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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, CHUNG-HUA INSTITUTION FOR ECONOMIC RESEARCH 13/12/2017 1

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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,

CHUNG-HUA INSTITUTION FOR ECONOMIC RESEARCH

13/12/2017 1

Presentation Outline

Global Halal

Industry

Research Objectives

Methodology Synthesis

of Findings

Implications for

Businesses and Policy

13/12/2017 2

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

Global Halal Industry • Halal = 清真 (qīngzhēn).

• Ordained on all mankind, as stated in the Quran:

ها الناس يا با كلوا أي ا في األرض حالال طي مم 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

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

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

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

Key Halal Markets

Algeria Bahrain Egypt Indonesia

Iran Iraq Jordan Kuwait

Lebanon Malaysia Morocco Oman

Pakistan Qatar Saudi Arabia Syria

Tunisia Turkey UAE Yemen

Key halal markets, Muslim-majority countries (Population = 700 million)

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: http://halalfocus.net/canada-global-halal-food-market/

13/12/2017 8

(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 2030.

• Largest Muslim population in the world are located in the Asia region: Indonesia, Pakistan, India, and Bangladesh.

Source: http://gifr.net/gifr2013/ch_13.PDF

13/12/2017 9

Global Halal Trends

Source: Dato’ Sri Mustapa Muhamed, Status of Halal Industry (2016), MITI. 13/12/2017 10

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.

13/12/2017 11

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) 2011.

Source: JAKIM, 2017

13/12/2017 12

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.

13/12/2017 13

Methodology

• Qualitative methodology

• 4 approaches:

– Content Analysis

– Personal Interviews

– Observations

– Factory visits

13/12/2017 14

Content Analysis

13/12/2017 15

Personal Interviews

Category Participants

Halal certification bodies, and related associations and teams

THIDA, TGM Foundation, CMA, IMTIDA, Taipei Grand Mosque, Halal.Taiwan apps founding team, Salimah Taiwan.

Government offices and agencies

Taiwan Halal Center, Taiwan Tourism Bureau, MATRADE, MIDA

Manufacturers of halal certified products / Halal service providers

A large snacks manufacturer, Oil Well, A gourmet ice-cream manufacturer, Pro-Tour Express.

Consumers of halal products

12 formal interviews with tourists, temporary residents & permanent residents

13/12/2017 16

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).

13/12/2017 17

Observations

13/12/2017 18

• 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

Finding --1

13/12/2017 19

• 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) .

Finding--2

13/12/2017 20

• 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

Finding--3

13/12/2017 21

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 )

13/12/2017 22

(cont’d) Characteristics of halal certification in Taiwan

Private-driven • 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

13/12/2017 23

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.

13/12/2017 24

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

13/12/2017 25

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.

13/12/2017 26

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.

13/12/2017 27

Proposed Functions and Responsibilities of Halal Industry Policy

Functions Output Potential

Halal Development Policy and Policy- and-Upper-Level Functions

-Performed functions of policymaking, intelligence, control and coordination -Coordination promote greater collaboration and cohesiveness between many different units

Overcome issues of lack of explicit halal industry development policy and coordination between manufacturing companies and manufacturing and service industries.

Implementation Units 1) Halal research center

Number of R&D output and innovation in processes and products

Strengthen R&D in halal industry and practices to support policymaking and competitive industry practices.

2) Halal education and training

People trained in halal concept and implementation and related fields

Overcome issues of lack of manpower, knowledge foundation of Islam and halal concept, and internalization of Islamic values.

3) Halal certification unit

Firms being certified and conform their practices to required procedure

Overcome issues of fake certification and sustaining halal certification bodies

4) Halal promotion center Include promotion for halal exports and halal tourism

Taiwan Halal Center: Number of products exported to Muslim countries Taiwan Halal Tourism Center: Number of Muslim Inbound Tourists

Strengthen trade and tourism promotion

13/12/2017 28

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.

13/12/2017 29

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)

13/12/2017 30