1 Development of Halal IndustryProduction of Islamic Goods and Services; Development of Halal Industry Prepared by; Denny Andriana Farouk Ghazi Fathin Fathana Mohd Hairul Azrin Nuraishah G G G G G

2 Halal Halal means Lawful Allah commands Muslim to eat Halal thingsO mankind! Eat of that which is lawful and wholesome in the earth, and follow not the footsteps of the devil.  Lo! he is an open enemy for you. (2:168) 

3 Kosher Vs Halal Kosher Halal Blessing on AnimalBlessing before entering slaughtering area, not on each animal Blessing on each animal while slaughtering Gelatin form: Dry bones Skin and Bones Fish Pork Maybe From Kosher Animals Kosher Fish only Allowed by some liberal Orthodox Rabbis Halal bones only From Halal Animals Any fish Not allowed at all Alcohol Permitted, depending on source Not permitted Combining Dairy and Meat Not Permitted Not an issue Special Occasion Additional Restriction during Passover Same rules apply at all times From an article by Dr. M. Riaz, Texas A & M University; minor adjustments by eat-halal.com

4 Halal Food Industry With today's manufacturing and food production, it's hard to know what goes into the food we eat. This created a need for Halal food industry. Especially with the increasing of Muslims in a non-Muslim countries.

5 Total Muslim Population is 1,480,083,062 of Total Population 6,036,972,881Source :

6 Muslim Customer

7 Cooperation by OIC MembersHalal Exhibition Malaysian International Halal Showcase (MIHAS) Dubai International Halal Show (DIHAS) Indonesia International Halal Exhibition Purpose : Create a market place for Halal product and services

8 Number of Foreign CountriesMIHAS Year Number of Exhibitors Number of Foreign Countries OIC Member Countries 2004 195 2005 332 18 7 2006 392 19 9 Source : MIHAS website,

9 Cooperation by OIC MembersWorld Halal Forum To develop the Global Halal Market To understand and solve challenges faced by the Halal industry Address the need for industry standards for Halal on a global scale Create a networking event to facilitate trade between the different players in the Global Halal Market

10 Government Support MalaysiaMechanisms and legislations - certifying products, food producers, slaughter houses and food premises. Vision : By International Halal Hub Initiatives : JAKIM Halal Food: Production, Preparation, Handling and Storage – General Guidelines (MS 1500:2004) Halal Industry Development Corporation Allocation of funds – RM100 million in 2006 Standard Halal logo

11 Government Support Singapore: Indonesia: Middle Eastern CountriesThe government gave full support and backing for the establishment of the Islamic Center of Singapore (MUIS) even though Muslims are a minority. Indonesia: Regulatory body Assessment Institute for Foods, Drugs and Cosmetics by the Majlis Ulama Indonesia (MUI), a council of religious scholars. Middle Eastern Countries Gulf Standards Requirements and guidelines for food imports Thailand and South Africa Provide services that help to monitor Halal compliance in slaughterhouses

12 Development of Technology & Knowledge Based ResourcesHalal Verification via SMS LG Qiblah Phone New Portable Slaughter Unit – The Compact by a Belgian Company

13 Challenges Standardization of Halal IndustryUniformity Across Industry Acceptable standard to all users Benchmarking Across Mazhab Differences in Mazhab Lost of customer’s trust Determination of Goods and Services Sacrificing basic goods for luxury goods Avoiding wastages Knowledge Based Production

14 Challenges Developing Human Resources Global Understanding of IndustryUnderstanding not only at Entrepreneur level Human Resources to sustain the industry in the long run Building knowledgeable workforce Global Understanding of Industry Overcoming Misconception Industry not exclusive to Muslim only Branding Induce inform purchase Avoid Price Discrimination Regulating the use of Halal Brand

15 Future Outlook Production of Islamic Goods & Services in international market. - 25% of world population are Muslims. 2. To gain acceptance of Halal Industries from all different religion and races in the world. 3. Establish cooperation among Muslim Nations  Halal Producer. Facilitate Under-developed Muslim Nations Expansion of Halal Industry  ‘the way of life’ for its users. - concept of justice for all creatures: short-pain death for animals - concept of cleanliness: materials manufacturing  cleaning Final output 5. Halal Industry could lead to actual realization of Islamic Economy. - already apart of Islamic Economy  with same Shariah objective Government Cooperation Intra-Government Cooperation This is presentation slide

