Malaysia is set to receive a significant boost in halal industry investments from China, amounting to RM4 billion. Deputy Prime Minister Datuk Seri Dr. Ahmad Zahid Hamidi announced a series of high-profile meetings with key Chinese halal industry players at the Malaysia-China Halal Business Forum in Shanghai. This development signals a strong economic partnership between the two nations, positioning Malaysia as a major player in the global halal market. Aamer Yaqub Reports

Halal Industry Investments from China

The potential RM4 billion in investments is aimed at various sectors within the halal industry, including food and beverages, pharmaceuticals, cosmetics, herbal medicine, and vaccines. These sectors are expected to drive economic growth and create new opportunities for Malaysia’s expanding halal industry. The importance of halal-certified products, especially in Muslim-majority regions like Southeast Asia and the Middle East, cannot be understated. As the global demand for halal products continues to rise, Malaysia is positioning itself as the primary hub for investors who want to tap into this burgeoning market.

“Forty Chinese companies have expressed serious interest in investing in Malaysia, with estimated investments totaling RM4 billion,” said Ahmad Zahid during a press conference. “The priority sectors are food and beverages, but there are also significant interests in pharmaceuticals, cosmetics, vaccines, and herbal medicinal products.”

This investment surge comes at a time when the halal industry is witnessing exponential growth. According to the State of the Global Islamic Economy Report 2023, the global halal market is projected to reach $2.3 trillion by 2024, with the food and beverage sector alone expected to account for nearly $1.5 trillion. Malaysia’s move to attract more foreign direct investments, particularly from China, is well-timed to capitalize on this growth.

Expanding Malaysia’s Halal Footprint

Malaysia’s halal industry continues to grow rapidly, thanks in part to its strategic location in Southeast Asia and its reputation for producing high-quality halal-certified products. Currently, Malaysia has dedicated 5,787 hectares of land to the halal industry, with the largest area being Tanjung Mas, Sarawak, which boasts an impressive 9,900 acres of land available for halal production. This infrastructure has made Malaysia an attractive destination for international investors looking to penetrate the global halal market.

In recent years, Malaysia has strengthened its halal certification system under the Halal Development Corporation (HDC) and the Department of Islamic Development Malaysia (JAKIM), making it one of the most recognized and trusted halal certification bodies worldwide. This has given foreign investors, including Chinese companies, confidence that their products will meet stringent global halal standards, making Malaysia an ideal base for halal production and exports.

Ahmad Zahid emphasized the need for government support to facilitate these new investments. He urged the state government to streamline the approval processes for Chinese investors, particularly in areas such as infrastructure development, including water and electricity supply, and providing incentives like tax exemptions. This move is expected to ease the entry of Chinese companies into Malaysia’s halal industry, enabling them to obtain the JAKIM halal certification, a globally recognized standard that will allow them to export their products internationally.

The halal certification market is not only limited to food but has expanded to include pharmaceuticals, cosmetics, and healthcare products. This diversification means that Chinese investors, who have already established themselves in various industries, can leverage Malaysia’s certification infrastructure to expand into new markets. As halal becomes a key driver of the global economy, Malaysia is positioning itself as the gatekeeper of halal standards for the world.

Halal Industry’s Global Potential

Malaysia is not only eyeing domestic growth but also aims to become a global halal hub, catering to the demands of the BRICS nations, ASEAN, and the Global South. During the Malaysia-China Halal Business Forum, Ahmad Zahid introduced a visionary concept: the Malaysia-China Halal Trade Corridor, an initiative designed to boost halal trade between the two nations and beyond.

This trade corridor is expected to streamline the import and export processes between China and Malaysia. It will feature Bi-Nation Halal One-Stop Centres, simplifying protocols, enhancing halal logistics, and providing easier access to markets in both countries. By aligning with China’s One Belt One Road initiative, this strategic corridor will strengthen the supply chain for halal products, not only in ASEAN but globally.

The Malaysia-China Halal Trade Corridor will also position Malaysia as the leading halal trade partner for BRICS nations, where the demand for halal products is growing. Countries like Brazil and Russia have shown increased interest in halal-certified meat and food products. Additionally, Malaysia is eyeing other key halal markets, including the Middle East and Africa, where demand for halal-certified products is steadily rising. By working closely with China, Malaysia can ensure a smoother supply chain for halal goods in these regions, further expanding its global reach.

Collaboration in Herbal Medicine and R&D

An exciting area of potential growth is the collaboration between Chinese investors and Malaysian universities and research institutions, particularly in the herbal medicine sector. Ahmad Zahid highlighted that Chinese investors have shown strong interest in partnering with Malaysian institutions like the Malaysian Agricultural Research and Development Institute (MARDI) to develop new products. This partnership could spur innovation in herbal medicine, enhancing Malaysia’s capabilities in this rapidly growing field.

Herbal medicine, already a booming industry in China, is seeing rising demand in Southeast Asia due to increasing consumer interest in natural remedies and wellness. Malaysia, with its biodiversity and rich tradition of herbal medicine, offers a fertile ground for research and development in this field. Collaborations between Chinese herbal companies and Malaysian research institutions will likely result in new product innovations, which will be halal-certified and available for export globally.

This initiative could also help Malaysia tap into the growing wellness industry, which was valued at over $4.5 trillion globally in 2022, according to the Global Wellness Institute. With the backing of Chinese investments and research collaborations, Malaysia could become a leader in halal wellness products, ranging from herbal supplements to cosmetics and pharmaceutical innovations.

