysia is a country blessed with favourable weather condition and fertile soil which facilitates farming activities all year round and enables it to produce a stunning range of agricultural produce. It is one of the world’s top producers of palm oil, and produces cocoa, vegetables and tropical fruits which provide raw materials for downstream processing and food manufacturing. Malaysia is also a prominent player in the livestock industry, and is self-sufficient in the production of poultry which provides a major raw material for food production. Being a nation with a long coastline, Malaysia is also rich in marine resources, with its total fishery production consisting of mainly marine catchments. Its wealth of natural resources provides it with ready materials for the production of a variety of halal foods.

iii) Strong commitment by the government to increase food production

The government has always stressed the importance of increasing agricultural production for the country, as evidenced by its liberal policy of allowing the duty-free import of raw materials used in food manufacturing. Although blessed with an abundant of natural resources, Malaysia still has to import raw materials to facilitate the production of halal products. To meet its growing needs for food and to reduce its reliance on imported food, the government has launched several high-impact national projects to enhance food production as identified in the Ninth Malaysia Plan. These projects include designating an Aquaculture Industrial Zone, setting the target of creating 10,000 agro-based entrepreneurs, and launching the New Agriculture Integrated Development which consists of a National Feedlot Center, a Permanent Food Park and a Contract Farm.

iv) Located along strategic shipping lanes

Malaysia enjoys a tremendous advantage as a trading hub for being located along some of world’s most important and busiest sea lanes. The location of Peninsular Malaysia along the Straits of Malacca, a key trade waterway connecting East and West trade, puts its major ports of Port Klang and Port of Tanjung Pelepas (PTP) in a fantastic position to establish extensive connectivity with major shipping lines and the global halal market and to tap into growing transshipment trade in the region. Penang Port is located within the Indonesia-Malaysia-Thailand Growth Triangle (IMT-GT), while Bintulu Port is strategically positioned within the Brunei-Indonesia-Malaysia-Philippines East Asia Growth Area (BIMP-EAGA). These are regions with sizeable Muslim population and are dynamic growth areas which these ports could tap into.

Taking advantage of Malaysia’s excellent location, the national shipping company, MISC Bhd, has launched a dedicated liner service carrying halal goods in 2006. Branded the Global Halal Express (GHX), the service links the Southeast Asia with the Far East and South Asia and the lucrative Middle East market. GHX is the world’s first shipping service of its kind that exclusively caters to halal trade.

v) Excellent trade facilitation and distribution facilities

Malaysia has world-class ports in Port Klang and PTP which have modern facilities to efficiently serve large ships and handle large throughput volumes. These ports have extensive connectivity with other ports worldwide and are well-connected with various modes of transport such as road, rail and air. These ports attract the presence of many logistics players providing a wide range of services including halal supply chain management, and a host of ancillary services supporting maritime trade. Malaysia also features excellent highways, rail services and airports, and adequate trade distribution facilities such as warehouses and distribution centres. Also in place are very good value-added services to support trade such as financial institutions, electronic data interchange (EDI), and industrial development and trade promotional agencies which form an extensive network of trade facilitators that has helped Malaysia to become one of the world’s top 20 trading nations. These facilities combine to provide seamless movement of goods across the supply chain and expedite the delivery of goods in an efficient and cost-competitive way.

vi) Pro-business, investment and trade policies

The Malaysian government is very supportive of business, investment and trade activities by introducing a host of incentives to attract investors and promote the country as a choice location for businesses, industries and traders. It is acutely aware of the need for a trade-dependent and developing country like Malaysia to always enhance its competitiveness by way of adopting a set of policies which are friendly towards investors, businesses and industries. In national economic blueprints such as the Industrial Master Plans and Malaysia Plans, the Government places great emphasis on attracting investors and promoting the country as a regional business and trading hub. Investors and companies enjoy various incentives in terms of tax breaks, profit repatriation, liberal equity ownership, non-restrictive employment policies and many other attractions.

The government has also established a high-level national body called PEMUDAH to make the process of conducting business in Malaysia more easy and efficient. Most recently, in a move that underscores the pragmatism of the government to adopt to international business practices, it has liberalised various key economic sectors such as finance and transport and has abolished the 30 per cent Bumiputra equity ownership ruling for listing on the Malaysian stock exchange. Such a move to de-regularise and liberalise the economy underlines the seriousness of the government to enhance Malaysia’s attraction as a business and investment destination, amid growing competition from other nations and regions and in the face of the challenging global economic situation.

vii) Productive workforce

Malaysia has a relatively young, skilled, hardworking, largely English-speaking and relatively cheap workforce. These are features which are highly coveted by multinational companies keen to gain advantage by setting up base in countries with low cost of production. The combination of local and foreign workforce – the latter estimated at 2 million – provides Malaysia with a significant advantage over more expensive locations in attracting investments and trade. The government pays keen attention to develop the workforce by adopting liberal policies to attract foreign workers, setting up various training facilities, institutes and centres, and conducting training courses and programmes through its agencies to enhance the skills of its workforce. It also provides incentives for companies to employ expatriates with specialised skills and to attract and nurture skilled workers.

viii) High level of quality control

Focussing on quality and safety in the production of goods, especially foodstuff, has become a priority in the manufacturing sector. Malaysia is fully committed to abide by international best practices in quality control and works hard at attaining world-class quality control in its manufacturing sector. Evidences of this commitment include the high-level involvement of the Ministry of Health in administering the system certification of the Hazard Analysis and Critical Control Point (HACCP). The ministry grants and maintains certification through surveillance audits, and HACCP consultants are on hand to provide professional services related to the certification.

