reimagining the role of banks in the halal economy
TRANSCRIPT
REIMAGINING THE ROLE OF BANKS IN THE
HALAL ECONOMY
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1. The Halal Context
2. Support for SMEs in Halal Industry
3. Halal in One Overview
4. Halal in One Notable Case Studies
5. Halal in One Moving Forward
Content
3
Halal
Opportunities Halal Eligible Base Actual Halal Base
Domestic market
Opportunities
Global Halal Market
Opportunities
• Global halal market is valued at
$2 trillion as at 2019
• Malaysia’s domestic Halal market
is expected to reach $150 bil by
2030
• Halal currently contributes to 7.4%
of Malaysia’s GDP, and is targeted
to contribute 15% by 2030.
• Malaysia aims to become a net
exporter of Halal goods
Sources:
NST, Aug 2019, Aug 2020
FM, Aug 2019, Aug 2020
Economic Census 2016, Department of Statistics
The Malaysian Reserve , Oct 2020
SME Segment in Malaysia
• In Malaysia, 9 out of 10 SMEs do
not have Halal certification
• Out of the 200,000 eligible base,
only 7,000 SMEs are Halal
certified
• Out of 907,065 business
establishments in Malaysia,
98.5% are SMEs
• Out of this, 200,000 SMEs are
operating in the Halal ecosystem
Despite the sizeable opportunities in the Halal market and the large Halal-eligible base of SMEs, SME participation in the
Halal sector is still limited.
Halal certified SMEs
Halal and SMEs: Snapshot of Current State of Affairs
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SME’s Appetite and
Readiness
Demand-Supply disconnects impede higher Halal penetration rates in the SME
segment
Early-stage enterprises are
concerned with business
viability and survivability
Low certification readiness due
to lack of production
infrastructure, management
processes and financial records
Prohibitive cost of preparation
for certification; and limited
access to funding
Information Asymmetries
and Support Fragmentation
Varied information and support
for Halal enterprises are
available but dispersed
Asymmetries create agency
risks and fraud incidences,
which generate negative
goodwill for Halal
Halal is not a consideration in
credit and investment models
Halal and SMEs: Factors Causing Limited Participation of SMEs
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1. The Halal Context
2. Support for SMEs in Halal Industry
3. Halal in One Overview
4. Halal in One Notable Case Studies
5. Halal In One Moving Forward
Content
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Government Initiatives to Encourage Halal SMEs Participation
https://www.theedgemarkets.com/article/smes-need-more-capacity-boost-halal-exports
Tax Incentives
• Halal compliance and
readiness programme
• Halal awareness
programmes
• Partnership with MNCs for
knowledge sharing
Sources: Based on Budget 2020 for SME Annual Report 2018/2019 by SME Corp
• Tradeshows and
international offices to
facilitate business
matching
Capacity Building and
Infrastructure Financing Incentives Market Access
• Tax Exemptions for HDC
Halal Park Operators
• Encourage MNCs’
investment; business
matching opportunities for
SMEs
• Budget Allocation to
encourage SME digitalisation
• Interest Subsidies
• Financing / Financing Grants
• IMT-GT= Promote trade
and investment in Halal
Products at sub
regional level
• Mutual recognition
between global halal
authorities and
certification bodies
• Halal Integrated Platform:
Centralisation of Information
and Services in Halal
Industry
Bank Negara Malaysia
https://www.mtdc.com.my/business-funding/htdf/
http://www.teraju.gov.my/halal-development-fund/?lang=en
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By extending offerings to non-financing propositions, IFIs have the
opportunity to establish stickier relationships with SMEs.
Halal and SMEs: Challenges, Needs and How IFIs can Contribute
Current
IFIs’
Offerings
Insufficient Access to
Financing Support
Depth of Understanding
of Halal Opportunities
General Business
Management Market Access
Challenges
Faced By
SMEs
• Pre-bankability • Lack supporting
documents and credit worthiness due to micro size
• No suitable financing programme ; frequently turn to high cost personal financing
• Lack resources for Halal Market Intelligence and Comprehensive Halal Marketing Strategy
• No proper financial account , payroll and business management systems
• No Digital Presence • Limited business network
• Lack new market entry
capabilities.
• Absence of certifications
exacerbating
disadvantages vs large
corporations.
