23/11/2014 11:19 AST
Eight years ago, Taleb Mohamad Almahmoud started importing a non-alcoholic beer popular in the Middle East to Malaysia. Now, he is bringing more than 300,000 bottles of Dubai-brewed Barbican into the country a month.
“There are many Arabs here and they like the drink because there’s no alcohol,” Syria-born Almahmoud said on Monday during an interview near his shop in downtown Kuala Lumpur that also stocks spices, couscous, pickled olives and Turkish coffee. “Malaysians like it too.”
The popularity of halal products such as Barbican that comply with the Koran’s tenets helped drive a 5.2 percent gain in the SAMI Halal Food Index of shares this year, beating a 0.6 percent rise in the Bloomberg World Food Index.
The industry’s expansion is also flowing through to debt markets, with the Malaysia International Islamic Financial Centre (MIFC) estimating that companies involved in Shariah-compliant food, textiles, tourism and healthcare have sold US$5 billion of Sukuk to date.
A Sukuk is a financial certificate that adheres to Shariah and typically denotes the Islamic equivalent of a Western bond.
The outlook for the US$2 trillion global halal industry that also includes fashion and entertainment is underpinned by a worldwide Muslim population that the Pew Research Center sees growing at twice the rate of non-believers through 2030. Demographics like that have lured Switzerland’s Nestle SA — the world’s biggest food company — to cater to the sector and it now markets Shariah-compliant noodles and breakfast cereals.
“Halal is a huge industry and the growth rate is massive,” Baiza Bain, director at Islamic finance consultancy Amanie Advisors Pty Ltd (Australia) in Melbourne, said in a telephone interview on Monday. “Companies are making sure that they adopt the inclusiveness policy that will broaden their market.”
Spending by Muslim consumers on halal products and services worldwide is forecast to increase 52 percent to US$2.47 trillion by 2018 from 2012, according to a September report by the Kuala Lumpur-based MIFC.
“The relationship between Islamic finance and halal industries is mutually beneficial,” the center said in the report, adding that there are opportunities to invest surplus funds throughout the value chain.
Nestle (Malaysia) Bhd ships its products to more than 50 countries and may soon start exporting to Europe and South America, Zainun Abdul Rauf, executive director for corporate affairs, said in an e-mail interview on Monday from Selangor State, near Kuala Lumpur.
The share price of the company, which set up a 700 million ringgit (US$208 million) Sukuk program in 2003, has risen 0.9 percent this year, beating a 2.4 percent drop in Malaysia’s benchmark stock index.
Worldwide sales of bonds that comply with Islam’s ban on interest have increased ten-fold in the past decade. Issuance has reached US$42.1 billion so far this year, 18 percent more than at the same point last year, data compiled by Bloomberg show.
Ajinomoto Co, Japan’s third-largest food company, sells Shariah-compliant food seasonings and drink sweeteners. The Asian nation and Spain have held halal summits this year to explore ways to develop the industry, while the UK plans to set up a business park to produce Shariah-compliant meat, according the center’s report.
As well as prohibiting products that include alcohol and pork, and banning gambling, Islamic tenets require that animals be slaughtered in a particular way, accompanied by the recitation of a prayer.
Bloomberg
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