Halal Taiwan: Emerging Player in the Global Halal Market
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1 Halal Taiwan: Emerging Player in the Global Halal Market KHAIRUL AKMALIAH ADHAM FACULTY OF ECONOMICS AND MUAMALAT, UNIVERSITI SAINS ISLAM MALAYSIA MOFA 2017 VISITING SCHOLAR, TAIWAN-ASEAN STUDIES CENTER, 13/12/ CHUNG-HUA INSTITUTION FOR ECONOMIC RESEARCH
2 Presentation Outline Global Halal Industry Research Objectives Methodology Synthesis of Findings Implications for Businesses and Policy 13/12/2017 2
3 Global Halal Industry Halal market is big and lucrative, one of the biggest global markets today Muslims population worldwide in 2016 is 1.6billion (23% of total global population) and it increases every year Observing rules of halal is compulsory on all Muslims Halal industry covers sectors of food, non-food (health products, cosmetics, etc) and services (packaging, logistics, financing, etc). In 2016, global halal industry estimated value USD3.7trillion (USD2trillion for food and lifestyle; USD1.7trillion for Islamic finance). 13/12/2017 3
4 Halal = 清真 (qīngzhēn). Global Halal Industry Ordained on all mankind, as stated in the Quran: ك ل و ا أ ي ه ا الن ا س ي ا م م ا ف ي األ ر ض ح ال ال ط ي با O you mankind! Eat of what is on earth, Lawful and good (Al-Baqarah: 168) Arabic word halla, literally means unrestricted. In simple terms, halal means permissible and clean. Core concept of halal is cleanliness, i.e., clean from prohibited substances e.g. pork and alcoholic drinks. In addition, the entire process of manufacturing or servicing must be clean and performed with good conduct. It is this entire process that is to be audited for a Halal certification by a credible authority. 13/12/2017 4
5 The New Southbound Policy The New Southbound Policy, introduced by President Tsai Ing-wen in August 2016 aims among others to 1) Increase market share of home-grown halal product export 2) Increase number of inbound Muslim tourists to Taiwan, particularly from the South countries. Under this policy, development of halal industry is considered as people-centric, to strengthen Taiwan s relationships with partner countries. 13/12/2017 5
6 Taiwan Partner Countries Source: An Introductory Guide to Taiwan s New Southbound policy. Bureau of Foreign Trade, Ministry of Economic Affairs. 13/12/2017 6
7 New Southbound Policy and Halal Industry To achieve the policy s aims, creation of a competitive halal ecosystem in Taiwan, both for supporting development of halal products export market, as well as for attracting inbound Muslim tourists to Taiwan, is needed. However, number of Muslims in Taiwan is small (about 300,000 in 2017). Therefore, the concept of halal might be foreign in Taiwan. How Taiwan can create a competitive and sustainable halal industry? And how Taiwan can take advantage of this big and lucrative halal market? 13/12/2017 7
8 Key Halal Markets Key halal markets, Muslim-majority countries (Population = 700 million) Algeria Bahrain Egypt Indonesia Iran Iraq Jordan Kuwait Lebanon Malaysia Morocco Oman Pakistan Qatar Saudi Arabia Syria Tunisia Turkey UAE Yemen Emerging halal markets, Muslim-minority countries India (177 million) China (23 million) Russia (16 million) Philippines (5 million) France (5 million) Germany (4 million) UK (3 million) USA (4 million) Source: 13/12/2017 8
9 (cont d) Key Halal Markets Asia Pacific and the Middle East are the largest markets for halal products. 60% of global Muslim population resides in Asia Number of Muslims in Asia are expected to reach 1.3 billion by Largest Muslim population in the world are located in the Asia region: Indonesia, Pakistan, India, and Bangladesh. Source: 13/12/2017 9
10 Global Halal Trends Source: Dato Sri Mustapa Muhamed, Status of Halal Industry (2016), MITI. 13/12/
11 Halal Certification Worldwide In 2016, there are 200 halal certification bodies worldwide As of July 2017, JAKIM gives certified body status to 67 certification bodies, which operate in 41 countries. 13/12/
12 JAKIM Certified Bodies, Sept 2017 Products and goods certified by CBs are allowed to be exported and marketed in Malaysia under Trade Description Act (Certification and Marking of Halal Order) Source: JAKIM, /12/
13 Research Objectives To understand the existing operations of halal industry in Taiwan, through illuminating the current state of affairs of the halal industry. To identify the players within the halal products industry and some of the conditions for firm and industry competitiveness. To understand the level of availability and accessibility of the supporting industries/institutions related to the halal industry, including those related to halal certification bodies. To understand the perceptions of consumers and manufacturers regarding halal industry in Taiwan. 13/12/
14 Methodology Qualitative methodology 4 approaches: Content Analysis Personal Interviews Observations Factory visits 13/12/
15 Content Analysis 13/12/
16 Personal Interviews Category Halal certification bodies, and related associations and teams Government offices and agencies Manufacturers of halal certified products / Halal service providers Consumers of halal products Participants THIDA, TGM Foundation, CMA, IMTIDA, Taipei Grand Mosque, Halal.Taiwan apps founding team, Salimah Taiwan. Taiwan Halal Center, Taiwan Tourism Bureau, MATRADE, MIDA A large snacks manufacturer, Oil Well, A gourmet ice-cream manufacturer, Pro- Tour Express. 12 formal interviews with tourists, temporary residents & permanent residents 13/12/
17 Factory Visits Two site visits to factories organized by Taiwan Halal Center in November 2017 (visits to a Taiwan specialty snack and a gourmet ice cream manufacturers). 13/12/
18 Observations 13/12/
19 Finding --1 Global halal market is lucrative Huge opportunities for Taiwan to further develop its halal exports to partner countries as well as other Muslim markets. Development of the halal industry will also induce the growth in the inbound tourism markets too, as the product industry act as a feeder to the halal services sector. As availability of halal products increase, and Taiwan becomes more Muslim-friendly, high potential for Muslim inbound tourism market to further increase 13/12/
