SME Directory of Malaysia, Malaysia Business Portal

With an estimated population of 1.8 billion Muslims worldwide and growing, the fast-expanding halal sector offers a great opportunity for SMEs that are looking to enter a lucrative market.

WHAT IS HALAL?
In the Quran, the holy book and guide for all Muslims, there exists verses that call for Muslims to seek provisions that are ‘halalan toyibban’. The English equivalent for this phrase would mean lawful and wholesome. Therefore, halal is actually about everything from the food we consume to the businesses we conduct to the transactions we perform in our daily lives. It is the responsibility of a Muslim to ensure that what he practices and consumes is clean, hygienic and not detrimental to either his health or his well-being. Halal is an all encompassing concept which encourages a Muslim to seek and use products, ventures and services that promote cleanliness in all aspects – that a product or service is safe for consumption, produced in a clean environment and health. Halal is the next benchmark for quality. (Source: www.halal.com.my)

WHY VENTURE INTO THE HALAL MARKET?
One of the objectives of the Third Industrial Master Plan 2006 – 2020 (IMP3) is to make Malaysia the global halal hub for the production and trade in halal goods and services. From a business perspective, the halal market is a fast-growing one that offers great potential. According to IMP3, the world Muslim population is about 1.6 billion (at press time, estimated to be 1.8 billion). It is estimated that by 2010, the global Muslim population will be approximately 3 billion. The global market value for trade in halal food and non-food products is estimated at US$2.1 trillion annually. This market has stirred interest among food producing countries, both Muslim and non-Muslim.

The halal industry covers food products, non-food products (including pharmaceuticals, health products, medical devices, cosmetics and toiletries) and services (including logistics, packaging, branding and marketing, printed and electronic media, and travel and tourism).

HOW TO OBTAIN HALAL CERTIFICATION FOR YOUR PRODUCTS
To venture into the halal market, a company must first obtain a halal certification for its products. The steps in obtaining a halal certification are documented by Jabatan Kemajuan Islam Malaysia (JAKIM). They are as follows:
•    Document Evaluation – submit application forms and supporting documents with detailed analysis on the company’s profile and declared ingredients, suppliers’ details, manufacturing processes and procedures.
•    Physical Inspection by technical inspectors, including an assessment of declared ingredients, storage methods of raw materials and finished products, cold rooms, processing plant manufacturing flows and handling aspects of production, packaging materials, general hygiene, quality control and assurance practices.
•    Report Preparation – technical inspectors will write a full report on the status of the application based on its site inspection.
•    Evaluation Committee and Recommendation – report will be tabled and evaluated.
•    Issuance of Halal Certificate - once approved, JAKIM will issue the Halal certificate and grant the permission to use the Halal logo. The certificate is valid for two years with renewal of the application to be submitted three months before the expiry date. JAKIM will carry out constant monitoring to ensure conformity to the Halal standards.

HALAL INDUSTRY DEVELOPMENT CORPORATION (HDC)
HDC was established in 2006 to co-ordinate the overall development of the industry with its main focus on developing Halal standards, audit and certification, capacity building for halal products and services, as well as to promote and facilitate growth and participation of Malaysian companies in the global halal market.

HDC spearheads Malaysia’s vision to develop halal as a powerful market force, bringing the benefits of halal products and services to both Muslims and non-Muslims throughout the world. Malaysia has the potential to become the leading World Halal Hub and gather the global industry under a unified umbrella that can take the halal business to higher levels.

To encourage the participation of SMEs in the halal business, HDC is initiating a series of programmes to nurture the SMEs capacity and performance to take advantage of opportunities now arising in this sector. These programmes include mentoring projects as well as vendor programmes to engage SMEs in halal product procurement. HDC will set-up Halal Industry Incubator Parks which will identify, support and groom emerging Halal ChampionTM industry players. This is being done through collaboration with the various State Development Agencies in Malaysia.

