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@ Halal | May-June . 2021

Bilal

BY KHIRTINI K KUMARAN

DESPITE the pandemic , there is a positive trajectory in growth for the halal economy . The halal market and Islamic finance sector offer lucrative opportunities for small and medium-sized enterprises ( SMEs ).

Executive Director of Islamic Business and Head Products at Standard Chartered Saadiq Malaysia , Bilal Parvaiz , said : “ If you look at the Malaysian GDP , about 40 per cent of the contribution comes from SMEs . That ’ s how important the role SMEs play .”

He said given the right financing platform , halal-centred SMEs have opportunities to thrive both locally and internationally .

Halal market opportunities for SMEs

Referring to the Thomson Reuters report , Bilal said the Muslim population worldwide is expected to spend about US $ 2.2 trillion over the next two years .

He added : “ Interestingly , 66 per cent of the consumers are willing to pay more for ethical products . It means that if there is a product that has some ethical or sustainable certification , consumers are willing to pay more for that .

“ The halal economic landscape in Malaysia is already ahead of the curve . There is the availability of certification , consultancy , training and advocacy to Islamic finance .”

Malaysian SMEs can benefit from the robust ecosystem of the halal economy . The ecosystem was put in place in Malaysia via Halal Development Corporation Berhad ( HDC ), Department of Islamic Development Malaysia ( JAKIM ), Jabatan Agama Islam Selangor ( JAIS ) and other regulatory bodies and policy-makers , etc .

“ Meanwhile , for Islamic financing or the Islamic banks support , the market here is at about 35 per cent in terms of shariah-compliant assets .”

Bilal highlights that the playing field for halal is not limited in terms of the international landscape . It is becoming a global phenomenon . The demand for halal is not just in Muslim countries but comes from non-Muslim countries as well .

“ In fact , the highest exports of Malaysian halal products are to non- Muslim countries .

“ As Malaysia has also signed the Regional Comprehensive Economic Partnership ( RCEP ) Agreement , it now has access on preferred trade arrangements with about 30 per cent of the world ’ s population .”

However , Bilal noted there were some challenges faced by local SMEs in terms of obtaining financial assets .

“ Firstly , is the capability and the capacity for the SMEs to expand into the larger market space , which is linked to access to funding , and how the SMEs lack global knowledge .

“ Another challenge is digitisation or adapting to technology . As soon as the pandemic hit , there were physical boundaries and limitations drawn . The pandemic was a catalyst for a change towards digitalisation .

“ Lastly , is the lack of knowledge and ability to access the opportunities and compliance and become a good contributor in the halal economic landscape .”

Islamic financing solutions

The financial industry , said Bilal , is experiencing the highest compound annual growth rate ( CAGR ). The yearly growth for Islamic banks was at about 11 per cent , which is higher than conventional banks .

“ It shows that more financing is being done by Islamic banks . And obviously , SMEs are a significant sector .

“ For example , banks are already contributing to SMEs via direct programmes through their own platform or indirectly or in collaboration with other stakeholders .

“ Standard Chartered Saadiq is the only international Islamic bank with a network globally . We have a solid banking network presence across many markets from Asia , Africa and the Middle East . And we cover client segments ranging from consumer , SMEs to corporate .”

Thus , it is keen to provide solutions to tap the halal economic landscape locally and globally .

In Feb 2020 , Standard Chartered Saadiq launched a shariah-compliant proposition termed ‘ Halal360 ’ to support local businesses thrive within the global halal ecosystem .

“ The Halal360 platform offers the right solutions at each step of the business cycle , whether they trade within the country or worldwide .

“ We are here to support them through this proposition . This is in terms of a comprehensive set of shariah-compliant trade financing , liquidity management and working capital solutions for local and crossborder business requirements .”