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Keeping It Halal

Last update: 07/01/2019
By Associate Prof Dr Suhaimi Ab Rahman

Associate Prof Dr Suhaimi Ab Rahman is the Deputy Dean of Research & Industry and Community Relations at the Faculty of Economics and Management, Universiti Putra Malaysia (UPM). He is also a Shariah Council Member of QSR Brands Sdn Bhd.

KUALA LUMPUR (Bernama) -- In business, “halal” is a strong brand and a marketing tool with a pull.

The halal industry is a US$3.1 trillion market that covers products, services and the Islamic financial market.

The figure is expected to steadily increase with increasing consumer demand and the growth of the Muslim population, which is estimated to be at 2.2 billion by 2030.

The global halal market, meanwhile, is expected to hit US$641.5billion, with US$391.2 billion of it in Asia.

Consumers today are starting to realise that halal is not just a code for permissible consumption for Muslims. Halal also means that a food or product is wholesome, of quality, clean and nutritious – giving it a universal appeal.

In Malaysia, the government has been focusing on the development of the halal industry since 2006 when it established the Halal Industry Development Corporation (HDC).

HDC coordinates the overall development of the halal industry in Malaysia while the Department of Islamic Development Malaysia (JAKIM) and state Islamic councils (MAIN) award certification and monitors products and services labelled as halal.

These agencies work with the Domestic Trade and Consumer Affairs Ministry (KPDNHEP) to ensure strict adherence to halal standards as well to guide non-Muslim businesses seeking halal certification for their products and services.



FROM THE ECONOMIC PERSPECTIVE



Halal is considered a relatively new source of economic growth for the country. As such, the government has made it an important national agenda by including halal development into the Halal Industry Master Plan and the 11th Malaysia Plan.

According to the Thomson Reuters State of Global Islamic and Economic Report 2015/2016, Malaysia was ranked the country with the most developed Islamic economy out of 73 countries in the Halal Food, Islamic Finance and Halal Travel categories. It is also in the top five of the pharmaceutical and cosmetics category.

In light of the results, the HDC is optimistic that the halal industry can contribute to a much higher gross domestic product (GDP) that its initial target of RM19 billion by 2020.

This promising development has made the country’s halal industry attractive to more investors.

Many are racing to find business opportunities in the industry, but along with such lucrative opportunities is a huge responsibility to maintain the integrity of the halal status.

From the business perspective, the halal issue is a high stakes, highly sensitive one. A mistake in the management of a halal business can result in major losses.

This can be seen in previous cases such as with the High 5 bread (Silver Bird Group) which recorded a loss of RM18.25 million in the first quarter of 2007 and the tainted Cadbury chocolate issue in 2014.

Both these businesses suffered significant losses due to the loss of consumer trust in their brand.

Malaysian law provides for severe punishment for offences involving the abuse of halal logo and related offenses, but businesses must realise that regaining consumer trust is another matter.



EFFICIENT MANAGEMENT NEEDED



There is a need for efficient halal management and governance so that cases like the aforementioned can be addressed quickly and easily.

At the national level, this process can be assisted by authorities like JAKIM/MAIN and KPDNHEP. However, every organisation is encouraged to have their own governance system for such matters.

The most important part of halal management and governance is upholding the integrity of the halal status.

To protect the integrity of the halal status, every organisation needs to carry out the following three steps: 1) appoint a halal executive; 2) conduct an internal audit and 3) create and execute a halal assurance system (HAS).

HAS is a halal management system that ensures and protects the integrity of a halal product or service.

The halal executive in every organisation is in charge of ensuring that every product or service offered is Shariah-compliant. In this context, the halal executive needs to become the eyes and ears of the local authorities and ensure that the company adheres to all the process according to the stipulated requirements.

Internal auditing helps identify whether a manufacturing process needs to be improved, records non-compliance and ensures corrective measures are taken immediately.



A SHARIAH-COMPLIANT MANAGEMENT



The foundation of the halal industry is that everything is considered halal as long as there are no nas (a known clear legal injunction) stating that it is not. Very few things are considered haram under Islamic law.

A fundamental aspect about Shariah-compliancy of the halal industry is to not exceed the limits stated by the syarak (law).

This Shariah principle can be found from the Quran, hadith, consensus of the ulama (scholars) and the National Fatwa Council of Malaysia, among others.

The important thing to focus on is that the halal industry is developing alongside developments in science and technology.

The halal discussion used to revolve only around dietary restrictions but today, it has traversed across categories. As what is halal often goes through numerous processes, science and technology, ascertaining the halal status of a product can become more and more difficult.

Generally, halal products do not contain by-products of animals that are considered unlawful to consume, urine/faeces, human parts, intoxicating ingredients, harmful ingredients or processed through a non-halal method.



CHALLENGES



The sheer number of agencies dealing with the halal industry in this country has somewhat hindered the growth of the halal industry in the country.

To overcome this issue, the authorities has introduced the Trade Description Act 2011 to replace the Trade Description Act 1975 where only authorised agencies can award halal certification to qualified industries.

In addition to that, a proposal to create a National Halal Council Act is also hoped to address the lack of standardisation of certification as well as issues of overlapping authority.

On the international front, the lack of standardisation when it comes to halal certification has also impeded industry players as it results in confusion and limits the mobility of a product. There needs to be a standardised certification system or at the very least, a harmonised halal standard.

Halal certification is still an issue among small and medium enterprises. Many of them cannot afford to meet the requirements of halal certification. It is hoped that the government would take the appropriate measures to remedy the situation to ensure the growth of the halal industry.

Industry players also need to not only fulfil the requirements of halal standards but make a concerted effort to carry out the responsibility entrusted upon them honestly and ethically, in addition to ensuring a safe and healthy workplace.



Translated by Sakina Mohamed



--BERNAMA





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