In 2019 demand for halal products and services by Muslims globally was recorded at USD$2.02 trillion for major halal sectors (i.e. food and beverages, modest fashion, Muslim-friendly tourism, pharmaceuticals, and cosmetics), a 3.2 percent increase from 2018[1]. The halal industry presents abundant opportunities for new investment, and Malaysia has made considerable efforts to become a global halal hub by creating networking and collaborations with other countries.
Within Sabah, there are significant opportunities to invest, driven by growing local demand for halal products. Sabah’s Kota Kinabalu Industrial Park (KKIP) and Sabah Agro-Industrial Precinct (SAIP) offer dedicated manufacturing facilities with halal certification support for producers.
Advantages
With more than 40 years of experience in developing halal standards, Malaysia has pioneered the development of a halal industry and has become the reference centre for more than 150 countries. The halal certification by the Department of Islamic Development Malaysia (Jabatan Kemajuan Islam Malaysia or JAKIM) is well recognised globally.[2]
Since 2012 Malaysia ranked first in the Global Islamic Economy Indicator placing it ahead of countries such as the United Arab Emirates, Bahrain, and Saudi Arabia. Malaysia also leads in sectors such as Islamic finance, halal food, travel, pharmaceuticals, and cosmetics.[3]
In 2019, Malaysia showed consistent growth across all the halal sectors, with exports to the Organization of Islamic Countries (OIC) increasing in food, pharmaceuticals, and media and recreation. Strong awareness and governance credentials have allowed Malaysia to rank higher than other Islamic countries, even those with larger export volumes.[4]
Investment Opportunities
With a population of 1.9 billion, Muslims represent 24.9 percent of the global population. This number is expected to increase to 2.2 billion by 2030, and to 2.76 billion by 2050.[5] The current global supply for halal food and non-food products has room for growth to cater to this growing population and demand, reflecting a need to develop a more robust and efficient global supply chain to benefit both Muslim and non-Muslim markets.
Globally the Muslim community has increased spending with spending on food increased by 3.1% in 2019 to USD$1.17 trillion from USD$1.13 trillion in 2018. A CAGR of 3.5% is expected between 2019 and 2024, with spending expected to reach USD$1.38 trillion by 2024.[6]
Among Sabah’s industrial parks, the Kota Kinabalu Industrial Park (KKIP) and Palm Oil Industrial Cluster in Lahad Datu are Halal Designated Industrial Parks (Halmas Parks). These parks are accredited for halal compliance and offer tenants incentives and streamlined halal certification for their products.[7]
Recent Investment Activity
Since 2011 Malaysia’s halal economic zones attracted total investments of over USD$3.5 billion, signalling continued significant growth in the halal industry. Of this figure, 59 percent is foreign direct investment, while the remaining 41 percent is domestic.[8]
Malaysia’s Halal Development Corporation is interested in broadening Malaysia’s halal market into the global halal supply chain and looking to local procurement of raw materials to produce finished products rather than sourcing ingredients from other countries.[9] Sabah’s significant endowment of a wide range of natural resources positions the state well to capitalise on this growth.
For Q1 2021, halal-certified food and beverage products, and halal ingredients, represented 85.5 percent of Malaysia’s halal exports with a combined value of USD$1.5 billion.[10]
1. Halal Development Corporation
2. Department of Islamic Development Malaysia, “List of Recognised Foreign Halal Certification Bodies & Authorities”