Asian Development Bank Investment

In a separate meeting with the Asian Development Investment Bank from China, it was revealed that the bank is prepared to offer an initial funding of US$500 million (RM2.17 billion) for halal industry development. This funding will play a crucial role in kickstarting new projects and expanding existing halal facilities, further solidifying Malaysia’s position as a leader in the halal economy.

The Asian Development Investment Bank’s commitment underscores China’s long-term investment strategy in Malaysia’s halal sector. With US$500 million in initial funding, Malaysia can develop the necessary infrastructure, support R&D, and build new halal-certified production facilities that meet global demand. The bank’s backing also signals confidence in Malaysia’s role as a leader in halal finance, opening doors to further collaboration between the two nations.

Malaysia as a Strategic Halal Hub

Malaysia’s strategic location in Southeast Asia makes it an ideal hub for halal trade, both regionally and globally. Ahmad Zahid reaffirmed Malaysia’s commitment to becoming the leading halal hub for ASEAN and beyond. “Our goal is to establish Malaysia as a global halal hub, not just for ASEAN but for the world. The halal industry is growing rapidly, and Malaysia is well-positioned to lead this charge,” he said.

In addition to food, cosmetics, and pharmaceuticals, Malaysia is looking to diversify its halal offerings to meet the increasing global demand. With more companies looking to invest in halal-certified products, Malaysia is at the forefront of ensuring that halal standards are upheld across various industries. The halal certification, overseen by JAKIM, is recognized worldwide and provides companies with a competitive advantage in the global marketplace.

As the halal economy continues to grow, Malaysia’s ability to attract foreign investment, build infrastructure, and develop innovative products will be key factors in its success. By positioning itself as a global halal hub, Malaysia is set to reap the rewards of an industry that is poised to become one of the largest in the world.

The RM4 billion in investments from China marks a new chapter in Malaysia’s journey to becoming a global leader in the halal industry. With strong government support, robust infrastructure, and a strategic location, Malaysia is well on its way to becoming a key player in the global halal market. The Malaysia-China Halal Trade Corridor will further enhance this growth, ensuring that halal products from both nations can easily reach international markets.

These halal industry investments from China are just the beginning, and Malaysia is poised to seize the opportunities that lie ahead in the expanding global halal economy. By focusing on innovation, collaboration, and certification, Malaysia is positioning itself as the premier destination for halal investors and companies looking to tap into the global halal market.

Malaysia’s halal exports are projected to reach RM65 billion by 2025, up from RM54 billion in 2023, according to the Malaysia External Trade Development Corporation (Matrade). This growth is driven by increasing global demand for halal products and Malaysia’s leadership in the halal market.

Matrade deputy CEO (export acceleration) Abu Bakar Yusof attributes this confidence to the growing global demand for halal products and Malaysia’s strong position in the market. “The forecast for the halal products market is to reach US$5 trillion (RM23.3 trillion) by 2030. Last year, the halal economy was valued at US$3 trillion. There is a lot of room for Malaysia to capitalize on these opportunities. Malaysia has the advantage because our Jakim (Department of Islamic Development Malaysia) halal certification is highly recognized and much sought after by the international business community,” Abu Bakar told SunBiz in an exclusive interview.

Abu Bakar highlighted that Malaysia’s strength in the global halal market stems from its innovation, research, and development efforts, and collaboration with international partners. “Currently, our focus is on the high-value-added food and beverage (F&B) industry, catering not only to domestic consumers but also to the global market.”

High-value F&B products undergo significant transformation compared to traditional items, integrating advanced technologies, rigorous research, and quality control measures. “This transformation not only enhances product quality but also positions these goods at premium price points for the medium and high-end market,” Abu Bakar explained.

Malaysia’s success stories in halal exports include products such as durians and birds’ nests, with China emerging as a key consumer market. “Our durians and birds’ nests exemplify Malaysia’s capacity to leverage high-value products in international trade.”

Furthermore, the halal high-value F&B products align with sustainability and environmental, social, and governance (ESG) principles. “Companies that integrate sustainable practices throughout their supply chains, from sourcing raw materials to packaging and distribution, not only appeal to environmentally conscious consumers but also enhance their market competitiveness,” Abu Bakar added.

Currently, Malaysia has about 10,000 companies certified by Jakim for halal standards, primarily in the F&B sector. “The goal is to expand this certification base further where halal certification not only meets religious requirements but also aligns with global sustainability demands. This is where we encourage our local producers and manufacturers to invest in more research and development (R&D) and innovation, and automation to meet international requirements,” he said.

The growth in Malaysia’s halal exports is also driven by sectors such as pharmaceuticals and cosmetics, which are seeing increasing demand from countries in the Middle East, Europe, and Asia. “The global halal industry is experiencing robust growth driven by consumer awareness and demand for products that adhere to Islamic laws,” he said.

Abu Bakar emphasized that being halal does not only cover the slaughtering of animals but encompasses the entire supply chain. “We have both food and non-food products covered under halal standards. That’s why the total halal export figure is larger than just processed food. Processed food accounted for RM30 billion last year, while the total halal exports were RM54 billion, covering non-food items as well,” he explained.

Halal standards also ensure adherence to sustainability standards, hygiene practices, and rigorous facility inspections. “Even logistics play a role, with dedicated halal logistics providers ensuring that products maintain their integrity throughout transportation,” Abu Bakar concluded.

This robust growth projection underscores Malaysia’s strategic initiatives and a strong commitment to advancing its halal industry, positioning it as a global leader in the halal market.