• N/A
• Cash management
account and payroll account
• Simple marketing platforms
• N/A
• Mentoring and awareness programme to help SMEs • To navigate through
Halal Market
• Business support ecosystem for SMEs
• Certification assistance via endorsed certification consultant
• Market access support
Sources: https://www.theedgemarkets.com/article/smes-need-more-capacity-boost-halal-exports
Level of Success of Halal Small and Medium Entrepreneurs in Malaysia, Putri Rohiza Tahir and Jalal Hanaysha, 2016
Bank Negara Malaysia
• Alternative financing models
• High priced personal financing
• Limited startup financing
Opportunities
for IFIs
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1. The Halal Context
2. Support for SMEs in Halal Industry
3. Halal in One Overview
4. Halal in One Notable Case Studies
5. Halal in One Moving Forward
Content
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i. Food Products / Drinks / Food Supplement
ii. Consumer Goods
iii. Cosmetics & Personal Care
iv. Pharmaceutical
v. Food Premise/ Hotel/ Catering
vi. Slaughterhouse
vii.Logistics
Overview of Halal in One (HiO)
What is Halal in
One?
Objective
Target Industries
• HiO is a complete Halal business support programme, designed to help SMEs tap into and
succeed in the Halal market
• HiO’s proposition for customers includes Halal certification advisory, market access, Halal
financing and digitalisation services
• Visit HiO platform at https://www.alliancebank.com.my/halal-in-one.aspx
i. Food Products / Drinks / Food Supplement
ii. Consumer Goods
iii. Cosmetics & Personal Care
Why Halal in One?
• AIS and ABMB operate in the SME
space
• More than 50% of AIS/ABMB SME
Customers who are eligible to
operate in the halal space are not
halal certified
• Halal in One fits to AIS’s purpose to
become the preferred ESG bank
and ABMB’s to become the most
important relationship for business
owners
Benefits to Bank Benefits to SMEs
• Provide SMEs with services needed
through credible sources on one
platform
• Eliminate information asymmetry in
the market for halal SMEs.
• To create a Halal enterprise ecosystem by providing end to end support for SMEs to start and
expand their Halal businesses
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AIS’s Purposes and Flagship Initiatives
Mission Mobilize communities to promote economic inclusivity and successful businesses that
impact positively on society and the environment
• AIS’ introduced a complete Halal business support
programme, Halal in One (HiO) targeted to help SMEs
• HiO aims to empower businesses to tap into the large and
fast-growing Halal market
• HiO’s proposition for customers includes Halal certification
advisory, market access, Halal financing and digitalisation
services
Brand Promise
Flagship
Initiatives
Description
We help SMEs grow by providing the
right Halal solutions and advisory
We promote financial inclusion
and help businesses create
positive impact to the community
and environment
• A crowdfunding platform introduced in 2019 to deliver
sustainable social and environmental impact by empowering
the underprivileged communities
• SocioBiz supports entrepreneurship, education and
businesses doing good i.e. social enterprises
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Halal Certification Support
• Advisory services to obtain Halal certification from JAKIM
• On-site visitations and pre-audit for Halal certification
• Online Halal Readiness Checklist and Mobile Site Visit service
• Free Halal Awareness Training Program for SME customers
Business Matching
• Retail listings at e-marketplaces
• Product listing at e-marketplaces and physical stores/hypermarkets
• International Halal export program
Halal Financing and Banking Products
• Halal Financing using SME Financing Program
• Exclusive Halal Financing Packages with special rates (CGC program)
• Alternate funding for SMEs ineligible for banking financing
• Complete Halal Banking solutions (Special financing, BizSmart, CASA,
payroll, Takaful)
Digitalization Support
• Assistance for SMEs to be onboarded onto e-commerce platforms
• Advisory support for SMEs on how to enhance existing e-commerce
platform
Value Propositions Benefits to SMEs
• Increase transparency of Halal
certification costs
• Provide assistance through
credible parties with pledged
TAT
• Provide SMEs with markets to
capitalize on their newly Halal
certified status
• Assist SMEs to tap into Halal
business opportunities locally
and abroad
• Provide SMEs with financing
access to assist with costs of
certification, market access and
business expansion
• Assist SMEs to maintain
viability by digitalising their
business
Halal in One Value Propositions
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2018-Mar
2019
Sep 2019
Jan 2020
Oct 2020
Dec 2020
-Present
Pilot of Halal certification
proposition
Awareness generation
and lead building
Official launch of HiO
Onboarding of new
partners to improve
propositions
Digital marketing drive
Brief Description Proposition Launched Leads Generated
• Talks and Event
Sponsorships
• JAKIM Consultation
• Soft Launch at Halfest
• Halal Certification Packages
Launch with HQC Commerce ~400 leads + 3000 mined leads
• Official partnership
with HQC
Commerce
• Addition of funding and
market access to
propositions
• Addition of international
market access and digital
version of halal certification
support
Awarded with Critics' Choice
Most Innovative SME
Product Award 2020 by
Cambridge IFA
~1,000 warm leads in less than 2
months
~Planned onboarding of
additional partners to diversify
value proposition
Halal in One Journey
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Halal in One Architecture
Gap Analysis
Training
Mock Audit
E-Commerce
Physical Shelving
Domestic
Abroad
Domestic
Abroad
On-site
Online
On-site
Mobile
Mainstream
Alternative
Financing
Non financing
Financing
Bank’s
Programmes
Government
Funds
YaPEIM
YaPEIM
AIS / ABMB Halal Funding
and Banking
Support
Halal
Certification
Support
Halal
Market
Access
Digitalisation
E-Commerce
On-boarding
Online Platform
Building
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Additional Support by AIS / ABMB for SMEs and Business Owners
What is it?
