Halal Industry & International Market

CCM Halal Awareness Seminar MATRADE, 16 December 2008

Presentation by Mariam Abdul Latif Vice President, Halal Integrity Halal Industry Development Corporation

Scope

Introduction
The Halal Industry:
Products Food (Ingredients, groups) Non-food Products (Pharmaceuticals, Cosmetics, Personal Care, Leatherwear) Services Food (Hotel & Catering Services) Related activities (Certification, Training, Banking, Media, Logistics, Tourism)

Components of the Halal Industry

Standards, Auditing & Certification Research & Development Pharmaceuticals, Health & Personal Care

Food Manufacturing

Food, Products and Services

Food Service Industry

Food and Product Retailing Meat & Poultry Islamic Finance & Banking

Logistics & Shipping

Large and growing Muslim population of increased affluence

Growth in Muslim population 2001-2005 million World Muslim population Top 10* countries of Muslim population GDP per capita at PPP for top 5 countries USD 000 CAGR

Why Halal?

43 41 39 37

US

4.4%

1,330

1,355

1,382

1,408

1,433

Qatar Netherlands UK France Germany

4.5% 2.6% 4.7% 2.7% 2.7%

887

903

920
CAGR = 1.8%

937

952

35 33 31 29 27 25 2001

2001

2002

2003

2004

2005

2002

2003

2004

2005

Muslim population growing at a faster rate of 1.8% than global population growth of 1.26%

Countries with lower Muslim populations compensate by having very strong and fast growing GDP per capita

* Includes Indonesia, Pakistan, India, Bangladesh, Nigeria, Turkey, Iran, Egypt, Morocco, Yemen Source: IMF World Economic Outlook Database 4/2007; International Religious Freedom 2006; Economist Intelligence Unit 2006

Global Halal Market Size - 2005

Region Market Muslim Population Per capita food expenditure Halal Value Million USD

Africa West Asia South Central Asia South East Asia China Europe (inc Russia) N. America S. America Oceania Total
Source: www.islamicpopulation.com,,Euromonitor

462 195 585 266 39 51 9 1.6 .35 1,608m

250 570 300 350 175 1,250 1,750 500 1,500

115,443 111,150 175,440 93,230 5,865 63,988 14,455 820 525 $580,916

World Muslim Population

>20% of worlds population are Muslims

Mandate
To leverage on Malaysias advantages in the halal sector particularly in terms of certification and logo recognition, the Plan will drive the sectors growth in making Malaysia an international hub for halal products and services. The Halal Industry Development Corporation will be established to develop this industry in a holistic and orderly manner. I am confident that by carrying out these duties, the HDC will be able to play a leadership role and enable the country to bring our diverse skills and experience to bear in developing the halal-related sectors.

YAB Dato Seri Abdullah Hj. Ahmad Badawi Prime Minister on 31 March 2006, at the tabling of the motion of the Ninth Malaysia Plan, 2006-2010 in the Parliament.

Halal Industry Development Corporation (HDC)

The Halal Value Chain

Islamic Financing

Extremely diverse and cuts across multiple sectorsLivestock and

Halal Logistics Agricultural Produce Halal Parks Halal Entrepreneurs

SME Development

Export Promotion

AGENCIES INVOLVED
BNM MOF MOT MOA DVS MECD,EPU, UPEN State SEDCs MECD PNS MARA PUNB Halal SMIDEC MECD, Domestic Trade MITI MATRADE

Malaysias

Halal Logistics

involves providing halal certified cold an excellent storage Syariah compliant facilities, financial refrigerated instruments and transportation, services for the and nonHalal Industry contaminated shipping services. Creation of Halal Distribution Centres

Leadership in Islamic Banking

Livestock and

Halal Parks

Development of

Agricultural Produce involve rearing, grazing, feedlot, syariah compliant slaughtering and planting of commercial grade agri products. GlobalGAP and SALM and SALT compliance.

provide location requirements for SMEs and Foreign Investment. Focus on Flagship Halal Zone, PKFZ, Tg. Manis Halal Park, Sarawak; Gambang Halal AgriFood Park and Padang Besar Halal Park.

Entrepreneurs is an essential part of the value chain particularly the creation of successful entrepreneurs under the BCIC programme

Halal SMEs to be export ready and gradually becoming global players. Develop product differentiation and branding. Access to Hypermarkets such as Tesco, Carrefour, Jusco and Giant.

Export Promotion

and Access to Global markets through Matrade. Participation in Halal Expos and promotional visits in strategic markets for Halal Industry players.