16 Recommendation The production of Islamic Goods and Services: Variety + Quality + Convenience Cooperation  among Muslim Nations using free-trade agg., existing Muslim-Related Organizations or Financial Institution. Standardization  logo, procedures of certifications (such as clear guideline and quality) which would need to be adhered to across all industry. Benchmark acceptance level of Halal across Mazhabs and Nations  to resolve ambiguities and contradictions.  Education on Halal knowledge  human resources & global market Regulatory body  proactive, friendly alliance with local authorities and cooperation bodies. This is presentation slide.

17 Discussion

18 Halal Halal means Lawful Allah commands Muslim to eat Halal thingsO mankind! Eat of that which is lawful and wholesome in the earth, and follow not the footsteps of the devil.  Lo! he is an open enemy for you. (2:168) 

19 The Haram Food The Qura’an has mentioned the several kinds of unlawful (Haram) food in the following verse: "He hath only forbidden you dead meat, and blood, and the flesh of swine, and that on which any other name hath been invoked besides that of Allah. But if one is forced by necessity, without wilful disobedience, nor transgressing due limits - then is he guiltless. For Allah is Oft-Forgiving Most Merciful And also alcohol drinks which is mentioned in other verses.

20 Kosher What is kosher ? The idea of lawful and unlawful food known from Judaism mentioned in the Jews holly book (Torah). Kosher is the Jews name (Hebrew) for a lawful food

21 Kosher Vs Halal Kosher Halal Blessing on AnimalBlessing before entering slaughtering area, not on each animal Blessing on each animal while slaughtering Gelatin form: Dry bones Skin and Bones Fish Pork Maybe From Kosher Animals Kosher Fish only Allowed by some liberal Orthodox Rabbis Halal bones only From Halal Animals Any fish Not allowed at all Alcohol Permitted, depending on source Not permitted Combining Dairy and Meat Not Permitted Not an issue Special Occasion Additional Restriction during Passover Same rules apply at all times From an article by Dr. M. Riaz, Texas A & M University; minor adjustments by eat-halal.com

22 Halal Food Industry With today's manufacturing and food production, it's hard to know what goes into the food we eat. This created a need for Halal food industry. Especially with the increasing of Muslims in a non-Muslim countries.

23 Total Muslim Population is 1,480,083,062 of Total Population 6,036,972,881Source :

24 Muslim Population Demographic considerations with regard to Muslim populations may prove to be of vital concern in the next millennium. A large percentage of Muslim population can affect the socio-political structure of one country.

25 Muslim Customer

26 Muslim Population & Food Expenditure 2006Region 2005 Muslim Population (million) Per capita Average Food Expenditure p/a USD Halal Food Market Value USD (million) Africa 461.77 250 115,443 West Asia 195.00 570 111,150 South Central Asia 584.80 300 175,440 South East Asia 266.37 350 93,230 China 39.10 175 5,865 Europe (inc Russia) 51.19 1,250 63,988 N.America 8.26 1,750 14,455 S.America 1.64 500 820 Oceania 0.35 1,500 525 Total 1,565 - 580,915 Source : World Halal Forum Magazine

27 Halal Accreditation Food processing operations must apply for Halal accreditation with an approved Islamic organization. Processors must have a Halal program to comply with the Halal processing requirements. The facility must be inspected and be suitable for Halal slaughter and/or production. All inspections are carried out by qualified personnel from the Islamic organization. 4. The processor must submit a list of all raw materials, ingredients and additives for each product that will be certified Halal. These ingredients will be thoroughly scrutinized by the Islamic organization and where necessary the advice of a Halal food technologist may be used.