Contact details:
Halal Industry Development Corporation (HDC)
Suite 5.02, Level 5
KPMG Tower, First Avenue
Persiaran Bandar Utama
Bandar Utama
47800, Petaling Jaya
Selangor Darul Ehsan
Malaysia
Tel: 603-7965 5555
Fax: 603-7965 5500
Email: This e-mail address is being protected from spambots. You need JavaScript enabled to view it
Website: www.hdcglobal.com

 
MALAYSIAN STANDARD ON HALAL FOOD (MS 1500:2004)
In Malaysia, there is a dedicated Halal Standard known as ‘Halal Food: Production, Preparation, Handling and Storage – General Guidelines (MS 1500:2004). Launched in 2005, this Standard is the first of its kind in the world and was developed under the Malaysian Standard Development System, under the responsibility of Department of Standards Malaysia (DSM), Ministry of Science, Technology and Innovation.

The Standard prescribes practical guidelines for the food industry on the preparation and handling of halal food (including nutrient supplements) and to serve as a basic requirement for food product and food trade or business in Malaysia. It is used by JAKIM as the basis for certification, further supplemented by many other comprehensive requirements for the certification process.

Contact details:
Department of Standards Malaysia
Ministry of Science, Technology and Innovation
Century Square, Level 1 & 2, Block 2300
Jalan Usahawan
63000 Cyberjaya
Malaysia
Tel: 603-8318 0002
Fax: 603-8319 3131
Email: This e-mail address is being protected from spambots. You need JavaScript enabled to view it
Website: www.standardsmalaysia.gov.my

FINANCIAL INCENTIVES & SUPPORT
Grants have been set aside to assist SMEs in becoming halal producers. One such grant is SMIDEC’s Matching Grant for Development and Promotion of Halal Products.

Matching Grant for Development and Promotion of Halal Products
This scheme provides matching grants for SMEs to develop and promote halal products (both food and non-food). Applicants must be locally-incorporated companies in manufacturing and manufacturing-related services (such as warehousing, bulk-breaking and packaging) with at least 60% equity held by Malaysians, must not be listed on any stock exchange and must possess a valid premise license.

Assistance is given in the form of a matching grant where 50% of the approved project cost is borne by the Government and the remainder by the applicant. For enterprises in the manufacturing sector, incorporated under the Registration of Business Ordinance 1956, assistance is given up to 80% of the approved cost. The maximum grant allocated per application is RM150,000.

Eligible expenses are those incurred on developing and promoting halal products, including:
•    Product development and product formulation
•    Sample testing
•    Acquisition of machinery and equipment related to the approved project
•    Renovation expenditure for compliance to certification requirement
•    Other related costs for compliance to requirements of halal certification
•    Promotional activities

Application can be made using the Matching Grant for Development and Promotion of Halal Products Form which can be obtained free of charge from SMIDEC’s offices or download at http://www.smidec.gov.my/detailpage.jsp?page=sfdphp

As a further incentive, the Government has allowed an Investment Tax Allowance of 100% on qualifying capital expenditure incurred within a period of five years. The allowance can be offset against 100% of statutory income in each year of assessment.

MALAYSIA INTERNATIONAL HALAL SHOWCASE (MIHAS)
MIHAS is an annual trade fair designed to bring together the world’s goods, products and services that are halal-compliant. It is usually held in the 2nd quarter of the year in Kuala Lumpur, Malaysia. The trade fair is hosted by the Ministry of International Trade and Industry (MITI), and jointly-organized by the Malaysia External Trade Development Corporation (MATRADE) and the Islamic Dakwah Foundation Malaysia (YADIM), in association with the Ministry of Entrepreneur and Cooperative Development (MECD).

MIHAS 2008 saw the active participation of 507 exhibitors from 25 countries and attracted a total of 41,862 visitors from 69 countries. Over 55% of these visitors are trade buyers and the who’s who in the food and beverage industry from the ASEAN countries. Every year, MIHAS hosts over 500 buyers and matches them with participants of MIHAS from Malaysia. During MIHAS 2008, this programme resulted in immediate sales of over RM185.3 million with over RM2.02 billion under negotiation.

MIHAS 2009 will be held from May 6th to 10th at the MATRADE Exhibition and Convention Centre (MECC), Jalan Khidmat Usaha, Off Jalan Duta, Kuala Lumpur, Malaysia.

CONCLUSION
With the Government’s vision and support, Malaysia is set to become a halal hub to serve the global market. This is an opportune time for SMEs to capitalize on this immense potential and capture their share of the halal market.