HDCs role is to ensure an integrated and comprehensive development of the National Halal Industry throughout the entire Halal Value Chain

HDC Strategic Thrusts

Global Reference Centre

Halal Integrity

Industry Development

Branding & Promotion

Halal Certification

SME Development

Branding

Halal Training

Foreign Investment

Marketing

Halal R&D

R&D and Innovation Acquisition & Consolidation Halal Park

Promotion

Standard & Reference

Events

Consultancy

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HALAL INTEGRITY DIVISION

Malaysia as the World Halal Hub. Leader in providing world-class services on Halal references, training, consultancy, certification and R&D in Halal industry.
Technical Advisory Services
Develop in-house Halal expertise (Syariah and Science) Develop and provide Consultancy to other government Develop and provide Consultancy services to industry

Halal R&D Centre

Develop Halal R&D roadmap Collate R&D information from local and regional institutions Develop international R&D network

HALAL INTEGRITY
Certification and Audit
Improve the certification process Provide product and premise certification services Monitoring and network with other relevant agencies

Training
Improve level of awareness on Halal and its benefits Implement and coordinate HDC training programmes

Halal Reference Centre

Develop HDC Halal Library Collate database on Halal certified industries& ingredients Develop network with all international Halal websites

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INDUSTRY DEVELOPMENT DIVISION

To attract foreign investments to establish Halal R&D and Global Halal Production Centres and to facilitate the growth and participation of Malaysian Companies in the Global Halal Market. Foreign Investment
Attract Foreign Investment to invest in Halal Malaysia and to establish a one stop Investor Support Centre

SME Development
Provide International and Local Market Access for SMEs and identify gaps and strengthen SME capacity to become global players and Halal Champions

INDUSTRY DEVELOPMENT

R&D and Innovation

Strengthen R&D and Product Innovation and to conduct Workshop to increase innovative capacity

Acquisition & Consolidation

To acquire established and niche innovative companies and to promote JV between Local and Foreign companies to accelerate market penetration

Halal Park Management

Establish the necessary Guidelines for Halal Park Provide Halal Park Advisory Services Ensure Halal Parks are operational for investors

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BRANDING & PROMOTION DIVISION

To develop effective branding, marketing and promotional campaigns for Malaysias Halal hub programme, and to position HDC as the Halal service provider domestically and internationally.
Branding
Three core areas

Halal - Education on the overall concept of Halal

HDC - Brand HDC as a market leading corporation National Brand - Create a strong Malaysian national Halal brand

Establish the most up-to-date market intelligence on the worldwide Halal markets

Creation of a holistic Halal Malaysia Brand

Create Halal Malaysia campaign which will include food, finance, Halal services, consumer goods. Cosmetics and pharmaceuticals

Marketing

Promotion

BRANDING & PROMOTION

Acquisition and utilization of market intelligence Creation of a Malaysia centric promotional campaign

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Vision and Objectives of the Halal Master Plan: 2-prong

Objectives Vision

Identify how to strengthen Malaysias

capabilities in halal integrity

Develop means to capitalise on this

know-how to create new income streams for Malaysia

Malaysia as the global reference centre for Halal Integrity know-how

Identify sectors that Malaysia should

focus on

Identify strategies and initiatives to

accelerate growth and increase GDP contribution from these sectors

Malaysia as the global leader in the innovation, production and trade of a number of halal-related sectors

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The Halal Industry Master Plan: Focus Areas

Malaysia cannot be involved in everything focus areas were identified based on demand potential, local capabilities and potential to create economic impact
New source of export led growth Global Reference Centre for Halal Integrity (Standards, Certification, Training, etc.)
Specialty Processed Food Cosmetics And Personal Care Area in which Malaysia will be a global reference centre Industries that Malaysia needs to grow in order to create economic impact

Pharmaceutical

Halal Livestock** Ingredients

Legislation and regulatory framework

Human capital

Physical infrastructure and connectivity Public sector delivery system

Funding and incentives Industry standards and certification

Key enablers to be strengthened

**Livestock is included to address consumer well-being issues, not as an export oriented growth industry Source:Ethos analysis

The Halal Industry

Great potential for Malaysia in developing and

promoting the halal products and services for global market. Halal products and services are also gaining increasing acceptability among non-Muslims Created interest among food producing countries, Muslim and non-Muslim The global value for trade of Halal foods and non-food products is estimated at USD2.1 trillion annually.

Global Halal Industry

FMCG sector
Primary meat
10

Processed food*** & beverages****

35

Potentially halal
market has been quantified as the target market that can potentially be captured

Pharmaceutical
23

Approximately 67%
6

Nutraceutical Confectionery

5
9

12

Bakery products

Cosmetics & personal care

of potentially Halal products are categorized as fast moving consumer goods (FMCG)

Food FMCG and

primary meat together account for 62% of the market

Global market for potentially Halal products, 2005** (Percent)

Does not include Islamic Financial Services. Services involved in final product e.g. certification, logistics, R&D are included in sectoral values ** Based on sales revenue *** Halal processed food is taken as 66% of the total based on world halal meat consumption **** Only non-alcoholic beverages Source: Euromonitor reports; FAOSTAT

Market Trends
Halal Market is expanding More countries entering market EU, USA, China, Turkey More product choices New generation, new tastes, new products/varieties More outlets/fast food Major retailers entering Halal market More market sectors emerging Contract manufacturing, Logistics, Security, Auditing, Training, Media,

