By Alicia Buller

Halal regulation schemes can attract more investment, stimulate trade and boost industry

Muslims account for 26 percent of the global population – about 2.2 billion people – and the colossal potential of the Islamic economy is ripe for the picking. This growing and increasingly well-heeled demographic spent around $2 trillion on halal products in 2021, according to the latest State of the Islamic Economy report. The industry has evolved beyond Islamic finance to include convenience food, pharmaceuticals, tourism, media, clothing, cosmetics and more.

In the West, second and third-generation Muslims are seeking faith-aligned products that chime with modern consumer lifestyles – such as Islamic Deliveroo, halal ice-cream, tech-assisted smart hijabs and even Muslim Barbie dolls. And like the rest of the world, Muslims are becoming increasingly globally connected, tech-savvy and label-conscious.

Muslims want brands they love. For too long, the Islamic consumer has been subjected to poorly-executed branding or crudely stereotyped marketing. Unequivocally, the modern Muslim presents an opportunity for savvy marketers and investors. But despite the impressive top-level numbers, some industry teething challenges persist.

Certification confusion

In its simplest terms, halal is an Arabic word that means “permissible” or “lawful”. This generally means pork-free, alcohol-free, gambling-free and interest-free. Halal meat must be slaughtered by specific methods. As with all modern certification methods, guaranteeing practices and provenance along the supply chain can prove challenging.

Smart countries know that halal regulation schemes can attract more investment, stimulate trade and boost industry. As such, a handful of nations have historically jostled for rubber-stamping supremacy in the last two decades. For all its solid business credentials, the halal sector often comes up against regulatory bottlenecks. The hand-wringing and disagreement of the various regional and global certification bodies has historically bred a culture of inertia.

This is one area where the global halal economy must look to evolve as it grows into a more robust industry. Smart blockchain and AI may have a role to play here. Nevertheless, Malaysia, with its large Muslim population, has long reigned as the global doyen of halal. The Asian nation is home to a highly developed Islamic finance sector and is seen as one of the bellwethers of worldwide halal accreditation standards.

Malaysia has been named the top global halal economy for the ninth consecutive year by the Global Islamic Economy Indicator 2022, followed by Saudi Arabia, the UAE and Indonesia. New entrants to the top 15 include the UK and Kazakhstan. Turkey and Singapore moved up to reach the fifth and seventh positions, respectively.

Shaky starts

Around a decade ago, Dubai had designs on becoming the world’s halal hub. The Dubai Islamic Economy Development Centre (DIEDC) was established to transform the emirate into the “capital of Islamic economy”. There was much hullabaloo surrounding the opening of what was pitched as a game-changing all-in-one hub.

But today, there is little talk of DIEDC. As one pundit tells me, “The Muslim economy is growing but it’s still fragmented. They didn’t have the time to wait. It requires enormous investment.”  But where there has been a lull in Dubai’s halal push, Saudi Arabia has stepped in. The kingdom is undergoing rapid social and economic transformation and is witnessing a boom in the halal economy.

In October 2022, Saudi Arabia’s Public Investment Fund announced the launch of Halal Products Development Company. The new body will invest in localising production and increasing efficiency, including plans to certify and export to global markets.

Strong backing needed

As the halal sector expands, it will require government funding and vision for optimal, exponential growth. Robust and patient policies must be drawn up to underpin startup finance, investment mobilization and regulatory clout. In a sea of conflicting regulatory bodies, competing nations, and mixed messaging, halal startups and businesses must negotiate a fragmented market. Greater collaboration is needed, not only among businesses, but also between trade bodies and governments.

Moreover, education and awareness of the sector’s value – whether funded by governments or trade bodies – need to be conveyed to investors, venture capitalists and buyers. Make no mistake, the Nikes and the Nestlés of the world have caught on to the size of the halal market. They have been bringing out limited add-on ranges and designs aimed at Muslims in the last few years – with varying success.

But while global conglomerates can afford to invest in niche loss-makers as the sector finds its feet, that is not the case for the world’s many Islamic fashion designers, entrepreneurs, and boutique startups. With support, homegrown SMEs will seize the opportunity to inject the halal economy with the dynamism, depth, innovation and choice it needs.

Perhaps a true measure of the Islamic economy’s success will be seen in the arrival of the Muslim world’s first globally recognized brand – a halal Nike or Kellogg’s. And in the meantime can we do away with the sub-par branding as soon as possible?

Alicia Buller is Opinion Editor at AGBI. This article was originally published at agbi.com

The Islamic Forum for Halal Accreditation Bodies (IFHAB) has taken significant strides in establishing a transparent and standardized system for halal products and services. This initiative, grounded in Sharia principles and technical prerequisites, is in sync with global practices. The forum’s efforts are particularly evident in member nations of the Organization of Islamic Cooperation (OIC), where they’ve been instrumental in integrating with the Standards and Metrology Institute for Islamic Countries (SMIIC). This collaboration aims to perpetually refine IFHAB’s operations by analyzing best practices across member states and relevant committees.

IFHAB’s mission is multifaceted. Beyond ensuring representation from diverse stakeholders like accreditation bodies, legislators, and consumers, the forum is keen on unlocking new economic avenues. These opportunities, ranging from enhancing international trade to creating specialized job roles, are pivotal in an era where innovation and knowledge development are paramount.

