The halal corridor: A $2.2 trillion market opportunity
This article is produced and sponsored by CIMB islamic. It was first published in the State of the Global Islamic Economy 2019/20 report produced by DinarStandard and supported by the Dubai Islamic Economy Development Centre. The report can be downloaded from here.
The growing global market for halal products across multiple sectors represents a compelling value proposition in otherwise uncertain conditions. 2019 saw global market participants - from corporates to countries to institutions - reimagine their respective roles, seeking firm resolution to the US-China trade disputes. Amidst this backdrop of uncertainty, growing global and intra-regional trade for halal goods has continued unabashed along new and traditional trade routes, some going back over two millennia from East to West and encompassing all regions in between.
From the 2nd century BCE to as recently as the 18th century, the Silk Road land routes connected East and Southeast Asia to South Asia, Persia, the Arabian Peninsula, Africa and finally to Europe. The global development strategy, Belt and Road Initiative (BRI), initiated by China to infrastructurally link these long standing economic routes, continues to dominate regional and global conversations. It could potentially impact over 150 countries , and would also draw responses from established global superpowers.
Amidst this backdrop, and in contrast to greater declines in the overall population growth of more mature economies leading to saturation, the growth of Muslim populations worldwide continues to buck the trend. Led by Southeast Asia and the engine of emerging Indonesia, as well as the Middle East and significant Muslim minority populations in Western economies, the demand for halal across all sectors represents a considerable value opportunity.
Across various sectors encompassing halal consumables – food and beverage, agribusiness, pharmaceuticals – but also in new markets such as beauty and cosmetics as well as modest fashion, the growing market demand for halal continues unabated, fueled by the consumptive power of Muslims across the globe. Islamic banks, with their emphasis on integrity in ensuring financial transactions are free of interest, have a significant role to play in supporting halal trade via these ecosystems - empowering Muslims in adhering to their beliefs and enabling the availability of more choice to meet the demands of these emerging consumers worldwide. For CIMB Islamic, the Halal Corridor proposition represents our answer to meet these demands in our role as a shariah-compliant banking institution.
The Halal Corridor is an enhanced network connecting new and established trade ecosystems with the infrastructure required to access the global market for halal goods. Now enhanced by modern financial systems in trade and technology, the Halal Corridor connects businesses to consumers and buyers to sellers across the value chain. The Halal Corridor proposition ensures that producers, manufacturers, suppliers, wholesalers and retailers are given the right solution to enable their ability to meet this demand.
While global economies are already connected through supply chains, the demands of halal market consumers require the re-imagining of existing networks, and how they can deliver goods to the halal consumer. Halal consumers require that food and products are prepared in a manner which is permissible according to Sharia law and that these are then delivered free from external contaminants via the supply chain. In addition, consumers are rightfully demanding that products are ethically and sustainably sourced and that no harm was caused in the preparation of the final product. By combining infrastructure and technology across established trade ecosystems, the Halal Corridor delivers market access, supply chain, certification and logistics for providers as well as the Islamic banking and financial solutions required to complete the integrity of the supply chain for halal consumers.
CIMB Islamic, via its relationships with key certification bodies in its home markets in Southeast Asia (home to the world’s largest Muslim population), enables potential halal providers to achieve “Halal-Ready” status. From there, strong relationships with established logistics providers and strategically located halal hubs enable halal products to be safely warehoused and freight to be transported to their intended destination whilst ensuring the full integrity of the halal-certified product is maintained. The financing solution from CIMB Islamic takes into account the requirements of the entire mechanism from production to the halal consumer (“from Farm to Fork”), potentially involving financing for upgrading of business premises to importexport financing and payment of other providers involved in delivery.
The entire Halal Corridor proposition by CIMB Islamic is enhanced by platforms and technology which address and facilitate trade across the ecosystem. These ensure integrity, reduce timeto-market and assure the availability of buyers and sellers of the components of the final halal product. Trade client relationships are managed at country-of-origin across the most extensive homegrown banking network in Southeast Asia, further linking to reciprocal relationships and a global ecosystem powered by technology. In Malaysia, CIMB Islamic has developed strong relationships with trade bodies and regulators across the ASEAN region, providing clients the ability to not only access opportunities via on-ground trade events and expos, but the ability to navigate the business together with legal and regulatory requirements for providing halal products to the end consumer.
CIMB Islamic is a pioneering member of the Trade Club Alliance, a bank-backed trade network of credible buyers and sellers across the globe, providing business matching opportunities across thousands of suppliers via an electronic platform that is open to trade clients of the bank. Developments in blockchain technology, built upon the principle of traceability, mean that the halal product is traced from point of origin to final delivery, removing the chance of contamination and ensuring consumer confidence, particularly if the product is ethically or sustainably sourced. CIMB Islamic is leading the development of global halal trade. From our home base in ASEAN, the intent is to connect participants across the value chain and provide greater choice to meet the demands of halal consumers worldwide. By combining market access opportunities and networks with the infrastructural and technological platforms and, perhaps most importantly, the Shariah-compliant financial solutions required to ensure the integrity of these transactions, the Halal Corridor represents an end-to-end solution that empowers global trade and growing consumer choice.
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