Market Expansion
Halal is going up-market Market value include healthy, ethnic, fair trade, environmental & animal friendly All expanding sub-sectors, all intersect with Halal Halal is going mainstream Tesco, Carrefour taking Halal global Looking for 40% own-label products Halal is not just religious issue High cross-over market potential

The Era of Halal Pharmaceuticals

Global Market Value: 2006 = USD 607 billion* 2013 ~ USD 818 billion* 2020 ~ USD 1,300 billion**
Source: *Frost & Sullivan Market Insight 2 April 2008 **PricewaterhouseCoopers Report 13 June 2007

Growth in the Muslim population more supply

Rising incomes among Muslim consumers created more purchase

Increasing demand for Halal Pharmaceuticals spur more R&D

Driving Factors For Global Halal Pharmaceuticals

Most Pharmaceuticals marketed are not Halal and has spurred demand for genuine Halal products , hence need Halal certification from competent authority

A choice for Muslims to consume Halal pharmaceuticals

Potential Muslim Customers

US AND EUROPE
United States
France Germany

Muslim Population (Million)

10.0
4.1 2.8

Percent (%)
3.7
7.0 3.4

GDP (USD)
37,800
27,500 27,600

United Kingdom
Italy Netherlands

1.6
0.6 0.5

2.7
1.0 3.0

27,700
26,800 28,600
Source: islamicweb.com

Key Halal Markets

Algeria Indonesia Kuwait Oman Tunisia Yemen Bahrain Iran Lebanon Qatar Turkey Brunei Egypt Iraq Jordan Malaysia Morocco Saudi Arabia Syria United Arab Emirates

France - 6 million Philippines - 6 million Thailand 8.2 million China - 40 million

Key Halal Markets In Non-Muslim Countries USA - 8 million Germany - 3 million

India - 140 million

Canada - 800,000

Singapore - 600,000 UK - 1.5 million

Asia
Malaysia/Thailand/Singapore/the Philippines/

Brunei/China and India have all taken steps to tap into the global Halal market.
Has the largest Muslim population Several countries, including Malaysia, aspire

to become an international Halal hub.

Middle East
Especially members of the Cooperation

Council for the Arab States of the Gulf (GCC), have higher incomes and consequently higher per capita rates of consumption. The region import 80% of its food requirements. Saudi Arabia and the United Arab Emirates (UAE) are the most important import markets

United States
The market for Halal products is estimated at

US$12 billion annually and domestic sales are growing. US sales of Halal food have increased by more than 70% since 1995. US companies are significant exporters of Halal products. US companies involved with Halal products include Cargil, ConAgra, Tyson, Purdue Farms, Oscar Mayer and Midamar.

Europe
Higher purchasing power rather than

population size. The port of Rotterdam is the key Halal entry point for the European market. The port dedicated one warehouse solely to Halal products in 2008.

IDEAS, March 2007

Incentives for Halal Food

Incentives For Halal Food 100% ITA for 5 years under PIA, 1986 Double deduction for expenses to obtain Halal certification, quality systems and standard certification Incentives for companies who qualify for Halal Malaysia Status Halal Industry Players ITA of 100% for 10 years Exemption on statutory income from export sales for 5 years

Promoted Sector Under Halal Malaysia Status Livestock and Meat Products; Specialty Processed Foods; Cosmetics and Personal Care; Halal Ingredients ; and Pharmaceuticals Criteria Halal certified Compliance with quality, hygiene and environmental guidelines 15% of workforce compries of knowledge workers and minimum 3 halal compliance officers

Prospect/Investment Opportunities
Production of Halal Pharmaceuticals Supplier of Halal capsules (halal gelatine) Alternative Ingredients vitamins, flavours, seasonings and palm oil-based additives Functional Food - fibre & nutrient enriched products, traditional herbal products, food supplements

Factors To Consider Exporting Halal Products

Comply to importing country requirements

(food laws and regulations) Consistent good quality Halal products Good networking with importers or agents in the importing country Continuous R&D in Product Development

Management Of Quality Locally Manufactured Halal Products

Understanding the concept of halal is

important Strong Commitment of the management to supply authentic halal food Comply to HDCs requirements on Halal products/pharmaceuticals Establishing an internal Halal Committee Label food products properly for consumer informed choice

Management Of Quality Locally Manufactured Halal Products

Establish a quality assurance system in the

factory/premise (GMP, GHP and analytical services) Ensure reliable supply of halal raw ingredients Trained food handlers in good hygienic practices Ensure halal products are halal throughout the production chain (from raw ingredients, processing, packaging, storage and distribution)

Smart Partnership
A Tripartite management between the government

(competent authority), the industry (manufacturers/ retailers) and the consumers as smart partnership, working together and close cooperation for making Malaysia an International Halal Hub a reality The government as the policy maker and regulator The industries and the retailers are accountable for halal products they produce or distribute The consumers are educated and have access to halal information and labelling during product purchase

SUMMARY
Think globally, act locally Halal product and services are the next world

market forces Harmonize with international standards to be competitive Halal is good for business and business is good for Halal industry Success in Halal Pharmaceuticals is a shared responsibility

Thank you for your attention