28 Halal Accreditation Haram product must not be processed in the same area used for Halal product. 6. Halal and non-Halal products must be adequately separated and identified at all times. 7. Equipment must be thoroughly cleaned and washed if non-Halal product has been in contact. 8. Only approved Islamic organizations can certify Halal food and beverage products, for all exports. Source:

29 Cooperation by OIC MembersHalal Exhibition Participation from OIC members are encouraging Malaysian International Halal Showcase (MIHAS), Indonesia International Halal Exhibition and Dubai International Halal Show (DIHAS) Assist in growth and continuous development of the Halal industries

30 Cooperation by OIC Members MIHAS : Exhibitors Profiles

31 Number of Foreign CountriesMIHAS Year Number of Exhibitors Number of Foreign Countries OIC Member Countries 2004 195 2005 332 18 7 2006 392 19 9 Source : MIHAS website,

32 Cooperation by OIC MembersWorld Halal Forum To develop the Global Halal Market To understand and solve challenges faced by the Halal industry Address the need for industry standards for Halal on a global scale Create a networking event to facilitate trade between the different players in the Global Halal Market

33 Government Support MalaysiaThe government has long recognized the importance of the Halal industry. Several mechanisms and legislations have been established to secure the confidence and protect Muslim consumers of Halal products in terms of certifying products, food producers, slaughter houses and food premises. Vision : By 2008, to be the centre for the production and distribution of halal products, halal service providers, reference on Halal Standard, and research and development (R&D) on halal matters International Halal Hub

34 Government Support Malaysia Initiatives include : Year Details 1982Department of Islamic Development Malaysia (JAKIM) Function : to check and instill Halal awareness amongst food producers, distributors and importers and is responsible for the issuance of Halal certificates. 2003 Technical Committee on Developing Malaysia as the Regional Hub For Halal Products was set up. Function : To stimulate the growth of the Halal food industry and to make Malaysia a Halal hub by year 2010.

35 Government Support Malaysia: Year Details 2004(a) Halal Food: Production, Preparation, Handling and Storage – General Guidelines (MS 1500:2004)’ was established. Function : Prescribes practical guidelines for the food industry on the preparation and handling of Halal food (including nutrient supplements) based on quality, sanitary and safety considerations and serves as a basic requirement for food products and food trade or business in Malaysia. (b) JAKIM published the “Manual Procedure of Halal Certification Malaysia and Guidelines on the Appointment of Foreign Islamic Organisation as Halal Certification Body” for products to be exported to Malaysia. The Manual is a guideline to co-ordinate the implementation of Halal certification activities in Malaysia at JAKIM’s federal level and the State Department/Council of Islamic Affairs level (c) The 1st Malaysia International Halal Showcase (MIHAS) was held.

36 Government Support Malaysia: Year Details 2004The government allocated RM10 million in Budget 2005 specifically for purposes of promoting Malaysia as the world producer of Halal products and services. 2006 The Government allocated RM100 million to help boost efforts to make Malaysia an international halal hub. RM50 million was allocated to set up halal parks in Kelantan, Pahang, Terengganu and Perlis. The Halal parks are dedicated to the downstream production of halal products. RM20 million was allocated to SME Bank to finance entrepreneurs to develop Halal products. The 1st World Halal Forum was held. Halal Industry Development Corporation was formed to : - spur ahead the development of the Halal industry in Malaysia and the international market - draw up strategies for Malaysian food products to dominate the global halal market.

37 Government Support Malaysia: Year Details 2006- lead the development of Halal standards as well as audit and verification procedures, in order to protect the integrity of Halal - directing and co-ordinating the development of Malaysia’s Halal industry among all stakeholders - coordinate efforts to review standards, develop the local industry, promote Malaysian halal products and services in international markets as well as support investments in the domestic halal sector. (f) JAKIM issued the standard Halal logo to be used by all state governments in Malaysia. (g) CIMB allocated RM500 million in the form of loans to Halal food players. It is the world’s first special Halal package which offers good opportunities to businesses as they provide more depth and opportunities in the Halal industry.

38 Government Support In Singapore: In Indonesia:The government gave full support and backing for the establishment of the Islamic Center of Singapore (MUIS) even though Muslims are a minority. In Indonesia: The government formed a regulatory body called the Assessment Institute for Foods, Drugs and Cosmetics by the Majlis Ulama Indonesia (MUI), a council of religious scholars.

