We have been talking about Halal business opportunities on these pages since we started the platform in 2014. Most of the articles we shared with you were in general terms. But, today we would like to specifically discuss where you could find Halal business opportunities?
As in several industries, Asia Pacific has now become the center of business activities. The global Halal industry is no exception.
Recently, 15 countries including Australia, Brunei, Cambodia, China, Indonesia, Japan, South Korea, Laos, Malaysia, Myanmar, New Zealand, the Philippines, Singapore, Thailand, and Vietnam agreed called the Regional Comprehensive Economic Partnership (RCEP). It is also the largest free trade group of countries.
The purpose of this agreement is to eliminate or reduce tariffs and non-tariff barriers on exports and imports of goods as well as regulations on service sectors. the RCEP agreement assures a strong commitment to development cooperation between member countries.
There are about 2.27 billion inhabitants in the RCEP region. Their gross domestic product (GDP) was about US$26 trillion in 2020, about one-third of the world’s GDP. The total value of exports was US$5.42 trillion in 2020 or about 31 percent of world exports.
This group of countries is expected to record an average economic growth of five percent per annum in the next 10 years. This means the group’s GDP will become US$42.35 trillion in 2032.
All these growth figures point to an increasing number of Halal business initiatives in these countries.
Malaysia, being the top Muslim country among the group members and having the most sophisticated Halal ecosystem, is likely going to benefit the most from the halal initiatives in the next ten years. Indonesia, being the largest Muslim country in terms of population, also has big plans to promote its Halal industry in the coming years.
Although Japan and South Korea are non-Muslim countries are developing local Halal industries in their own unique ways. Vietnam has also started planning to capture the growing Halal market worldwide.
The frontier for expanding supply and demand is huge. Markets will undoubtedly expand for intermediate goods, durable and non-durable consumer goods, medical and healthcare, services such as food and beverages, retailing, finance and banking, and so on.
In this regard, the Islamic economy can bring added tangible and non-tangible benefits to member states in the RCEP. It is a crucial platform for promoting trade and investments in halal business in and outside Malaysia.
Malaysia is strong in the production, consumption, and export of halal products and related goods/services. Moreover, that strength can be further optimized through directed domestic and foreign investments leveraging Malaysia’s Gold Standard Halal certification program.
The imperative of foreign inward investments in halal sectors is particularly significant because of the large volume of domestic production it induces. The inducement effects for compensation are also impressive in terms of bigger domestic demand and more foreign inward investments for producing halal goods and services, not to mention increased employment.
We found that domestic demand and exports indeed mutually reinforce foreign inward investments in the halal sector. Imports also equally induce increased domestic production in the domestic and international marketplace.
Hence, the International Trade and Industry Ministry and HDC Bhd must incentivize the production of halal goods and services to expand and solidify their marketplaces in and outside Malaysia.
Their interventions through the RCEP are a clear and present opportunity that will continuously lift our living standards founded on sustainability.
Just as important, both institutions can make small and medium companies — income and employment generators — drive the growth of halal business in the RCEP, too.
The writer is a professor at Reitaku University, Tokyo, and has been teaching Southeast Asian studies, international economics, integration, development economics, and Asian economy since 1983
By looking at the statistics available and the growth prospects among the countries, Halal entrepreneurs could renew their business priorities realign with the public and private sectors which are conducive to the Halal business environment could be on their way to a winning Halal business strategy.