Malaysia considers the halal industry as a key component of its economy and a strong promoter of socioeconomic growth. Photo credit: Courtesy of the Sarawak Tourism Board
Malaysia has lofty ambitions for its halal industry, with plans to grow it to $113.2 billion by 2030 from $68.4 billion in 2018 by strengthening an ecosystem of support for producers and service providers.
Last year, the government launched the Halal Industry Master Plan 2030, which aims to catalyze Malaysia’s strengths in the halal industry by bolstering and internationalizing the country’s halal ecosystem and by re-evaluating and improving existing initiatives, as well as introducing high-impact programs. The plan defines the halal ecosystem as the network of components involved in growth cycle and delivery of halal products or services. Each component in the ecosystem has its own unique activities that are interrelated with each other.
Malaysia considers the halal industry as a key component of its economy and a strong promoter of socioeconomic growth. As such, “efforts to improve governance, capacity-building programs, and promotion of the industry needs to be intensified,” according to the master plan.
Filling the gap
The master plan sets out a developmental framework for the industry, noting the country needs to take advantage of opportunities, with the global halal market expected to grow to $5 trillion by 2030. Malaysia, in particular, wants to capitalize on the estimated 80% gap between demand and production of global halal products.
"Apart from addressing the gap in the domestic halal economy, HIMP 2030 [master plan] is a roadmap and a critical connecting point for Malaysia's halal ecosystem to connect with the halal ecosystem of other countries as well as member countries of the Organization of Islamic Cooperation [OIC, an intergovernmental organization comprised of Muslim countries],” said Halal Development Corp. Bhd. Chief Executive Officer Hairol Ariffein Sahari in a report from news agency Bernama. The company is a state-owned enterprise tasked to oversee the development of the country’s halal market.
According to the master plan, to meet its 2030 goals, Malaysia must move into higher-value sectors, explore new frontiers, influence consumer trends, and invest in innovations and new product development.
The plan noted the need to focus on core sectors—food and beverage, cosmetics and personal care, and pharmaceutical—as well as emerging sectors, which include modest fashion, medical tourism, and medical devices.
Under the master plan, all core sectors are expected to show robust growth between 2018 and 2030, with the food and beverage sector to grow to $85.2 billion from $51.9 billion; the cosmetics and personal care sector to $10.5 billion from $7 billion; the pharmaceutical sector to $5.9 billion from $3.4 billion; and the emerging sectors to $11.7 billion from $6.2 billion.
Key enablers
According to the master plan, Malaysia will need key enablers to support the master plan’s implementation.
Halal traceability services. These services are vital to any country’s halal ecosystem as they help ensure the integrity and purity of the ingredients used. For Malaysia, deploying innovative digital technologies is key to ensuring such systems are in place. The master plan cited technologies like the internet of things, blockchain, financial technology, and big data to ensure halal products will go through a verified supply chain.
Talent development/upskilling services. Ensuring the halal market has a steady supply of competent halal professionals and halal experts is seen to support comprehensive and future developments of the halal ecosystem.
Standards, accreditation, and certification services. Robust standards, accreditation and certification services will ensure the integrity of the halal supply chain, in addition to ensuring global trust in Malaysia’s accreditation and compatibility with halal emerging markets.
Islamic finance. Access to financial support for players in the halal supply chain will encourage and support participation in the halal industry through the promotion of a hybrid Islamic financing structure.
Logistics services. Dedicated logistics services, from sourcing of raw materials to reaching the consumer (i.e., farm to fork) are needed to avoid cross-contamination, thus ensuring the safety and quality of halal-certified products.
Malaysia has consistently topped a global report that looks at economies best-positioned to take advantage of opportunities in the halal sector. For the 10th consecutive year, it topped the State of the Global Islamic Economy Report in 2023. Overall, the report examined and ranked countries’ ecosystems for Islamic products and services as well as regulations on halal goods and services.
Malaysia currently has 14 industrial parks designated for halal production. More than 40 multinational companies and 200 local small- and medium-sized enterprises have located in these industrial parks. Kellogg Asia Products Sdn. Bhd., PureCircle Sdn. Bhd., Cargill Palm Products Sdn. Bhd., F&N Dairies Manufacturing Sdn. Bhd., and Coca-Cola Bottlers (M) Sdn. Bhd. are among the multinational companies that have located in these designated halal industrial parks. In total, these parks encompass 200,000 acres (80,937 hectares) across the country. Under the government’s halal park development scheme, locators can enjoy incentives facilitated by Halal Development Corp.