22
Budget 2023
@ Halal | November-December . 2022
Industry incentive for sustainability Micro , small and medium enterprises ( MSME ) participation in the halal industry was not forgotten
BY NIK NABILAH NIK AMIRUDDIN
WHAT was once a dietary law , halal , has evolved into a lifestyle consumed by close to two billion global Muslim population and non-Muslim consumers . Due to its exponential growth on top of the local demand , the industry has been growing steadily and is pivotal in supplying halal-certified products for Malaysia ’ s vast residents .
In seizing the global economic opportunity , the government of Malaysia is determined to be the leader in the halal industry . Its efforts have paid off with the reported annual export value of halal products , which had increased by 19 per cent year-on-year to RM36.3 billion in 2021 .
According to the then Deputy International Trade and Industry Minister Datuk Lim Ban Hong at the launch of the 18th Malaysia International Halal Showcase ( MIHAS ), he noted that the industry was expected to grow further in the Asia-Pacific region following Malaysia ’ s ratification of the Regional Comprehensive Economic Partnership , the world ’ s biggest free trade agreement , in March this year .
Halal Parks was introduced to boost the nation ’ s halal industry , which showcases world-class infrastructure , a skilled workforce , and access to halal ingredients . All these are in addition to the attractive government incentive to encourage investments including foreign direct investments . Halal Park is a specialised zone for producing halal products for local and international markets .
Nearly 300 companies are operating from 22 halal industrial parks nationwide . Food and beverage are the key sectors , followed by other sectors such as cosmetic and personal care , drugs and medicines , and medical devices .
Halal in Budget 2023
As part of the Budget 2023 measures under ‘ Initiative 6 : Islamic Pillar ’, the halal industry development gets a RM92 million allocation mainly for the completion of the Halal Hub Development Centre in Tanjung Manis , Sarawak . Apart from that , the allocation was provided to implement halal programmes and initiatives .
These allocations are expected to spur the development of Malaysia ’ s halal industry , which is projected to contribute 8.1 per cent to the nation ’ s GDP and generate RM56 billion in export earnings by 2025 .
According to the Halal Development Corporation Bhd ( HDC ), the export value in 2022 is expected to surpass the pre-pandemic level of RM42 billion . The continuous increase since the pandemic and its potential to grow even larger proves that the halal industry is a key contributor to Malaysia ’ s economy .
The micro , small and medium enterprises ( MSME ) participation in the halal industry was not forgotten . In the earlier Budget 2022 announcement , RM25 million was allocated to HDC solely to implement various programs , including digital branding and halal competitiveness , to produce more halal MSMEs that can compete in global markets .
Halal tax incentives
Malaysia is actively promoting investments in the halal sector , thus offering a wide range of tax incentives from double deductions to allowances such as : i . Incentives for the production of halal food This tax incentive is to encourage new investments in halal food production and to increase the use of modern and stateof-the-art machinery and equipment to produce high-quality halal food adhering to global standards .
Companies that invest in halal food production and have the halal certification from JAKIM are eligible for the Investment Tax Allowance ( ITA ) of 100 per cent of qualifying capital expenditure incurred within five years .
This allowance can be set off against 100 per cent of the statutory income in the assessment year , and any unutilised allowances can be carried forward until they are fully utilised . ii . Incentives for other halal activities – Park Operators As part of the effort to promote the attractiveness of the halal parks , halal park operators are eligible for either Pioneer Status ( PS ) or ITA tax incentive .
PS provides an exemption of 100 per cent of the statutory income for 10 years , where any unabsorbed capital allowances and accumulated losses incurred during the pioneer period can be carried forward and deducted from the post-pioneer period income of the company ( subject to restrictions where applicable ).
On the other hand , ITA provides for 100 per cent of qualifying capital expenditure incurred within five years . The allowance can be set off against 100 per cent of the