Impact of Halal economy on Globe,Especially on South east Asia

Introduction
Halal industry is the latest trend in the world market. With Muslim population
reaching 3 billion people, Halal industry becomes one of the fastest growing
businesses in the global market.Halal is Arabic word which mean permitted and
lawful. It is not only related to consumption but also all actions. While haram means
prohibited and unlawful. Halal market covers sector such as finance,
tourism,Introduction

Halal industry covers sector such as finance, tourism, service, transportation, and
food.Previous studies (Regenstein et al., 2003; Lever and Miele, 2012; Abdul-Talib
and Abd-Razak, 2013) indicate that the emergence of Halal in the global market is
contributed by the growing global Muslim population. The growth of global Muslim
population will experience a 35 percent increment from 1.6 billion in 2010 to 2.2
billion people in 2030 (The Pew Research Center, 2011).This condition boosted the
emergence and growth of Halal market with the broad acceptance among non-Muslim
consumers who consider Halal food as safe, hygienic, quality and wholesome product.
This opportunity has been grabbed by developed countries such as Japan, United
Kingdom and Australia who mostly depend on automotive and electronic
manufacturing.

Traditionally, halal was seen to refer only to meat and poultry, specifically with
reference to the method of slaughter. More recently, this has grown to include non-
meat foods such as dairy, baked goods, snacks, confectionery, ready-made meals and
other processed food and beverage products. And as halal is a ‘farm-to-fork’ process
with halal compliance needed all the way through the supply chain, aspects such as
warehousing, transportation and logistics all play a role in maintaining and
demonstrating halal integrity.In terms of market research, trade data and analysis, and
the preferences and spending habits of 1.6 billion consumers, the halal market has for
years been uncharted territory. In this respect, the halal marketplace is still a very
young and continually evolving commercial arena; it is, in effect, a new market
paradigm that crosses geographic, cultural and even religious boundaries.
In terms of market research, trade data and analysis, and the preferences and spending
habits of 1.6 billion consumers, the halal market has for years been uncharted
territory. In this respect, the halal marketplace is still a very young and continually
evolving commercial arena; it is, in effect, a new market paradigm that crosses
geographic, cultural and even religious boundaries.
Diverse Sectors in the Halal Economy

Regulatory Framework:
The regulatory frameworks in the halal sector are complex, as they vary between
regions and countries. Muslim-majority countries take a different approach from
Muslim-minority countries, and regional frameworks, such as for ASEAN or the
GCC, are also being developed, as are standards and frameworks for the 57 member
states of OIC.
The entire landscape of regulation of the halal market globally is constantly evolving.
A major challenge in developing a regulatory framework for the halal market is to
bring the halal F&B sectors up to the same levels of regulatory compliance as those
pertaining to safety and quality in the mainstream food sectors.
Generally, regulatory frameworks comprise the following elements:
• Definitions, guidelines and standards
• Auditing and certification
• Accreditation
Mainstream food sector regulatory framework

In this diverse regulatory ecosystem, the various regulatory frameworks are specified
using the following categorisation, and in each case using examples for clarification:
• Multicultural country, government controlled (e.g.Malaysia)
• Muslim-majority country, government controlled (e.g.United Arab Emirates)
• Muslim-minority country, government controlled (e.g.Australia, New Zealand)
• Muslim-minority country, non-government controlled (e.g. United States, United
Kingdom)
• Regional (e.g. European Committee for Standardization– CEN)
• Global (e.g. Organisation of Islamic Cooperation – OIC)
Regional variations in global halal market:
 Multicultural (e.g. Malaysia, Singapore)
• Mixed religion & culture
• Well-established Muslim presence
• Pioneered standards & certification
• Consume & produce
• Multinational presence
• Local SMEs & micro enterprises
• Halal as economic driver
• Halal as political platform

 Muslim majority (e.g. GCC countries)

 Muslim minority (United Kingdom, United States, France)

