In this Aug 13, 2021 photo, Muslims attend congregational Friday prayers with social distancing measures in place due to the COVID-19 pandemic at a mosque in Surabaya. (JUNI KRISWANTO / AFP)
Halal industries such as food manufacturing and fashion retail are seen to help Southeast Asian economies recover from the pandemic, with a growing number of its citizens preferring to purchase foods and services that are aligned with their Islamic faith, analysts said.
Halal is an Arabic word that translates to ‘permissible’ in English, as opposed to ‘haram’ which means ‘forbidden’
This is especially true in Indonesia and Malaysia – two of the biggest economies in the region and are also home to a huge Muslim population. Islam is widely practiced across Southeast Asia, with 40 percent of the over 600 million population in the region identifying as Muslims.
“The Muslim consumer market can be leveraged to accelerate the economy,” Fazal Bahardeen, founder and CEO of the Singapore-based Muslim lifestyle and travel consultancy CrescentRating.
Fazal said that even before the pandemic started, more Muslims in the region are availing of products and services that are “friendlier to their faith”. He said it’s the tech-savvy Southeast Asian youth, who now comprise the majority of the region’s consumers, that bolstered consumption for halal products as the rise of internet technology and social media has made them more aware of halal businesses.
Halal is an Arabic word that translates to ‘permissible’ in English, as opposed to ‘haram’ which means ‘forbidden’. The requirements for what is considered halal are based from the Quran, the holy book of the Muslim faith, and the Hadith teachings of the Prophet Muhammad.
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The term ‘halal’ is usually associated with food. Meals that have pork and alcohol are forbidden. Meat must be processed and prepared based on Islamic dietary laws. However, the halal ecosystem also covers other industries that are in line with Islamic laws including fashion, travel and finance.
Malaysia is currently holding the three-month virtual expo Malaysia International Halal Showcase that will end Dec 31 and hosted the World Halal Business Conference (WHBC) in Sept 9.
Malaysian Prime Minister Ismail Sabri Yaakob said at the opening of the WHBC that the halal industry is a key feature of the country’s post-pandemic economic plan, noting that the industry is “paramount to the resilience of overall Muslim-majority national economy”.
Emil Fazira, senior consultant at market research firm Euromonitor International said Malaysia’s globally recognized halal certification, advisory and infrastructure helps the country “tap on opportunities within the halal space across various industries”.
She said the country’s big Muslim population can drive domestic demand for halal products and services. Muslims comprise more than 60 percent of Malaysia’s roughly 32 million population.
“I think the desire for halal products will be stronger in the future especially since the strengthening of e-commerce has driven familiarity with online marketplaces selling products from overseas and local, smaller businesses that may not be as easily available through physical retail,” Emil said.
She said technology has been a key driver in many industries, but is particularly important to strengthen the halal infrastructure.
“Certifications and site audits have been severely affected due to reduced mobility, affecting the rate of certified halal products and services. Remote solutions using technology must be created in order to support halal businesses,” Emil said
In its latest Global Islamic Economy Report, New York-based research and advisory firm DinarStandard said that Malaysia is a “leader in Islamic banking knowledge” and plans to send its Islamic finance graduates abroad to help build the industry globally.
DinarStandard has likewise noted the growth of Islamic finance in Indonesia, citing the increases in the value of sukuk (Shariah-compliant bonds) and Islamic funds. It said the “awareness of and demand for Islamic finance is also strong” with Indonesia holding the largest number of Islamic finance- related
events and ranking second in the number of research papers.
Modest fashion is thriving in Indonesia – and its fashion consumer market is one of the biggest in the world. DinarStandard said Indonesia is aiming to become the world’s Muslim fashion capital, noting that the country has launched an incubator program with Shariah-compliant banks to help modest fashion businesses.
In Singapore where roughly 15 percent of the 5 million population are Muslims, the domestic halal dining market is estimated at S$700 million in 2019, according to a report published by CrescentRating and MasterCard.
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The report said local Muslims aged 25 to 40 years are the “key driving force” behind the growth of the dining sector, with an annual per capita expenditure of S$1,177. Muslim visitors to Singapore spent S$300 million in 2019, putting the total Halal dining market at S$1 billion.
“Although COVID-19 disrupted this in 2020, this indicates the short to medium term domestic market potential post-COVID,” the report said.
Fazal of CrescentRating said while halal products and services are marketed to Muslim consumers, he also sees potential in non-Muslim consumers. He said some non-Muslims who opt for Shariah-compliant equity funds consider it more ethical to do so as Islamic financial companies don’t invest on weapons manufacturing companies, casinos and liquor companies.