39 Government Support In the Middle Eastern Countries:They have formulated the Gulf Standards for prepared foods and have laid down requirements and guidelines for food imports. In Thailand and South Africa: They provide services that help to monitor Halal compliance in slaughterhouses and manufacturing establishments for further processed products, both locally and internationally

40 Government Support Brunei:Brunei Halal Certification offers credibility by being under the control of the government, having a controlling body (Brunei Religious Council), existence of an Act, a proper auditing system, and the presence of enforcement mechanisms. Brunei Premium Halal Brand targets a global market, especially that of high halal sensitivity, with plans to penetrate the global halal market through two phases: Phase one - GCC (Gulf Cooperation Council) countries, and phase two - Western countries Five MOUs were signed between Brunei Darussalam and several Australian companies as part of the initiatives to make Brunei as one of the leading players on the global Halal map. Officials from the two countries will examine ways to develop a niche high quality halal export industry by combining Australia's reputation as a producer of fresh, high quality food products with Brunei Darussalam's stringent halal certification standards.

41 Development of Technology & Knowledge Based ResourcesHalal Verification via SMS : - Muslim consumers in Malaysia can soon verify if certain products sold at shops are "halal" by using their handphones via SMS to JAKIM. Consumers can also have access to the department's halal database LG Qiblah Phone - LG Electronics has introduced Qiblah phone (model:LG-F7100) which comes complete with embedded compass, direction indication and prayer time alarm (Azan feature), usable in 500 cities worldwide. New Portable Slaughter Unit – The Compact by a Belgian Company - It can be set up anywhere as the entire process, including the waste, is self-contained with no environmental impact whatsoever. The Compact is constructed of sturdy galvanized iron and painted with special long life varnish. It is set on two twin wheels and can be moved both by hand and by tractor using the special hook-up.

42 Development of Technology & Knowledge Based ResourcesHalal vaccines - Government-owned facility, National Institute for Natural Products, Vaccine and Biologicals, will become a producer and exporter of halal vaccines to meet global demands. Halal toiletries for Haj - A team of scientists from Pakistan Council of Scientific and Industrial Research (PCSIR) has developed a kit comprising perfume-free toiletries with halal ingredients for intending Haj and Umra pilgrims. The odourless toiletries consist of a body lotion, shampoo, soap, lip balm, anti-crack cream and a face wash. The products contained special herb extracts and were free from fillers, artificial colours and bleaching agents.

43 Challenges In the provision of halal goods and services, there are challenges which would be faced by the industry in order to ensure its sustainability and growth in the future. One of the greatest challenge is the prevailing discriminated view on Islam which is widely understood to be a religion rather than a way of life would invite immediate negative view on anything associated with it.

44 Challenges Among the challenges to be considered isStandardization of halal industry Benchmarking across Mazhab Determination of Goods and Services Developing Human Resources Inculcating Global understanding on Halal industry Branding

45 Challenges Standardization of halal industryIn building halal industry across the world, certain standard needs to be provided ensuring uniformity across the industry and acceptability to all the users. Such standard would provide a clear guideline and quality which would need to be adhered to. Also the minimum halal requirement to be abide by the inudstry. Provision of such standard must be properly supervised by a regulatory agency that will strictly ensure such standard not be compromised. The regulatory body must be able to regulate but give room for innovation and improvement of the industry and not just reacting base on occurrence of non compliance. The regulatory body must be proactive, understanding the working of the industry and its respective requirements aligning it with the Shariah objectives.

46 Challenges Benchmarking Across MazhabThe fundamental rules guiding halal and haram are clear as been outlined in the Quran and Sunnah. However, its application and interpretation in the current time needs to be made clearly in context with the prevailing practices and situations. The OIC had established a fiqh council which resides on issues facing the Muslims in the current period. However there are gaps on the fiqh scholars and the practitioners. Various interpretations of the prevailing transactions, products, services and practices causes confusion among the Muslims. The consumers are not sure of the Halal status of the product or services itself which would lead to the lost of consumers trusts.