Eg. Australia

Findings
Strengths:
 Increasing global awareness of potential of the halal market by governments,
corporations and financial institutions
 Recognition of halal as genuine engine of economic growth
 Continued strong growth across all halal market sectors
 Halal industry initiatives across MENA region strengthen the market
 Appearance of reliable trade and research data
 Synergy between various sub-sectors, e.g. food, travel, digital
 Young entrepreneurs and start-ups entering halal sectors
 More countries developing national halal campaigns
 Halal foods playing a more prominent role in global sporting events, e.g. the
Olympics
Weakness:
 Lack of clear leadership to coordinate regional initiatives
 Confusion over differences in standards
 No viable accreditation scheme to regulate halal certification bodies (HCBs)
 Conflicts of interest among HCBs
 Evident fraud and rumours undermine market integrity
 Lack of funding for start-ups and SMEs
 Insufficient awareness among financial institutions
 Regional competition hinders mutual recognition initiatives
 Negative reports of animal welfare issues
 Insufficient training and human resource development programmes
 Halal as non-tariff barrier hinders trade
 Weakness among many Organisation of Islamic Cooperation member states
 Unclear or opaque labelling issues

Opportunities:
 Lack of clear leadership to coordinate regional initiatives
 Confusion over differences in standards
 No viable accreditation scheme to regulate halal certification bodies (HCBs)
 Conflicts of interest among HCBs
 Evident fraud and rumours undermine market integrity
 Lack of funding for start-ups and SMEs
 Insufficient awareness among financial institutions
 Regional competition hinders mutual recognition initiatives
 Negative reports of animal welfare issues
 Insufficient training and human resource development programmes
 Halal as non-tariff barrier hinders trade
 Weakness among many Organisation of Islamic Cooperation member states
 Unclear or opaque labelling issues

Threats
 War, violence and social upheaval in the Middle East
 Acts of terrorism fuel Islamophobia in the West
 Opposition from vocal animal welfare groups, especially
 against live animal exports and unstunned slaughter
 Non-Muslim consumer opposition to unlabelled halal
 food
 Banning unstunned slaughter, e.g. in Denmark
 Scandals caused by poor management and operational
 methods
 Fake halal logos on non-halal products
 Proliferation of online videos highlighting bad practices

Pestle Analysis:
Political:
 Growing awareness of halal as economic driver
 Political sensitivities of various kinds
 Recognition of importance of clear regulations
 Food security & sovereignty issues
 Growing involvement of Muslim majority countries

Economic:
 Emerging as new economic paradigm
 Above average growth
 Crosses political, cultural and ethnic boundaries
 More sectors coming into halal ecosystem
 Convergence with Islamic finance
 New investment platforms, e.g. crowd funding

Social:
 Youthful demographic
 Expanding middle class & Job creation
 Disposable income
 Halal as identity issue
 Changing consumer habits
 Online connectivity
 Growing consumer power
 Entrepreneurial opportunities
 New educational field
Technological:
 Data mining driving market confidence
 Online trading opportunities
 More sophisticated testing methods
 Increased market connectivity
 Growing consumer awareness and power
 Creating entrepreneurial opportunities
Environmental:
 Undeveloped agricultural opportunities
 Parallels with eco-ethical movements
 Opportunity to bring Islamic values to environmental Causes

Legal:
 Regulatory frameworks in development
 Increasing halal-related legislation
 Proliferation of standards development
 Accreditation bodies appearing
 Regional mutual recognition

Conclusion:
With the trend of Halal food in the global market, countries with Muslim minority are
embracing this industry as alternative revenue.Developed countries such as Australia,
Japan and United Kingdom enhance the Halal food industry as alternative revenue
other than electronic and automotive manufacture. They assume that Halal food
segment is a catalyst in developing other potential sectors who receive negative effect
from economic turmoil. With Muslim population less than 5% in developed countries,
Halal food is growing very fast. These three developing countries Australia, Japan and
United Kingdom put Organization Islamic Committee (OIC) and ASEAN countries as
Halal food export target. Most source of Halal food in developed and developing
countries are focus on self-production. Countries such as Japan, Australia, UK and
Thailand mostly applied commercial farm in their supply chain management while
most farms in Indonesia and Malaysia are using small scale. The awareness of
consuming Halal food is not only come from Muslim but also non-Muslim because
they think it is safer to purchase Halal products. Besides that, focus on shelf life and
freshness needed for food. That is the reason why Halal food industry is very
attractive. Therefore, it is important to promote Halal food as being safety-compliant
since they undergo one of the safest methods of production. Likewise, more research
work should be conducted to fill the gaps of Halal market development beside those
six mentioned countries. The high demand of Halal food should provide benefit for
consumers in terms of giving a safer product and obligatory for Muslim to consume
Halal food.