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Study on Halal Industry Investment in Brunei Darussalam
Final Report (August, 2016)
Smart Shield International Sdn Bhd
2
Agenda for Today
Muslim population in ASEAN, India and Middle East
Halal food market potential
1. Halal in the World
Halal industry promotion in Brunei
Overview of Brunei Halal Certification
2. Halal in Brunei
Uniqueness of Brunei Halal Certification
Investment incentives in Brunei
3. Competitiveness of Brunei
3
1. Halal in the World
4
1. Halal in the World
Muslim Population in the World The world Muslim population is about 1.8 billion. Mostly lives in South East Asia, Middle East and North Africa.
Muslim population is expected to grow continuously, and is expected to two fifth of world population.
204,847,000
178,000,000
172,000,000
145,607,000
80,024,000
75,728,000
74,819,000
40,400,000
39,027,950
32,381,000
31,108,000
29,047,100
26,833,000
25,493,000
25,037,646
Indonesia
Pakistan
India
Bangladesh
Egypt
Nigeria
Iran
Algeria
Sudan
Morocco
Iraq
Afghanistan
Uzbekistan
Saudi Arabia
Ethiopia
① Indonesia
② Pakistan
③ India
④ Bangladesh
⑤ Egypt
⑥ Nigeria
⑦ Iran⑧ Algeria
⑨ Sudan
⑩ Morocco ⑪ Iraq ⑫ Afghanistan
⑬ Uzbekistan
⑭ Saudi Arabia
⑮ Ethiopia
5
1. Halal in the World
Strategic Location of Brunei ASEAN’s major Halal markets, Malaysia, Indonesia and Singapore, are located within almost 1500km from
Brunei.
6
1. Halal in the World
Trade Tariff for Major Markets Tariff among ASEAN countries are exempted. ASEAN is currently negotiating FTA with GCC and OIC
(Organization of Islamic Cooperation) is also discussing streamlining trades among member countries.
JapanFood Ave. MFN Rate:Cosmetics Ave. MFN Rate: 1.42%
ROKFood Ave. Pref. Rate: 23.2%Cosmetics Ave. Pref. Rate: 18.5%%
ASEAN
Brunei Darussalam
AustraliaFood Ave. MFN Rate: 2.6%Cosmetics Ave. MFN Rate: 3.3%
IndiaFood Ave. MFN Rate:51.8%Cosmetics Ave. MFN Rate: 23.06%
Middle EastSaudi ArabiaFood Ave. MFN Rate: 5.1%Cosmetics Ave. MFN Rate:5.2%
UAEFood Ave. MFN Rate:33.7%Cosmetics Ave. MFN Rate:10.8%
ChinaFood Ave. MFN Rate:17.2%Cosmetics Ave. MFN Rate: 14.6%h
7
1. Halal in the World
Halal Food Demand Muslim population, food expenditure per person, and expected halal food demand of world top 15 countries in
terms of Muslim population are shown below. The halal food market potential is expected to be 1,723 billion USD
with these 15 countries.
Country Muslim Population Muslim Population %Food Expenditure
[USD/capita]
Halal Food Demand
[million USD]
Indonesia 204,847,000 87.2 675 138,292
Pakistan 178,000,000 96.4 1,486 264,526
India 172,000,000 14.2 3,931 676,098
Bangladesh 145,607,000 86.3 202 29,413
Egypt 80,024,000 94.7 2,785 222,859
Nigeria 75,728,000 47.9 552 41,787
Iran 74,819,000 99.7 2,785 208,363
Algeria 40,400,000 99.0 658 26,583
Sudan 39,027,950 97.0 NA NA
Morocco 32,381,000 99.0 NA NA
Iraq 31,108,000 98.9 1,281 39,837
Afghanistan 29,047,100 99.8 NA NA
Uzbekistan 26,833,000 96.5 NA NA
Saudi Arabia 25,493,000 97.1 1,807 46,056
Ethiopia 25,037,646 34.0 1,174 29,392
8
2. Halal in Brunei
9
2. Halal in Brunei
Overview of Brunei Halal Brunei Halal is an official Halal certification issued by Ministry of Religious Affairs.
