KUALA LUMPUR: The halal economy — encompassing everything from banking and finance to food and beauty products — is on the rise.
Halal refers to what is permitted or lawful in Islam, and it is used in reference to food and lifestyle products which include clothing, pharmaceutical items as well as cosmetics and personal care.
According to a Thomson Reuters report, State of the Global Islamic Economy 2014-2015, the global expenditure of Muslim consumers on food and lifestyle sectors grew 9.5 per cent from previous years’ estimates to US$2 trillion (RM8.3 trillion) in 2013 and is expected to reach US$3.7 trillion by 2019, at a compound annual growth rate of 10.8 per cent.
“The customers of Islamic economy are universal with shared values. At the highest level, values-based customer needs that are driving these Islamic economy sectors include Islamic/ethical financing, lawful and pure food, modest clothing, family-friendly travel, gender interaction considerations, and religious practices.
“These needs also extend to business practices that seek Islamic business financing, investment and insurance services (takaful),” the report said.
According to the Malaysia External Trade Development Corporation Halal Unit, Malaysia’s total halal exports in the first half of last year was valued at RM19.5 billion, an increase of 3.6 per cent from the first half of 2014.
The contribution of halal products to the country’s overall exports during the period stood at six per cent.
“Halal food and beverage as well as cosmetics and personal care were the only segments that reported an increase in exports during the period while halal ingredients, palm oil derivatives and industrial chemicals recorded a decrease,” it said.
Many well-known and established international brands are now considering adding halal cosmetics and personal care into their line, as the global market for the segment totals RM695 billion, according to Halal Industry Development Corp (HDC).
The Thomson Reuters report said global Muslim spending on cosmetics increased one per cent to US$46 billion globally in 2013. This spending was 6.78 per cent of the global sector expenditure and is expected to reach US$73 billion by 2019.
“Top countries with Muslim cosmetics consumers are the United Arab Emirates (US$4.9 billion), Turkey (US$4.4 billion), India (US$3.5 billion), and Russia (US$3.4 billion), based on 2013 estimates,” it said.
The report added that Malaysia, Egypt and Singapore lead a combined halal pharmaeuticals and cosmetics indicator that focuses on the health of the halal pharmaceutical and cosmetics ecosystem a country has relative to its size.
HDC chief executive officer (CEO) Datuk Seri Jamil Bidin said halal cosmetics and personal care companies have started to actively promote their products as Muslim consumers are more aware of alternatives and non-Muslims are attracted to safer and “ethical” products.
“After halal food and banking, Muslims have begun to look for halal cosmetics and personal care products. Muslim consumers, with global population of nearly two billion, are increasingly aware that some cosmetics contain ingredients derived from animal origins and are thus concerned about the halal status,” he told Business Times.
SimplySiti Sdn Bhd founder Datuk Siti Nurhaliza Tarudin said there is a huge demand for halal cosmetics given the huge Muslim population worldwide.
“That is why SimplySiti has ensured that all our products get halal certifications,” she said.
Beyond that, any manufacturer which wants its products to be successful needs to go the extra mile to ensure that consumers have the best offering.
“A brand must stand on its own for something beyond the halal positioning,” Siti Nurhaliza added.
There are more than 100 halal certified companies selling cosmetics and personal care products in Malaysia, including SimplySiti, Johnson & Johnson Sdn Bhd, Wipro Unza (M) Sdn Bhd and Southern Lion Sdn Bhd.
“Local companies should also start looking at overseas markets as this segment has high growth potential,” said Jamil.
The export value for halal cosmetics and personal care products in the first three quarters of last year stood at RM1.73 billion, or 5.6 per cent of the country’s total exports.
“Local companies cannot depend on the domestic market as the Muslim population in the country is only around 16 million,” he said.
Jamil urged local companies to look to Indonesia (196 million Muslims), India (133 million Muslims), Pakistan (125 million Muslims), Bangladesh (104 million Muslims) and China (133 million Muslims).
He acknowledged that exporting halal cosmetics and personal care products may pose a new challenge to local companies due to stiffer competition, especially with the bigger brands in the global market.
“Consumers are attracted to international and prominent brands, so special attention needs to be paid to packaging, labelling and promotion,” Jamil added.
Siti Nurhaliza has also expressed confidence in expanding her business abroad, particularly in Indonesia.
“After five years of building and investing in the brand, we believe SimplySiti is now poised to be among the main cosmetics brands in the country and abroad.”
Another local entrepreneur, Vida Beauty Sdn Bhd CEO Datuk Seri Hasmiza Othman, knows all to well about promoting her brand.
In an interview with Bernama, Hasmiza, who is better known as Dr Vida, said: “I am promoting my own products, so I need to make it catchy and memorable.
“This ‘bling-bling’ persona is necessary to help sell my products, so that they will remember who Vida is and the products from her company.”