Malaysia as Gateway to ASEAN Halal Market

Successful Japanese companies like Ajinomoto, Taisho Pharma and Southern Lion have one thing in common—they have factories in Malaysia manufacturing products that are halal compliant. 

“Japanese companies have been using Malaysia as an operations and manufacturing centre for halal products since the 1960s. Ajinomoto, for example, started its business operations in 1961 and obtained halal certification in 1965,” says Mr Hairol Ariffein Sahari, the CEO of Halal Development Corporation Berhad (HDC), a government-backed agency tasked with promoting Malaysia as a player in the global halal industry.

During a strategic business mission to Japan in February this year, Malaysia’s senior minister Dato’ Seri Azmin Ali described the agency as the “custodian of Malaysia’s halal economy” as it is also responsible for helping companies tap the halal market by setting up operations in the country’s 14 designated halal parks.

“Today, Malaysia’s halal parks are home to more than 60 multinational companies and 300 SMEs, among them companies like Kewpie, Rikevita and Yakult,” says Hairol.

In a move to spur foreign investments in the aftermath of the COVID-19 pandemic, the Malaysian government has unveiled a slew of incentives ranging from tax and import-export duty exemptions to capital assistance and fast-track approval of manufacturing licenses. 

“We will be making a proposal to the Japanese government to consider Malaysia as one of the destinations for halal investments and to use Malaysia as a gateway to the ASEAN region with an estimated halal market size worth US$900 billion.” 

Malaysia’s central location at the heart of Southeast Asia makes it an ideal halal hub for regional and international expansion. In terms of “ease of doing business,” Malaysia ranks in 12th position among 190 countries worldwide, according to the World Bank Doing Business 2020 report. Among the country’s selling points are world-class infrastructure, skilled and productive workforce, and easy access to halal-sourced ingredients.

“As a government-backed agency, HDC makes it easier for foreign companies to navigate the sometimes complicated process in setting up operations in Malaysia as it has partnerships with other investment promotion agencies like the Malaysian Investment Development Authority (MIDA),” says Hairol.

In response to the growing worldwide demand for halal products, Malaysia is actively promoting investment in sectors like pharmaceuticals, cosmetics and personal care, halal ingredients, livestock and meat products, and speciality processed foods. 

“For foreign investors, HDC is the first point of contact and a key reference centre for information and first-hand industry knowledge of the halal economy. We help create business opportunities by helping foreign investors to obtain halal certification for their products and to tap the halal market. Besides consultancy services and training, we also help companies with the promotion and branding of halal products.”

In 2007, HDC established a Halal Training Institute to educate and develop halal professionals in various fields. The institute collaborates with government agencies, universities and research centres to create educational modules that are relevant to industry needs. Since its inception, the institute has trained 60,000 personnel worldwide. 

“Next year, we will offer our training programmes in Japan with the modules translated into Japanese. In future, trained and certified professionals will be able to assist companies around the world with halal compliance,” adds Hairol.

“During Malaysia’s COVID-19 lockdown, we have been active in opening up new channels of communication using social media so that companies can continue to communicate with us. We also took the opportunity to revise business plans to prepare for the post-COVID economy.”

“We will be gearing up for more promotional activities on a global scale and expedite plans to start operations in Korea and Taiwan next year, in addition to Japan.” 

“Our biggest project for the year is the setting up of an online integrated platform where we can share expert knowledge and connect industry players worldwide. With this platform, we can amalgamate every component of the halal ecosystem with service providers, logistic suppliers, banks, government agencies and halal park operators onboard to provide facilitation. This connection will spur investment and trade, promote technology transfer and create more job opportunities,” says Hairol.