A landmark decision was made during the 21st meeting of the SMIIC Board of Directors on June 1st, 2021. The board greenlit the Organization of Islamic Cooperation’s Halal Quality Global Infrastructure (OHAQ) through resolution number (03/2021). This unanimous decision was further bolstered by the board’s directive to the General Secretariat to present the approved “Global Halal Quality Infrastructure of the Organization of Islamic Cooperation” to the OIC General Secretariat for subsequent endorsement.

The OIC’s 49th Session of the Council of Foreign Ministers, held in Nouakchott, Islamic Republic of Mauritania, in March 2023, was another pivotal moment. During this session, the OIC conferred the status of an OIC Affiliated institution upon IFHAB. This recognition is a testament to the OIC’s commitment to fostering mutual respect, cooperation, and socio-economic development among its member states.

The Halal industry’s significance cannot be overstated. Beyond religious adherence, Halal products and services are synonymous with quality, leading to their widespread acceptance even outside the Muslim community. Recognizing this, IFHAB is dedicated to creating a transparent system for Halal products and services that align with Sharia regulations, technical requirements, and international best practices.

IFHAB’s objectives are clear and ambitious:

• Trust & Credibility: Ensuring products and services bearing the Halal logo are trusted and credible in both local and global markets.
• Standardization: Developing global Halal requirements, unifying accreditation procedures, and linking them to the international system.
• Economic Growth: Facilitating international recognition of accredited Halal certificates and fostering cooperation with regional and international forums.
• Capacity Building: Providing specialized training, forming a broad base of expert evaluators, and enhancing the skills of OIC member countries in Halal certification.

The economic potential of the Halal industry is immense. As per the Global Islamic Economy Report 2019/2020, the global Muslim consumer base stands at 1.8 billion. In 2018, their expenditure on Halal food, pharmaceuticals, and Sharia-compliant lifestyle products was a staggering $2.2 trillion. With an annual growth rate of 5.2%, this figure is projected to touch $3.2 trillion by 2024.

In conclusion, IFHAB’s role is not just pivotal but also timely. As the Halal industry continues to grow, forums like IFHAB will be instrumental in ensuring that the sector remains standardized, transparent, and economically beneficial for all stakeholders involved.

As the global Muslim population continues to grow, estimated to reach 2.8 billion by 2050, the demand for Halal food products has never been higher. Halal food companies have harnessed innovative solutions to keep up with this expanding market to enhance production, preserve quality, and streamline distribution.

Technology has emerged as a game-changer in this fast-paced era, empowering companies to meet customer needs efficiently and effectively. Join us as we explore how technology revolutionizes the global Halal food industry.

A Smarter Approach to Slaughterhouses

One of the most important advancements in the Halal food industry is the automation of slaughterhouses. Companies use technology to ensure that animals are handled as per strict Halal requirements. 

For instance, precise cutting and efficient blood draining are now achieved through automated systems, while sensors monitor and maintain blade sharpness. This ensures compliance with Halal standards and improves overall efficiency and productivity.

Quality Control in the Digital Age

Technology plays a pivotal role in maintaining the quality of Halal products. Automation has enabled consistent and accurate quality control checks, such as visual inspections, weight measurements, and temperature monitoring. By leveraging technology, companies can identify and rectify issues more effectively, ensuring that the final product meets the highest Halal standards.

Tracking and Traceability: A Transparent Supply Chain

Transparency is crucial for consumer confidence in the Halal food industry. Automated systems have made it possible to track products from farm to table, providing a clear and transparent record of the entire supply chain. This increased visibility allows companies to ensure that Halal standards are consistently maintained and fosters consumer trust in the products they consume.

Keeping It Clean with Automation

Maintaining cleanliness is paramount in Halal food production, and technology has made it easier than ever to achieve this. Automated cleaning systems now ensure that facilities are kept at the highest level of cleanliness, in line with Halal requirements.

Regular cleaning and sanitization of equipment, surfaces, and storage areas are now carried out more efficiently, reducing the risk of contamination and maintaining overall quality.

Speedy and Accurate Packaging and Labeling

Automated packaging systems have revolutionized how Halal products are sealed, labeled, and protected from contamination. These systems help prevent mislabeling or packaging errors, ensuring customers receive accurate product information. Moreover, automation enables faster, more efficient packaging processes, allowing companies to meet the ever-growing demand for Halal products.

Embracing Digital Distribution and Traceable Trade

The rise of e-commerce and digital platforms has made Halal food distribution more accessible. Online marketplaces now cater specifically to Halal consumers, providing them with a wide array of products from around the globe. This has allowed companies to expand their reach and tap into new markets, driving growth in the Halal industry. To further enhance this experience, traceable trade systems are being integrated, allowing consumers to verify the authenticity and origin of the products they purchase. Companies can also use data analysis and reporting tools to monitor consumer trends, optimize their product offerings, and identify new markets for expansion.

With the global Halal food market expected to reach a staggering USD 2.55 trillion by 2024, online sales of Halal food products are projected to grow at an impressive CAGR of 14.6%. This underscores the importance of technology in shaping the future of the Halal food industry.

Conclusion

Technology has played a transformative role in the production and distribution of Halal food. From slaughterhouse automation to embracing digital distribution through traceable trade, the industry has adopted innovative solutions to meet growing demand and maintain the highest quality standards. As technology evolves, we can expect even more exciting developments in the Halal food industry.