THE 2021 Budget tabled recently covered various initiatives focusing on technology deployment and enhancement, aiming to boost competitiveness of local businesses, drive foreign investment as well as expedite Malaysia’s transformation into a high-income economy.
Given the growing role of technology and the increasing importance of its adoption, especially since the global pandemic struck, it is apt to prioritise the development of technology now and post Covid-19.
While the manufacturing sector has been a focus in past years, it would also be beneficial to enhance innovation and technology application in an industry that Malaysia already has succeeded — the halal economy.
Halal plays a prominent role in Malaysian society and now, globally. Demand for halal products and services has grown in recent years, even in non-traditional markets, such as Japan, Taiwan and South Korea.
The increase in the Muslim population, expected to reach 30 per cent of the world population by 2050, is one of the driving factors for the expansion of the industry.
Malaysia has journeyed in the halal industry since the 1970s. Over the years, the country has succeeded in becoming one of the most established and trusted halal certifications globally.
Furthermore, the country has also managed to develop a comprehensive halal food and beverage industry and supply chain, while aggressively taking steps to expand to other sectors, such as travel, cosmetics and financing.
The export value of Malaysian halal products almost tripled in seven years, from RM15.2 billion in 2010 to RM43.3 billion in 2017, contributing about 7.5 per cent of Malaysia’s gross domestic product in 2017.
Unfortunately, while halal exports have been a big part of the national economy, the country has only taken a small fraction of the global halal market.
In 2018, Malaysia merely occupied about one per cent of the global halal demand — proving there are substantial opportunities and room for improvement.
In order to move up the value chain, local industry players need to leverage technological tools, especially given the people’s increasing reliance on technology to facilitate their daily lives, such as online shopping.
Halal e-commerce and Muslim-friendly tourism are among less developed areas that will see a rising demand in future.
Further, the lack of focus on halal processes, with much of the attention being on halal products, could lead to missed opportunities.
Blockchain technology, in particular, may be very beneficial. It will be able to accelerate the halal certification process, prevent halal certificates from being forged and provide traceability of the products from their origin — all of which will amplify trust in the products and supply chain.
The potential application of technologies in taking advantage of the growing halal economy is limitless — virtual reality, augmented reality, Internet of Things and development of mobile apps are some areas being explored.
However, challenges in the deployment of technology in the halal industry remain.
While the cost of innovation and technology development, and businesses’ lack of urgency are among challenges that exist across various sectors, ignorance of the significance of halal products and services in the global market also contributes to the lack of interest of businesses to venture into the industry.
Moving forward, the national halal industry needs to adopt a robust digital strategy. The first and vital step is to create awareness and develop initiatives that empower industry players to step into this market segment.
Given that the government has provided support to accelerate digital growth, businesses should take advantage to make the transition to digital adoption, find niches within the halal industry to thrive in, and meet market demand.
The government can also drive further this path by preempting with policy guidelines and regulations to facilitate innovation and the convergence of technology and the halal economy — to reap the most benefits from one of the fastest growing market segments globally.
This article was first appeared in New Straits Times on 17 November 2020.