The ministry also places great emphasis to laboratory facilities in the country in recognition of their pivotal role in ensuring the safety and high quality of foods produced locally. It undertakes various initiatives to ensure that the laboratories are up to mark to fulfill the highest standards in food safety and to meet the increasingly complex and stringent demands of food analysis. Such efforts include the continuous upgrading of laboratories in the ministry and the Department of Chemistry with state–of-the-art and advanced equipment and facilities. SIRIM QAS International Bhd – Malaysia’s leading certification, inspection and testing body – awards the coveted and internationally recognized MS ISO 9001:2000 Certification of Quality Systems. Further evidence of Malaysia’s uncompromising stand in ensuring a very high standard of food production is the requirement for food manufacturers to comply with the Food Act (1983) and Food Regulations (1985), two national legislations which regulate food production in the country.

ix) Establishment of halal parks and hubs

Over the years, several states in Malaysia have developed halal parks as part of their integrated development plans to encourage investments, generate business activities and boost economic growth. These parks are specially designated areas that host halal industry players in one place that offer all the amenities and support they need to operate their business. The establishment of halal parks and the promotion of halal activities contribute to the development of socio-economic well-being of the people residing in the area and beyond. Halal parks create business opportunities, generate employment, catalyse the infrastructure development and boost the growth and prosperity of the host areas in particular and the nation in general.

x) Strong focus on R&D in the agriculture industry

The Malaysian government is committed to enhance the level of R&D in food production in the country. Testimony to this is the establishment of several agencies to conduct R&D in various areas such as agriculture, biotechnology, palm oil, forestry, fisheries, cocoa and rubber.

xi) Strong commitment by the Federal and state governments to support and promote
Malaysia as a halal hub

The tremendous growth of the halal industry in Malaysia and its emergence as a halal hub of international repute can be largely attributed to the tireless effort of the Malaysian Government to support and promote the industry. The Malaysia halal industry owes its success to the many Government initiatives that have played a key role in ensuring that its development is undertaken in an orderly and coordinated manner.

A key initiative by the government is to set up a solid institutional framework to support the halal industry. At the forefront of the halal industry development is the Halal Industry Development Corporation (HDC), Malaysia’s sole halal developmental authority on halal initiatives and halal–related matters. It also acts as an approving authority for products and services seeking halal accreditation. HDC has been instrumental in helping the halal industry in the country to grow to the size that it is today and in realising Malaysia’s ambition to become a global halal hub. It has helped develop strategies to unify all halal industry players to create a critical mass of a nationwide ‘halal economy’ and community made up of small- and medium-scale enterprises (SMEs). The focus of HDC is not just to nurture local players to serve the local needs and meet domestic demand for halal products and services, but to also help them grow to compete in the global market.

xiii) Development of value-added halal related services

There are several government agencies set up to provide value-added services to halal-related businesses. Key among these services is halal accreditation for products and services provided by HDC. It certifies all halal food products under the MS1500:2004, Halal Food Certification standard introduced by the Malaysian government which incorporates the Good Manufacturing Practice (GMP) and hygienic sanitary requirements. In addition to this, HDC also issues halal accreditation to hotel and eateries which comply with the stipulated standards required of halal premises. There are also various government agencies involved in the process of inspecting and certifying halal products including Standards and Industrial Research Institute of Malaysia (SIRIM) and Ministry of Health. These agencies work together to grant halal status to products, services and industrial parks / hubs and facilitate the implementation of accreditations such as HACCP and ISO. Malaysia’s halal accreditation is coveted globally and has been used in processing plants in the United States and countries in Asia, Europe and Australasia.

Towards attaining global halal hub status

The Malaysian government is fully committed to make Malaysia into a global halal hub and has done well to enhance the country’s reputation and attraction as a halal centre of prominence. The factors that have helped Malaysia to successfully emerge as a leading player in the halal industry in many aspects can be exploited further to turn it into a global halal hub. In attaining this status, Malaysia hopes to serve as the gateway for players in the halal industry worldwide converge, do business, source products, exchange ideas, conduct R&D, get accreditation and certification, and trade with one another.

Nazery Khalid is senior Fellow at Maritime Institute of Malaysia. He can be contacted at This e-mail address is being protected from spambots. You need JavaScript enabled to view it