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Malaysia’s growing halal manufacturing sector offers export opportunities

Malaysia’s halal manufacturing sector is growing. There are opportunities to supply halal-certified agri-products to local and international food companies in Malaysia. The halal ecosystem is well developed, with strong government support and dedicated halal economic zones.

Malaysia is hosting the World Halal Business Conference on 9 September 2021. Find more information on the Conference and Malaysia’s halal initiatives.

Malaysia’s halal manufacturing sector

Malaysia occupies a unique but distinct position in the global halal economy. It has in place the ingredients for successful growth. These include the regulatory architecture, certification and standards, business incentives and a growing domestic market.

Situated in the ASEAN region, Malaysia benefits from regional economic integration. Malaysia is part of the ASEAN Free Trade Area. It has unfettered access to neighbouring markets such as Indonesia and Brunei. Both markets hold significant export potential for halal products.

Like most emerging markets, Malaysia has a robust manufacturing sector. It continues to play a vital role in the country’s economic transformation. Last year, the manufacturing sector contributed about 22% of the country’s GDP (Source: Malaysian Treasury, key data and forecast, 2021).

This includes a growing halal manufacturing subsector focused on food and healthcare products. Just like food, beauty and personal care products can also be considered halal.

Opportunities for halal-certified Australian products

Australian products command a “perception premium” in the Malaysian market. They are heavily sought after due to their freshness and quality. The foodservice and hospitality industries, and manufacturers, source Australian products.

For example, Nestlé uses raw materials of Australian origin such as wheat and malt extract. Malaysian-based Captain Oats also repacks Australian oats for its product range. The Holstein Milk Company sells Australian milk and manufactures nut-based milks using Australian ingredients.

Australian products can rely on a well-established regulatory framework for halal certification.

Australia has 7 halal certification bodies recognised by Malaysia’s halal authority. These authorised representatives will confirm the manufacturing process adheres to halal standards. The Australian Government regulates these halal certification bodies.

Besides manufacturing, there are opportunities in the higher-value chain especially in services. For example, companies can adapt logistics and machinery to conform to halal processes. This might include delivery platforms with higher standards of cleanliness and sanitisation tools.

Australian products are innovative, customisable and versatile. They can integrate into the macro halal supply chain, generating trade synergies benefiting both countries.

Learn about the halal opportunities in Malaysia for Australian exporters.

Government support for the halal ecosystem

The Malaysian Halal Development Corporation (HDC) supports Malaysia’s halal ecosystem. The HDC is a federal government agency under the Malaysian Trade Ministry’s jurisdiction.

HDC provides institutional support for the growth of halal businesses by facilitating trade and investment. The agency also offers training and advisory services to equip stakeholders with halal-related information.

Halal “Economic Zones” support manufacturing

HDC has set up 14 locations for halal industrial parks spanning over 200,000 acres. They provide companies with infrastructure, labour and access to halal materials and ingredients.

Halal park operators meeting HDC guidelines will receive HALMAS (Halal Malaysia) accreditation. With this HALMAS status, industry players and investors can enjoy a range of business incentives. Among these are tax concessions on capital expenditure and import duty exemptions. Qualified businesses may also receive full income tax exemption for up to 10 years. Access more information here.

These halal economic zones support local firms and foreign investors. Since 2011, they have attracted cumulative investments totalling A$5.4 billion (Salaam Gateway, Malaysia to boost halal pharma as exports plunge and investment into dedicated hubs rise only slightly in 2020, accessed 7 September 2020). Foreign direct investment represents 60% of this figure.

Local players and foreign companies in Malaysia

Within HDC’s industrial parks sit many food and beverage manufacturers. These include domestic companies and foreign conglomerates. Local companies include Ramly Food Industries, a renowned burger pattie brand. Another notable manufacturer is Kawan Food. Kawan manufactures a range of food bases, sauces, pastries and vegetable products.

Foreign companies in Malaysia include seasoning manufacturer Ajinomoto, sauce manufacturer Kewpie, F&N Dairy, Coca-Cola and Kellogg’s.

Other multinationals with a pan-Malaysian presence outside the halal parks include Nestlé and Mondelez International. These companies export halal-certified products worldwide. They manufacture, import and distribute their products under strict hygiene and sanitary conditions in accordance with the Islamic faith.

Driven by global demand, F&B is traditionally the lynchpin of Malaysian halal manufacturing. However, there is a slow but gradual pivot to cosmetics, personal care and halal logistics. Malaysia is looking to manufacture pharmaceuticals, medical devices and other medicines as it ascends the value chain.

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