It is mainly handled by Ministry of Religious Affaires but it is also supported by Ministry of Energy and Industry.
Overview
Item Remarks
Regulated authorities
Ministry of Religious Affaires, Dept of Syariah Affairs, Halal Food Control Division
(Responsible for certification)
Ministry of Energy and Industry, Brunei Halal Industry Development Division
(Responsible for promotion)
Logo
Halal Certificate and Halal
Label Order, 2005Law that is basis for Brunei Halal
Brunei Darussalam Standard
for Halal Food PBD 24: 2007Standard of Brunei Halal
Brunei Darussalam Guideline
for Halal Certification, BCG
HALAL1
Official guideline for applicants for Brunei Halal
It explains application, auditing and certification procedures
BCG HALAL 2-4 2、3、4 are guidelines for auditing
Related Laws
Guidelines
10
2. Halal in Brunei
Brunei Halal Certification Procedure After application, document auditing and on-site auditing will be conducted. A certification can be obtained in 45
days at fastest.
Cost is BND 90 for Certificate(issued to companies) and BND 50 for Permit (issued to products).
SurveillancePermitAuditingApplication
Auditor
Applicant
Remarks
Submission
of Application
Form
45 days or longer Every 6 months
Surveillance
Every
6 months
Permission from
Inspection
Committee
On-site
Auditing
Document Audit
(Including oral test
to supervisors)
Currently, cost for surveillance is
not billed to applicants
11
2. Halal in Brunei
Halal Science and Metrology Centre This lab was established by Ministry of Energy and Industry and has MOU with Osaka University and Japan
Food Research Lab. It provides DNA analysis and the like to identify whether applied products are truly Halal.
Currently, testing cost is not billed to applicants. However, cost will be billed to applicants in the future when their
service lines are prepared.
If such analysis is strictly conducted during auditing process, such strict process of Brunei Halal can be a
differentiator towards other Halal certification mechanisms.
Reference
Alcohol detection labHalal science and metrology centre
12
2. Halal in Brunei
Difference between Halal Certificate and Halal Permit There are two types of certificate in Brunei Halal: Certificate and Permit.
Certificate is issued to companies and restaurants. Permit is issued to each product.
If one company wish to sell a Halal product, the company needs to obtain certificate for its factory and permit for
each product they wish to sell.
Reference
13
2. Halal in Brunei
Major Products Certified by Brunei Halal Major companies certified by Brunei Halal are shown below. Although most companies sell their products
domestically, some companies, including Golden Corporation, export their products too.
In addition, many local bakeries and restraints obtain Brunei Halal Certification.
Food
Company name Overview
Ghanim InternationalNational company owned by Ministry of Finance.
Sells 25 products (as of June 2016) sourced by OEM and their own factory
Golden CorporationTaiwanese company.
Processes seafood of Brunei and exports them.
Hana Soy & WorldJV between a Japanese venture company and locals
Manufactures soy related products
Super WaterLocally owned company
Purify tab water and manufacture oxygen added premium water
Artestian FreshLocally owned company
Purify groundwater using RO filter and produce filtered bottled water
Simpor PharmaJV between Canadian pharmaceuticals and local investors
Manufactures consumer cosmeticsPharmaceuticals
14
2. Halal in Brunei
National Company For Brunei Halal Promotion(Ghanim International) National company established in 2009. It sells 25 products as of 2016 (of 21 products sourced externally).
Products are sold both domestically and internationally, using Tesco and Lulu Hypermarket networks.
It provides marketing channel for SMEs in Brunei. However, it also aims to their own production capacity.
