Opinion: Malaysia’s Halal Crisis

IN Malaysia today, halal is an important part of life for the majority-Muslim population. Internationally, at a time when conventional markets are reaching a saturation point, Muslim consumers are becoming much more concerned about Islamic issues in the way they conduct their daily lives.

Halal-related markets are some of the fastest-growing consumer segments today. These include food and beverages, medicines, pharmaceuticals, health foods, cosmetics, fashion, tourism, recreation, finance, and even hardware. There are numerous estimates of the size of the global halal market, averaging out to between US$4.5 trillion and US$5 trillion per annum.

Even as Muslims lean towards Western-style consumption and lifestyles, they are embracing the Islamic faith with much more reverence than previous generations who had to struggle to survive in a time when halal choices weren’t widely available. The Muslim obligation under tawhid (the relationship between people and God) is something that enters everyday life, and as a consequence, Muslim consumers are seeking products and services that are shariah-compliant (the path shown by God).

Central to shariah are the concepts of halal and toyyibaan, which govern the economic activities of people in the production and consumption of wealth, where certain means of gaining a livelihood are declared unlawful. Halal means lawful or permitted for Muslims, a concept much wider than just food issues. It concerns whether operational procedures are undertaken according to shariah.

Toyyibaan is a much wider concept than halal, meaning good, clean, wholesome, healthy, non-exploitative and ethical within the Islamic concept. Under toyyibaan, food and other products must be clean, safe, nutritious, healthy and balanced. Toyyibaan also means that production must be undertaken within a sustainable regime of practices, where business should be undertaken with good intentions. Therefore, in the strict sense of these concepts, toyyibaan influences management practices, human resources policies, business ethics, raw material selection, manufacturing methods and community relations.

The concept of halal stipulates a number of ingredients that Muslims cannot consume in any form.

These include:

* Pork and pork byproducts;

* Animals that are dead or dying prior to slaughter;

* Blood and blood byproducts;

* Carnivorous animals;

* Birds of prey;

* Land animals without ears;

* Alcohol, and;

* Animals killed in the name of anything other than Allah.

The increasing internationalisation of the market means many new product choices are available for consumers by companies and service providers that consumers don’t know and have yet to trust. Many products utilise animal-based formulations, and these creatures may or may not have been slaughtered in accordance with Islamic law. In addition, through advances in biotechnology, new ingredients are being formulated into products whose halal status is unknown.

Below continues into the original article in Asia Sentinel – 11 October 2019

Currently, the Malaysian Islamic Development Department (Jakim), which is the sole statutory halal certifier in the country, doesn’t yet have fully operational forensic laboratories with experienced staff to assess products’ halal status. In contrast, Thailand is leading the world in halal assessment and research with its Halal Science Centre at Chulalongkorn University in Bangkok, established in 1994. The centre focuses on developing standards, a haram (forbidden in Islam) ingredient detection system for certification purposes, a halal food production system development with a Halal-GMP-HACCP framework, developing consumer information systems through apps, as well as general halal research.

The Halal Science Centre has developed a complete halal logistical tracking system and protocols called “Hal-Q”, which has not just been widely accepted by Muslim businesses in Thailand, but has also been taken as an industry standard by many multinational food manufacturers in the country. In addition, many Arab and European countries have adopted this system and come to Thailand for training on halal logistics management, putting Thailand more than a decade ahead of any system Malaysia has to offer. This has enabled Thailand to become one of the foremost halal food manufacturers in the region today.

The Malaysian Halal Industry Development Corporation (HDC) was set up in 2006 to take over halal certification from Jakim and promote local halal products internationally. In 2009, Jakim, under mysterious circumstances, took back complete halal certification responsibility from HDC, via the new halal hub division. HDC then focused on spending hundreds of millions of ringgit developing warehouse facilities in what were called “halal parks”. All of these, like the Labuan Halal Complex, have become white elephants with few to no tenants. The Asia Sentinel visited the Perlis Halal Park in Padang Besar recently, and found that it was mainly empty except for a tenant using the park as a staging point to smuggle goods in and out of Thailand. The rest of HDC’s activities involve organising exhibitions as an event manager. ** See below.

Traditionally in Malaysia, eateries are known to be halal through word of mouth. The Islamic symbols on the walls and signs saying “bertanggung halal” were once assurance enough. These businesses relied on community recognition. Any premises suspected of not being halal would just be boycotted. It is only in the last decade that authorities have pushed small businesses to seek halal registration.

Today, only a fraction of Malay proprietors and SMEs have gained halal certification. In addition, only a small proportion of international hotels and resorts have halal registration. A number of SME owners and F&B managers of hotels told the Asia Sentinel that the major barrier to gaining halal registration is money. For many proprietors and SMEs running traditional businesses, the on-site infrastructure requirements are prohibitive and way beyond their financial means.

Then, a dark side to the halal certification process was brought up. SME proprietors and F&B managers told the Asia Sentinel that Jakim officials would request cash payments above the statutory fees in order to guarantee registration. Municipal councils and the fire department, too, would request such payments to issue the necessary documents required by Jakim for halal product and premises applications. According to one F&B manager, this practice is not being carried out by just a few rogue Jakim officers. One officer even brought out his immediate superior to negotiate the payment.