47 Challenges Determination of Goods and ServicesGoods or services to be produced are properly guided by Shariah and avoid any wastages of resources. The basic needs of the society must not be sacrificed for the production of other goods of services which may have a larger return but is under the category of unnecessary items. Finding a workable indicator which can guide determination of goods or services to be produce Consider in the provision of needed goods, respective society needs would differ across different societies in the Muslim world due to culture, environment or practices. The role of knowledge both in the validity from the Quran and needs of the society, accompanied by the respective efficient production process is highly needed in the determination and production of goods and services.

48 Challenges Developing of Human ResourcesHuman Resources are the major component of the production of goods and services for the economy. The human factor must be adequately trained and is knowledgeable to understand what is required in order to ensure goods and services are halal, from input, processes till the provision of such products and services to the users. Uniform understanding must not only be limited to the entrepreneur level of the society but by all of the people involve in provision of the goods and services. The living resources (basically human resources) is needed to sustain and develop the industry for the long term. Building knowledgeable workforce in the industry would not only bring benefit of complying with halal requirements but will contribute to a heightened quality of halal standard in the long run

49 Challenges Inculcating Global Understanding of The IndustryThe Global setting provide an opportunity for the industry to spread its goods and services, technologies and importantly understanding to be acceptable though out the world community. Similarly, halal goods and services, through global understanding of what the industry is about would pave way to serve all Muslim community through out the world. Penetrating global markets with the current misconception that it is based on religion requirement and not way of life. Avoid myopic view that the industry is exclusively for the Muslim community only. Ensuring competitiveness of the industry as compared to other industry

50 Challenges Branding The main objective of the branding in the halal industry must not be looked as an opportunity to use price discrimination from the brand but to safeguard the user to secure halal goods and services. The halal brand must be protected and only to be issued by authorized body who are internationally recognized to ensure that the brand is not abused. Thus the halal brand can only be issued and used by the members of the industry whom had followed the respective standard and guidelines issued by the authority and embed the halal requirement in the provision of the respective goods and services. Branding which is supervised by the entrusted authority seems to be idealistic and may not be easily implemented. Avoid branding to be taken as based of price discrimination.

51 Challenges Standardization of Halal IndustryUniformity Across Industry In order to ensure uniform practices acceptable by member of industry. Provide minimum requirement for competing firms Avoid compromised of Industry Acceptable standard to all users Protecting Users interest Acceptable minimum uniform quality of goods and services Transparent to all

52 Challenges Standardization of Halal Industry Control of StandardStandard to be set by authorized regulator Regulatory body to supervise the standard Clear and transparent standard Standard must not be too rigid Give room for innovation within the industry Determining basic level of Halal as a minimum Basic requirement of Halal part of standard Platform for competition Pave way for high quality in the future

53 Challenges Benchmarking Across Mazhab Differences in MazhabDifferent school of thoughts Different region follow different school of thoughts Different views in each school itself Further influence by different customs / culture Divided views can cause confusion to users Various conception of Halal Conflict due to different views Lack of knowledge on differences cause confusion Inability of user to take a common ground

54 Challenges Benchmarking Across MazhabLost of Customers trust on industry Discourage due to confusion Feel lack of choice Lack of innovativeness of the industry in their eyes Fear of manipulated and misuse of Islam as an attraction Finding Common Ground Initial ruling on halal form Quran and Sunnah Exercise of Ijtihad by contemporary scholars United interpretation for the current time Use of common platform such as the OIC Fiqh Council for majority view

55 Challenges Determination of Goods and ServicesProducts and services to be provided Identifying the goods and services need by the consumers Acquiring and allocation of resources Drivers of needs and demand Conforming to majority or minority Sacrificing basic goods for luxury goods Provision of basic needed goods or base on profit Luxury goods can get more return Basic goods as rights of the society

56 Challenges Determination of Goods and Services Avoiding wastagesProduction of Unnecessary goods leads Production of goods and services not conforming to halal requirement Knowledge Based Production Possession of knowledge on Halal Technical expertise Economic Efficiency and Effectiveness Shariah guidance Observation of Shariah requirement