20 Finding--2 Existence of emerging halal industry and tourism in Taiwan Increase in number of halal certified companies (about 1,000 companies [800 manufacturing companies and 200 service providers] have received halal certification. Based on interviews with the manufacturing companies, number of export sales to Muslim countries has increased. Increase in demand for halal certification [by manufacturers and service providers] Increase in number of Muslim tourists to Taiwan (from 10.7 million tourists, about 180,000 are Muslims in 2016, expected to increase by 10% in 5 years). 13/12/
21 Finding--3 Existence of structured certification procedures by halal certification bodies, characterized by: Stringent certification procedures, with emphasis on getting recognition or endorsement from reputable international halal certification bodies, including Malaysian JAKIM. THIDA mainly followed JAKIM requirements TGM, built upon its members deep knowledge and strengths in Shariah Law, in developing its halal certification procedure 13/12/
22 Characteristics of halal certification in Taiwan Multiple certification bodies Taipei Grand Mosque, THIDA & CMA Manufactured products (TGM and THIDA) Services (TGM 2 types of certification and CMA 6 types of certification ) 13/12/
23 (cont d) Characteristics of halal Private-driven certification in Taiwan All certification bodies are private bodies, which means that the certification process in Taiwan is mainly private-driven; Evidence of the absence of the Taiwanese government s involvement in administering the halal certification process and affairs of Muslims in general Other Characteristics Nominal fees Basic Islamic and halal training as prerequisite for certification 13/12/
24 Findings --4, 5, 6, 7 Low availability of home-grown certified products in Taiwan Lack of connection amongst the manufacturers as well as between the manufacturers and halal tourism industries. Lack of Taiwanese halal branding While there have been some support for halal certification bodies in the services sector, there is a lack of support for halal certification bodies in the product manufacturing sector. 13/12/
25 Finding --8, Current situation with halal industry policy Southbound policy aims to increase the market share of halal product export & inbound tourists But There is absence of explicit halal industry development policy Policy objective is not specified or detailed Course of action in supporting policy implementation seems unclear Lack of information on financial commitment for supporting the policy implementation 13/12/
26 Implications for Policymaking On the whole, government needs to create a conducive policy mechanism for development and promotion of halal industry Halal industry policy and its components must be made explicit: Policy objectives must be established Solid plan of action in support of the policy implementation is needed Timeframe for its implementation is needed Financial commitment/budget must be allocated by the government Institutional structure must be established: A dedicated policy level unit as well as implementation units For this purpose, need to establish a policy-level halal industry development unit to be positioned at the Executive Yuan. This office will be responsible for policymaking, intelligence, control and coordination of the policy implementation. 13/12/
27 Cont d In developing the policy, policymakers need to view halal industry as a system, in which the halal manufactured industry serves as the feeder to other manufacturing industries and to the halal tourism industry. Need for a coordination function of all the implementation units. There is a need to look into the most proper structure of governance and management of the halal certification can look into benchmarking other Muslim-minority countries that had adopted a formal structure. 13/12/
28 Proposed Functions and Responsibilities of Halal Industry Policy Functions Output Potential Halal Development Policy and Policyand-Upper-Level Functions Implementation Units 1) Halal research center 2) Halal education and training 3) Halal certification unit 4) Halal promotion center Include promotion for halal exports and halal tourism -Performed functions of policymaking, intelligence, control and coordination -Coordination promote greater collaboration and cohesiveness between many different units Number of R&D output and innovation in processes and products People trained in halal concept and implementation and related fields Firms being certified and conform their practices to required procedure Taiwan Halal Center: Number of products exported to Muslim countries Taiwan Halal Tourism Center: Number of Muslim Inbound Tourists Overcome issues of lack of explicit halal industry development policy and coordination between manufacturing companies and manufacturing and service industries. Strengthen R&D in halal industry and practices to support policymaking and competitive industry practices. Overcome issues of lack of manpower, knowledge foundation of Islam and halal concept, and internalization of Islamic values. Overcome issues of fake certification and sustaining halal certification bodies Strengthen trade and tourism promotion 13/12/
29 Implications for Businesses For Export and Tourism Market Businesses (product manufacturers and hospitality service providers) need to: Understand the behaviour of Muslim consumers. Be knowledgeable about what Muslims want Understand the different segments of the markets, the young, young family, and seniors and offer unique offerings to the Muslims Make their products more available to Muslims in Taiwan (residents and tourists), as development of local halal markets forms the basis for development of export markets Halal product manufacturers take the opportunity of the growing halal tourism industry to market products to service providers (hospitality industry) and tourists. 13/12/
30 Research Output Technical Report Halal Taiwan: Emerging Player in the Global Halal Market Media presentations at YouTube, 9 Videos related to halal industry in Taiwan (Youtube Channel: halal.research) 13/12/
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