How Does it
Work?
An online bazaar by Alliance Bank that lists
and promotes local products in an effort to
support SMEs impacted by COVID 19
• SME registers with Alliance Bank
• SME lists products on the platform
• Interested customers click on the SME
products they are interested in
• Customers are redirected to SME’s online
portal / page
• Digitalisation
• Complimentary marketing platforms for SMEs
• No additional portal needed: SMEs still can operate using their existing online platforms
An online community for business owners to
network, acquire products & services and
promote their own products
• Business owners become Alliance Bank
customers
• Business owners register to join BizSmart
Partner Portal
• Business owners advertise and enjoy
services from network partners at
preferential rates
Benefits to the SMEs
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1. The Halal Context
2. Support for SMEs in Halal Industry
3. Halal in One Overview
4. Halal in One Notable Case Studies
5. Halal in One Moving Forward
Content
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Support
Received from
Halal in One
Halal in One – Notable Case Studies
Company
Background • Premium healthy snacks
• Distributes exclusively online
• A non-certified halal company selling
‘Muslim Friendly’ products looking to
expand and penetrate the halal market
locally and abroad .
• Customers mainly consist of non-Muslims; looking to attract more Muslim customers and
expand locally and to the Middle East countries
• Lack financing to increase production capacity
• Financing of RM0.5 mil for working capital
• Halal certification through HiO’s partner – HQC Commerce Sdn. Bhd.
• HiO provided marketing support for the now Halal certified Status of Signature Snack’s
products
Impact of
Support from
Halal in One
• Successfully obtained Halal certification
• Public awareness on the Halal status of their products, via Signature Snack’s
testimonial video (HiO landing page, The Edge Markets and TV3)
Issues Faced /
Needs for
Expansion
Plans
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Halal in One – Notable Case Studies
Issues Faced /
Needs for
Expansion
Plans
Support
Received from
Halal in One
Company
Background
• A halal-certified company looking to grow
by increasing production and exporting to
various overseas markets
Impact of
Support from
Halal in One
• Manufactures and distributes frozen foodstuff
• Distributes through nationwide agents, supermarkets and own website
• Constrained production capacity and limited markets
• Plans to expand abroad
• Lack of payment gateway for website
• Financing of RM 1.4 mil for machineries
• Expansion into the UK market through HiO’s partner – Halalstreet UK
• Payment gateway for the website to increase efficiency
• Increased production capacity
• Exploring channels to supply to wholesalers in the UK
• Tisha’s website now accepts online payment
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1. The Halal Context
2. Support for SMEs in Halal Industry
3. Halal in One Overview
4. Halal in One Notable Case Studies
5. Halal in One Moving Forward
Content
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Halal in One – Plans Moving Forward
Moving Forward, AIS plans to diversify its offerings to be more inclusive
towards all SME players of the Halal Industry
Financing Assistance
Capacity Building
Market Access and
Business Matching
• Provide a more inclusive financial assistance through:
• Peer to peer crowdfunding
• Social financing
• Other inventive alternative financing modes
• Provide guidance/consultation for pre-bankables and pre-Halal ready customers
• Improve and expand current market access propositions to new markets
• Increase business matching propositions beyond packaged F&B,
pharmaceutical and beauty products
Community Building
and Engagement
• Expand proposition and reach of Halal in One
• Calibrate programme features to the evolving needs of the Halal in One
community
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Halal in One – Grow Your Halal Business With Us!
Visit our landing page at (https://www.alliancebank.com.my/halal-in-one.aspx) or be in
touch via email: [email protected]
alliancebank.com.my