57 Challenges Developing Human resources Major economic resourcesHuman resource are the main resources of the industry Must be equipped with the required knowledge Understanding not only at Entrepreneur level Uniform understanding to apply to all members of industry Basic knowledge must be uniform across industry Human Resource will carry on the industry in the long run Building knowledgeable work force

58 Challenges Global Understanding of IndustryProvide platform to introduce the industry to a larger market Entering new market Providing goods and services to Muslim worldwide Spreading Benefit of Halal goods and services Global acknowledgment of halal products Long run benefit of industry being accepted globally Halal as a global standard

59 Challenges Global Understanding of IndustryOvercoming global misconception Islam perceived only as religion Reintroducing Islam as a way of life Associating Halal industry as way of life Industry not exclusive to Muslims Products and services aimed for all Industry participants is not limited to Muslim Important understanding on the purpose of the industry

60 Challenges Branding Create loyalty to industryInduce informed purchase Halal brand as a guide to users Protection of brand Avoid abuse of brand Needs to be regulated Authorized use only

61 Challenges Branding Need for and international supervision for brandAvoid abuse of halal brand International Supervision due to Global landscape Protecting the interest of the users Avoiding Price Discrimination Branding not as basis of price discrimination

62 Future Outlook To establish a large collection of halal products and services available in the international commodity and service market. This would help the 25% Muslims in the world with the goods and services to satisfy their respective needs as well as non-Muslim consumers. To establish cooperation among Muslim Nations in becoming a leading Halal producer. This would have been made possible with the encouragement of each respective Islamic Government which has already been seen in the context of providing infrastructure and recognition of Halal industries. The governments should be ready to response for a global cooperation among other Muslim Nations to strengthen their position as Halal producers. Furthermore such cooperation could also facilitate the economic and social development of under developed Muslim Nations where employment and education could be provided for them. Slides for hand out to give to lecturer

63 Future Outlook To gain acceptance of Halal Industries from all different religion and races in the world. By meeting the needs and wants of consumers such as providing a clean and healthy products, kosher goods has gained acceptance from all including Muslims themselves. Thus it is no different for Halal Industry to breakthrough as similar with kosher or even better with their halal goods and services. The expansion of Halal Industry to not just providing goods and services merely for religious sake, but to be ‘the way of life’ for its users. This is in relation to the prevailing discriminated view on Islam that is only understood to be a religion. In fact Islam teachings of Halal elements are highly associated with the concept of justice for all creatures (for the slaughtered animal to die in a short pain) and cleanliness (with the concern regarding the manufacturing process, cleaning process apart from the material used in the production of Halal goods). Slides for hand out to give to lecturer

64 Future Outlook Halal Industry could lead to actual realization of Islamic Economy. This is since the industry itself is already apart of the Islamic economy component having the same objectives of achieving and meeting with the standards of Shariah. Slides for hand out to give to lecturer

65 Recommendation The production of Islamic Goods and Services must aim at three aspects or objectives which is to provide a wide variety of goods, with a recognized high quality (this could be in the term of cleanliness and animal fat-free positioning) and convenience relating to the availability of the halal goods and services everywhere. Cooperation could be establish among Muslim Nations as well as existing Muslim-Related Organizations or Financial Institution such as the OIC, IDB to promote the growth of Halal Industry as well as social welfare in Muslim Countries. Slides for hand out to give to lecturer

66 Recommendation The need to standardize the Halal Industry in terms of logo, procedures of certifications such as clear guideline and quality which would need to be adhered to across all industry. 4. The need to benchmark the acceptance level of Halal across Mazhabs and Nations. This is important to resolve the ambiguities that have resulted due to different interpretation of the prevailing transactions, products, services and also on practices. Slides for hand out to give to lecturer

67 Recommendation 5. Further education on Halal knowledge particularly on human resources and global market is needed. This is important to ensure that the human factors are adequately trained and knowledgeable to understand what is required in order to ensure it is halal and also the global market that includes non-Muslims are protected from fraud of halal goods and services. 6. Establish a regulatory body on Halal provisions across sectors. This body must also be proactive by giving room for innovation and improvement of the industry and not just reacting base on occurrence of non-compliance or fraud in the industry. Slides for hand out to give to lecturer

68 Muslim Population