One Japanese company supplies soy related products called Supersoya as OEM to Ghanim. As Ghanim can
provide package design and marketing functions, Ghanim can be a good partner for SMEs with limited sales
network.
Reference
15
2. Halal in Brunei
Simpor Pharma JV between Canadian pharmaceutical company and investors in Brunei. It mainly manufactures vitamin tablets
and toiletries. It has its own brand and markets their products by themselves.
Over 90% of sales are from abroad. Malaysia, Middle East and Singapore are their major markets. It recently
entered Hong Kong, where Muslim population is limited, but sells well due to positive “Halal Brand” image.
Simpor obtained both MUI and Brunei Halal certifications and some products have both MUI and Brunei Halal
certification logos as each has different customer recognition and image.
Reference
Product with both Brunei Halal and MUI logosTablets and toiletries of Simpor Pharma
16
2. Halal in Brunei
Golden Corporation Established in 2010 as FDI from Taiwan. BND 30 million was invested.
Initially, Golden processed shrimps supplied by Semaun Marine Resources, a company established byMIPR. It
now conducts aquafarming and fishing along with seafood processing.
It markets both domestically and internationally, exporting to East Asian countries including Indonesia, Malaysia,
Thailand, Vietnam and Japan.
Reference
Packing shripsProcessing plant
17
2. Halal in Brunei
Super Water Super Water manufactures “Halal Water”.
Owned by Brunei investors, it purify tab water, add oxygen and sell them as premium oxygen water called “Rain
Fresh”. It also supply them to Ghanim International as OEM.
It currently sells their products in Brunei and does not export them. It has over production capacity and aim to
export about 80% of their products to foreign markets in the future. They are currently negotiating with an agency
in Malaysia to export their products to Malaysia due to its proximity to Brunei.
Reference
Pet bottle production lineProduction line
18
3. Competitiveness of Brunei
19
3. Competitiveness of Brunei
Comparison of Halal Certifications Brunei Halal is the only certification that an government directly audit applied entities.
Halal Certification Country Issuer Remarks
Brunei Halal Brunei
Ministry of
Religious
Affaires
Ministry of Religious Affaires, Dept of Syariah Affairs, Halal Food
Control Division directly audit applied entities
Malaysia Halal Malaysia JAKIM Auditors certified by JAKIM conduct auditing
Indonesia Halal Indonesia LPPOM-MUI
Not government certification mechanism
In 2014, Halal Product Guarantee Act was enacted and Halal Product
Security Agency (BPJPH) is to be formed
Saudi ArabiaSaudi
ArabiaGSO
Import of non Halal foods is prohibited.
It follows Halal Standard made by GSO
UAE UAE Government
In principle, foods sold in UAE are Halal and non-Halal foods are
soled separately under special approval. All food products are
registered before importing and sample examination are conducted at
customs.
Certifications
in JapanJapan Several
There are no government certification. Instead, several organizations
issue their own, JAKIM or MUI certifications.
20
3. Competitiveness of Brunei
Strength of Brunei Halal Brunei Halal is a government official certification and auditing is also conducted by staff of Ministry of Religious
Affairs. It is understood that Brunei Halal is one of the most stringent Halal certification mechanisms.
By increasing Brunei Halal recognition along with its stringency, it is expected that Brunei Halal will become
premium Halal Certification.
National
certification
mechanism
Item Remarks
Government certificationSome Halal Certifications are issued by private organization
Brunei Halal is a government certification and thus more reliable
Auditing done by governmentAuditing is also directly done by Ministry of Religious Affairs and not
outsourced.
Brunei imposes Sharia LawBrunei imposes Sharia law, and thus certification issued by Brunei can be
more attractive to faithful Muslims
No stun gun Use of stun gun is not allowed unlike some other certifications.
Zero alcohol contentAny alcohol content is not allowed. In some other certification, low alcohol
content is tolerated.
