An Overview of Malaysia’s Halal Industry

YCP Solidiance reports on the current landscape of the halal market in Malaysia and potential development in the sectors of finance and halal food.

September 2022 , by Alexandra Santiago

Malaysia’s halal industry is one of the country’s most robust, expected to contribute 8.1% to the country’s total GDP. According to Statista, around 63.5% of the total Malaysian population identified as Muslim in a 2020 study, making the halal market a pivotal sector for Malaysian business and economic growth. 

As the world settles into a post-pandemic era marked by accelerated digital transformation and shifting consumer needs and behaviors, growing Malaysia’s halal industry also depends on embracing these changes and prioritizing growth areas through public-private sector partnerships and adopting digital solutions for optimization and productivity.  

An Overview of Malaysia’s Halal Industry Areas 
The Global Islamic Economy Report, an annual publication released by Islamic insights provider Salaam Gateway, defines the “Islamic Economy” as sectors comprising core products and services that are affected by Islamic law and ethics. YCP Solidiance Malaysia Manager Adeline Ooi and Associate Benjamin Yong have categorized these sectors into four major areas: 

Based on the aforementioned report, Malaysia ranked #1 for the ninth consecutive year through its high scores in Islamic Finance, Halal Food, Muslim-friendly Tourism, and Media & Recreation. It also ranks #2 and #9 in Pharmaceuticals and Cosmetics & Fashion respectively, highlighting just how much commitment the Malaysian government and companies have put into growing the industry. This, in turn, translates to more opportunities for businesses to enter and succeed in the market. 

Growth Areas and Recommendations for Malaysia’s Halal Market 
Malaysia is focused on developing its Islamic Finance and Halal Food sectors—the two largest industries in the world—via several partnerships with both local institutions and foreign developers.  

In the Islamic Finance sector—which sustained a 9% increase in Islamic Finance assets and 20% growth in total value in 2021—fintech is proving to be a promising key growth area due to shifting consumer behavior stemming from the COVID-19 pandemic. Financial institutions are now looking to develop remote, contactless services: an example is Ethis, considered to be Malaysia’s first Shariah-compliant fintech company focused on ethical crowdfunding in accordance with the laws of Islam. The overall growth of fintech and the continuing acceleration of digitalization in Malaysia presents market opportunities for players wanting to enter the halal market and carve out their own space within the industry. 

When it comes to Halal Food, the Halal Development Corporation (HDC), a federal government agency that oversees the country’s halal industry, has designated 14 strategic locations for Halal Malaysia Industrial Parks (HALMAS). To be accredited as a HALMAS, industrial park operators must comply with HDC requirements for halal park development, and can enjoy further incentives such as trade and investment facilitations. Currently, HALMAS parks encompass around 200,000 acres of land and host multinational corporations such as Kellogg Asia, Cargill Palm, F&N Dairies Manufacturing, and Coca-Cola Bottlers.  

Malaysia’s halal industry has also been designated as one of the focus areas in the 12th Malaysia Plan (12MP), a post-2020 national development plan to ensure meaningful socioeconomic development for the next decade. The Malaysian government is targeting 56 billion RM in export revenue for the halal industry by 2025, and has created a robust ecosystem to support businesses involved in this sector.  

Malaysia’s high ranking in the Global Islamic Economy Report, coupled with its government’s commitment to further developing the sector, make the country a prime location for local and foreign companies to invest in halal operations. YCP Solidiance Manager Adeline Ooi has the following recommendations for stakeholders who want to make the most of this boom: 

YCP Solidiance can aid both local and foreign companies interested in entering Malaysia’s halal sectors. Through our expertise in market research into a wide range of industries, our experience in end-to-end FA service, and our strong local team, we can provide business strategy and insight into diversification, market entry, and other services to ensure success in the halal industry.  

For more insights into Malaysia’s business industries, subscribe to our newsletter here, or read the following reports: 

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