Tech, new sectors will be priorities inMalaysia’s Halal 2.0 master plan

Technology will lead wider industries inMalaysia’s next halal industry master plan that will launch two years soonerthan anticipated

KUALA LUMPUR - Malaysia must ramp up thepace of technological growth and march into new industry segments if it is toremain a leader in the halal industry at a time when a growing number of othernations have their eyes on sharing its might.

That is the rally call from ministers andofficials as Malaysia gears up for the launch of its halal industry Master Plan2.0 later this year, which it hopes will drive continued growth for the period2018-2030.

The framework will come two years earlierthan anticipated, soon after the completion of just 10 years of the HalalIndustry Master Plan 2008-2020.

Explaining the hurry, Malaysia’s deputyprime minister Dr. Ahmad Zahid Hamidi said, “There have been many developmentswithin the halal industry, and we do not want to wait until 2020 to introducenew plans.” He was speaking at the World Halal Conference in Kuala Lumpur onApril 4.

Part of the plan will involve providingincentives to strengthen the country’s infrastructure to reinforce halal’scontribution to its economy, which accounted for 28,000 new jobs and around 7.5percent of GDP last year, according to Dr. Hamidi. This level of contributionto GDP has been flat since 2016. 

Further, new ways are needed for thegrowing halal industry. “There is still a need for new strategies to meet thechallenges and complexities of the halal economy,” said Abdul Rahman Dahlan,the minister in the prime minister’s department responsible for economicplanning, who joined the deputy prime minister for the keynote address.

COMPETITION RISING AS HALAL ‘EVOLVES’

There is a firm understanding that Malaysiacannot rest on its strengths in halal standards and certification.

“Certification alone is not enough. Factorssuch as quality, pricing, brand positioning and logistics must not bedisregarded. There is a need for new technology, while innovation plays animportant role, especially so as more companies are going digital,” warned Dr.Hamidi.

How Malaysia expands its halal remit beyondthe traditional areas of food, beverages, cosmetics and pharmaceuticals islargely in the hands of the Department of Islamic Development Malaysia  (JAKIM), and the Halal Industry DevelopmentCorporation (HDC), whose role is to promote Malaysia’s halal industry.

If these agencies are slow to attract newbusiness, Malaysia would be in danger of losing out to countries such as China,Japan and Korea, which are economically powerful and where there is a growinginterest in halal, said the deputy prime minister. Emerging nations includingIndia, Pakistan and countries in Africa are also strengthening their halalgame.

“An enlarged number of potential consumersmeans an increase in demand. Implementing sound Islamic economic frameworksmust therefore be complemented by competitive products and services,” said Dr.Hamidi.

Embracing change, JAKIM stressed that it isnot standing still. “Halal is not static: it’s evolving,” the certifier’s HalalHub Division director Dr. Sirajuddin bin Suhaimee told Salaam Gateway on the sidelinesof the World Halal Conference.

“We must look for markets which we cancater for through halal regulation, and the markets we can cater for asMuslim-friendly with Islamic compliance,” added Dr. Suhaimee.

With broader halal segments such as healthcareand pharmaceuticals, personal care and cosmetics, and travel and tourism underthe spotlight, JAKIM, HDC and other agencies have been actively promotingMalaysian standards and halal ecosystem globally and at home.

For example, later this year JAKIM isexpected to introduce halal certification for medical devices?the first of itskind and an initiative that aims to attract global firms to Malaysiancertification?as a means to tap into the wider Islamic economy.

Elsewhere, 30 million Malaysian ringgit($7.7 million) was allocated from the national 2018 Budget to the MalaysiaHealthcare Travel Council, another government-backed agency, to promote healthand medical tourism. This is an area in which the country is asserting itsposition as a leading halal destination.

“We are looking not just at the foodindustry … so obviously we are supporting the wider halal industry,” JamilBidin, chief executive of HDC, told Salaam Gateway.

“There’s the digital economy, there’s newtechnology, innovation and so on. Halal players need to embrace all thesethings?e-commerce, digital commercialisation?otherwise they will not besuccessful. We can’t ignore this.”

ISLAMIC DIGITAL FRAMEWORKS

The development of an Islamic digitaleconomy is of particular interest to policymakers and officials, who believe acombination of regulatory knowhow and generous incentives stand to put Malaysiain a position to dominate.

According to figures released by thegovernment-owned Malaysia Digital Economy Corporation (MDEC), new technologycontributed 18.2 percent of GDP in 2017 and has created more than 170,000 newjobs. Due to policies such as tax breaks for foreign start-ups, and year-longvisit passes for entrepreneurs, this figure rose from eight percent in just oneyear, it said.

By promoting Malaysia as an Islamic digitaleconomy hotbed for start-ups, the nation will be able to capitalise on allmanner of IT, from financial technology, or fintech, and smartphone apps tologistics and corporate systems, said Dr. Suhaimee.

But first it must work out how to regulatethe industry.

“We are developing Islamic frameworks tomake it clear which part of Shariah compliance we are going to in this digitaleconomy. When we talk about halal, we are usually thinking about halal food,but we know that halal is growing with technology,” he said.

Speaking at a World Halal Conference panelsession, Dr. Mohd Daud Bakar, chairman of the Shariah Advisory Council atMalaysia’s central bank that is keeping a close eye on fintech developments,said that people can easily relate to the Islamic digital economy, but thechallenge is to define the Islamic part of it, to make it Shariah-compliant.

“We have to look at the entire ecosystem.Interfacing technology use, automation, logistics management, Islamic content:all these things should be Shariah-compliant right from the ideation stage,”said Dr. Bakar.

In his opinion, Malaysia should also lookto develop and control an Islamic cryptocurrency. This, he said, would fulfilall fatawa covering money exchange.

“Of course, we need to put the rightShariah message on it, so we have a new Islamic coin. Hopefully we can havethis solution sooner rather than later,” he added.

TECH START-UPS DILEMMA

However, technology start-ups must tread athin line between making money and being seen to profit from their Islamicprinciples. This is something Mazlita Mat Hassan, co-founder and chiefoperating officer of Recite Lab, learnt as she set out to secure funding.

“If you are seen to be too commercialised,you can be accused of making money out of your religion. So you have to come upwith a business revenue model that cannot be viewed as too commercial,” saidMat Hassan, whose company provides a Quran recital validation service throughan app.

In turn, she said, venture capital firmscan be wary about investing in the Islamic digital economy because they cannotbe sure that an idea will be accepted by the Muslim community.

Attitudes like this are likely to change asregulators develop frameworks for Shariah-compliant or Islamic technology, techinvestors gain a better understanding of the potential of a vast Muslim marketand entrepreneurs increase in confidence.

Link-> https://www.salaamgateway.com/en/story/tech_new_sectors_will_be_priorities_in_malaysias_halal_20_master_plan_-SALAAM22042018045628/