In another case, a Muslim Lebanese butcher from Australia was setting up a halal butchery in Kuala Lumpur for retail and distribution. A Jakim official requested a RM50,000 payment for registration. Due to the company’s policy of not paying bribes, based on its religious moral philosophy, the investment in Malaysia was immediately aborted. * See below.

Some SMEs have tried to circumvent the issue of corruption through hiring a consultant or broker. Consultants and brokers, according to SME proprietors, are not people with technical and religious backgrounds. As one proprietor put it, these brokers seemed to be “sleazy hustlers” rather than experts.

Companies have found that bucking the system by complaining only leads to drastic consequences, like having their operating licence suspended and being put out of business. Other issues, including the arrogance of some Jakim officers and their refusal to assist in the registration process, have led to a backlash against the halal certification. The high rate of rejected applications discourages firms from applying. This has led to a black market in renting halal certificates, or even using bogus logos – issues that have become an epidemic, that Jakim can no longer handle them. As a consequence, 60% of halal registrations in Malaysia are by non-Muslim multinational companies.

Jakim doesn’t have its own compliance officers on the ground, relying instead on those from the Domestic Trade and Consumer Affairs Ministry to assist. With the ministry officers focusing on their own agenda, such as price control, the whole halal regulatory system in Malaysia is undermined. And yet, Jakim’s overzealous actions over incorrect reports made by other parties have led to brand damage, like the Cadbury case a few years ago.

Jakim is using the halal certification system to impose its ideas and opinions on the Malaysian community. Just recently, alcohol-free beer was banned in Malaysia, even though the product is widely distributed and sold throughout the rest of the Muslim world. McDonald’s Malaysia doesn’t allow customers to bring in cakes that have not been certified halal by Jakim. Words like “chicken ham”, “beef bacon” and “chicken char siew” are not allowed to be used on products certified by Jakim, even though similar culturally derived food names are certifiable in other countries. Jakim determines its own standards and opinions on the definition of halal, without any recourse to appeal its rulings.

The success and credibility of Jakim’s handling of the halal certification system is at stake, with 90% of Malaysia’s companies outside the scheme. Research indicates that there is a public trust issue with its halal certification, which compromises the integrity of the whole halal system.

To keep up with the increasingly sophisticated international halal trade, Jakim’s halal certification process requires some innovation, to help Malaysian companies develop a competitive edge. At present, Jakim’s certification lacks the supply chain tracking element that Thai exporters have with Hal-Q. Jakim could look at coupling halal certification with good agricultural practices and ethical business ratings, such as tawhid compliance. Tawhid compliance would take into consideration issues far in excess of supply chain management, such as management practices, employee exploitation, sustainable production, community flow-downs, and other ethical issues related to business. At the same time, there could be a special certification recognising the issues related to sole proprietors and small businesses.

Jakim, as a certification monopoly, has many shortfalls. Its staff are viewed as unfriendly, according to research. The online application portal is not working most of the time, making applications very difficult for firms outside Kuala Lumpur. There needs to be state-level accredited halal certifiers to facilitate application and processing. The halal hub division could be made independent of Jakim, with the department playing more of an appeal and arbitration role for aggrieved applicants.

There needs to be more science behind the halal process, such as the development of standards and enhancing detection techniques, along with a much more open public policy discussion. The current method of enforcement, relying on the Domestic Trade and Consumer Affairs Ministry and local governments, needs rethinking.

However, the major issue in the short term, which is directly related to the integrity of the halal application process, is the elimination of all types of bribery and corruption. A halal certificate issued with a bribe is not halal, according to Islam. The Malaysian Anti-Corruption Commission needs to make the investigation into Jakim’s halal hub division one of its highest priorities, to ensure the integrity of Malaysia’s halal certification system. – October 11, 2019.

* Please see below the response from Jakim:

REBUTTAL STATEMENT BY DEPARTMENT OF ISLAMIC DEVELOPMENT MALAYSIA TO THE ARTICLE BY MURRAY HUNTER ON “THE MALAYSIA’S HALAL CRISIS”

Reference is made to the recent statement by Murray Hunter, in an article published by Asia Sentinel on October 10, 2019. The report had alleged that there is a lack of integrity and competency of personnel in Malaysia’s Halal certification process which has now gone viral in the social media.

JAKIM is committed to ensuring that the Malaysian Halal certification process is conducted in accordance with established laws and complies with all applicable regulations. JAKIM will not compromise on issues related to integrity, including bribery and corruption. Henceforth, JAKIM refutes the allegation made by Murray Hunter concerning a JAKIM official seeking a RM50,000 bribe for the purpose of registering a halal choice meat cut butchery in Kuala Lumpur.

JAKIM has a mechanism of control and adopts a high standard and transparent system of integrity together with a code of conduct to prevent the practice of bribery and corruption among its officers and employees. This mechanism includes close cooperation with the Malaysian Anti-Corruption Commission (MACC) as well as the full-time placement of MACC officers in areas with a high risk of corruption occurring.

Therefore, JAKIM urges all parties, including the author, to come forward with the utmost sense of responsibility and present concrete evidence to be examined by the authority. We are prepared to take appropriate action in line with the established laws and regulations. We regard this matter seriously as we do not wish for Malaysia’s Halal reputation to be tarnished by slander and baseless accusations.

DATUK MOHAMAD NORDIN IBRAHIM

DIRECTOR GENERAL

DEPARTMENT OF ISLAMIC DEVELOPMENT MALAYSIA
12 October 2019