Amid palm oil trade dispute, Malaysia goes in search of Indian buy-in for its halal expertiseWritten by Syed Ameen Kader
There may be an ongoing trade dispute between India and Malaysia over palm oil imports but the Southeast Asian nation has not halted efforts to tap into the country of some 200 million Muslims as a huge market for halal products and services.
“India is one of the priority markets that we are getting into,” Mohammad Shukur Sugumaran, Manager, International Footprint and Industry Development at Malaysia’s Halal Industry Development Corporation (HDC), told Salaam Gateway.
“We feel there is a lot of untapped potential,” said the official, whose agency falls under the Ministry of Economic Affairs.
Mohammad Shukur believes India’s industry players know the potential of the halal market but that there is not much help for them.
In the last couple of years, Malaysia has intensified its efforts to create awareness in India about halal business at various platforms including halal exhibitions and road shows. This was evident during the recently concluded India International Halal Expo in Hyderabad, where Malaysia’s government bodies, trade agencies and companies were present to develop synergies between companies of both the countries.
“I would ask the industries which are not halal-certified but have halal potential to come together to support halal and see that halal grows to the next level,” the HDC official said on the sidelines of the Halal Expo in Hyderabad.
HDC is collaborating with the Malaysia External Trade Development Corporation (MATRADE) in Chennai to expand the presence of the country’s halal companies and organisations in India.
“We have halal organisations in Malaysia and we want to work with companies and buyers over here. We are trying to collaborate to see how we can maximise the exposure of Indian companies as well as the Malaysian companies so that there is more trade between us,” said Mohammad Shukur.
Muzzafar Shah Hanafi, who took charge as the Trade Commissioner of MATRADE in Chennai in 2018 told Salaam Gateway that one of the agendas for his term in India is to position Malaysia as the halal business reference for the Indian market.
“Halal is one of those industries that we really want to push for, knowing that India is the second-largest Muslim population in the world and has the second-largest purchasing power parity,” he said.
Halal business in India, he said, is largely an “untapped market”.
“People know about halal but the understanding about halal is still very much restricted to food only, more precisely halal beef,” said the trade commissioner.
India exported 124,357 MT of halal beef (buffalo meat) worth $368.5 million to Malaysia in the last financial year (2018-19) ending March 31, 2019, according to the government’s agriculture agency APEDA. In this fiscal year (2019-20) for which data is available from April to November, 2019, it recorded 73,757 MT export worth $219.32 million.
Muzzafar points out that halal embodies not just meat but the whole ecosystem of a business, from logistics and operations to how financial transactions are being conducted. “So, everything needs to be Shariah-compliant. Since these things are not being put in place in India yet, we see a lot of opportunities for us to explore,” he said.
MATRADE, which started promoting halal in India a couple of years back through a seminar in Chennai, is planning a number of industry engagements this year.
With awareness and demand for halal is growing in India, industry experts say this will also create demand for thousands of skilled and qualified workers. Malaysia hopes it can play a part in India’s capacity-building.
“[The] halal industry is growing as people are interested in the business aspect of it but they don’t realise that we also need manpower which is mentally as well as educationally prepared to serve the industry,” said Prof. Hamzah Mohd. Salleh, Dean of the International Islamic University Malaysia (IIUM).
Citing an estimate given by a former Malaysian minister, he said Malaysia would need at least 20,000 skilled workers for the halal industry. “We have a population of 32 million only. And if you were to extrapolate halal industry globally, you would realise how many halal professionals we need to produce,” said Prof. Hamzah, who spoke about human capital development for the halal industry at the Hyderabad expo in January.
However, he added, there is only a limited number of institutions around the world that are providing this service or preparing the workforce for the halal industry.
While Malaysia has been in the business of halal standards and certification for over 40 years, Prof. Hamzah noted that the country is at a stage where it needs to have proper educational training to sustainably develop a knowledgeable and skillful workforce for the halal industry.
“I hope there will be an interest in India as well as around the world to follow the footsteps of Malaysia in trying to have a proper educational curriculum and training for halal industry in their own countries.”
One of the things his university sought from participating at the Hyderabad expo was “some sort of collaboration” with local entities for some of its activities including research, and other services such as consultancy and Muslim-friendly hotel rating systems.
Trade relations between the countries are not at their best at the moment as India recently put a curb on palm oil imports from Malaysia, with further restrictions reportedly being mooted on other items including petroleum, aluminium ingots, liquefied natural gas, computer parts and microprocessors.
However, Malaysia is hopeful of resolving these issues soon as both countries have a long bilateral relation.
“It’s India’s position,” said MATRADE’s Muzaffar, referring to India’s curbing of Malaysia’s palm oil imports.
“There is no trade dispute from our side and we don’t retaliate,” he added.
He agrees that the restriction is impacting Malaysian exports to India but that currently “it’s only for one product which is refined palm oil”.
India was Malaysia’s largest buyer of palm oil in 2019, with 7.99 billion ringgit ($1.93 billion) worth of imports, according to data from the Department of Statistics Malaysia.
Muzzafar said his government is engaging with the Indian government to settle the dispute. “I hope these things will be resolved soon because it’s not going to benefit anyone in any way.”
Malaysia currently has two bilateral trade agreements with India: the Malaysia-India Comprehensive Economic Cooperation Agreement (MICECA) signed in 20111 and the regional trade agreement ASEAN-India FTA (AIFTA) signed in 2003.
“We want to look how we can actually leverage on these two trade agreements first, in term of [the] halal industry, before embarking on a much more dynamic engagement,” said Muzzafar.
Malaysia's exports to India were 37.54 billion ringgit ($9.1 billion) in 2019, while its imports were 24.28 billion ringgit ($5.88 billion), according to the country’s statistics department.
While increasing exports is one of MATRADE’s objectives, Muzzafar points out that it’s not just about trying to sell to the Indians. “In this global trade environment, I think it’s not only that we sell and you buy – it doesn’t work like that now.
“Now it’s more of joint ventures, partnerships and many other things. We want to create that kind of platform where business communities from both sides interested in the halal market landscape can actually leverage on,” he said.
There are four major industries that Malaysia can tap into in India, said Muzzafar, naming F&B, pharmaceuticals, modest fashion, and FMCG.
“These four market segments are our main target.”
HDC’s Mohammad Shukur agrees Malaysian companies have opportunities in cosmetics and personal care, and modest fashion.
“There is a lot of demand for these two segments but local producers are not in a position to meet that. We feel we can help India in these areas as they can buy from us and supply to the demand here,” said Mohammad Shukur.
He believes Malaysia can fill the current supply gap in India for halal-certified products. In the meantime, Malaysia can also play a part in helping India develop its own halal industry.
“India can get ingredients from Malaysia and develop its own industry. It can develop its own F&B, cosmetics and personal care, or modest fashion, or services like tourism and all, so that it becomes sustainable and is able to meet the demand of people over here,” said Mohammad Shukur.
For MATRADE, Muzzafar believes India’s halal pharmaceuticals is a huge growth sector.
“India already has a very strong ecosystem for the pharmaceutical industry. Actually, it just needs to incorporate the halal elements into the whole supply chain. It just requires a bit of fine-tuning because India already has a concept of veg and non-veg,” said Muzzafar.
Malaysia and India could be a major force in halal pharmaceuticals if the two countries could work together in collaboration, believes Muzzafar.
“I think that could be a good platform for Malaysia and India to create joint ventures, partnerships and collaborations for creating a more comprehensive halal pharmaceutical industry.”
Published in: SalaamGateway.com 2020