Non halal food production not
allowed in the same premiseNon-halal food are not allowed to be produced in the same premise
Stringency
21
3. Competitiveness of Brunei
Examples of Troubles in Other Certifications In other certifications, auditing is done by third party auditors, and therefore there is a case that non-Halal
products are accidentally certified.
Example Remarks
South Africa auditing body
Delisted
JAKIM delisted Muslim Judicial Council Halal Trust of South Africa because it does not meet an
international standard
McDonalds’ franchise in Detroit McDonalds’ franchise in Detroit allegedly sold non-Halal food as Halal
Midamar falsely marketing meat as Halal US meat company Midamar falsely marketed meat as Halal
Cosmetics Halal
in Indonesia
Since Halal Product Guarantee Act 2014 was enacted, there is a movement to make it
compulsory that all cosmetics sold in Indonesia to be Halal Certified. However, Indonesia
Cosmetics Association (Perkosmi) said it is unrealistic given many number of cosmetic
products and ingredients.
22
3. Competitiveness of Brunei
Cost Competitiveness of Brunei:Low Labor Cost(1/2) GDP per capita in Brunei is high but labor cost is relatively competitive because of foreign workers.
Cost Comparison
Category Brunei Malaysia Indonesia Singapore
Worker
(Staff)
USD 375 / month
(BND 500)
USD 418 / month
(MYR 1480)
USD 252 / month
(IDR 3,173,000)
USD 1526 / month
(SGD 2036)
Engineer
(Middle)
USD 525 / month
(BND 700)
USD 924 / month
(MYR 3270)
USD 408 / month
(IDR 5,138,000)
USD 2701 / month
(SGD 3604)
ManagerUSD 1125 / month
(BND 1500)
USD 1715 / month
(MYR 6070)
USD 974 / month
(IDR 12,265,000)
USD 4163 / month
(SGD 5556)
StaffUSD 375 / month
(BND 500)
USD 915 / month
(MYR 3238)
USD 411 / month
(IDR 5,174,000)
USD 2336 / month
(SGD 3117)
ManagerUSD 1125 / month
(BND 1500)
USD 1877 / month
(MYR 6643 / month)
USD 1153 / month
(IDR 14,509,000)
USD 4224 / month
(SGD 5638)
Apparel
Staff
USD 375 / month
(BND 500)
USD 424 / month
(MYR 1500 / month)
USD 291 / month
(IDR 3,666,666)
USD 937 / month
(SGD 1250)
Restaurant
Staff
USD 263 / month
(BND 350)
USD 311 / month
(MYR 1100 / month)
USD 230 / month
(IDR 2,900,000)
USD 787 / month
(SGD 1050)
Ma
nu
factu
ring
Offic
e w
ork
er
Re
tail
Source) Interview、JETRO
23
3. Competitiveness of Brunei
Cost Competitiveness of Brunei:Utility and Land Cost(2/2) Utility cost is very competitive: For residence US 0.09/kWh, and for commercial US 0.07/kWh.
Land cost is also very low due to vast assistance from governments.
Cost Comparison
Category Brunei Malaysia Indonesia Singapore
Electricity
(Commercial)
USD 0.15~0.04/kWh
(BND 0.20~0.05)
(Reverse progressive)
USD 0.1/kWh
(MYR 0.34)
USD 0.09/kWh
(IDR 1077)
USD 0.10~0.17/kWh
(SGD 0.14~0.23)
Electricity
(Residential)
USD 0.008 – 0.09 /kWh
(BND 0.01~0.12)
(Progressive)
USD 0.06~0.16/kWh
(MYR 0.22~0.57)
USD 0.11/kWh
(IDR 1352)
USD 0.19/kWh
(SGD 0.25)
Water
(Commercial)
USD 0.5/ m3
(BND 0.66)
USD 0.58 ~ 0.64 / m3
(MYR 2.07 ~ 2.28)
USD 1/m3
(IDR 12,550)
USD 1.67/m3
(SGD 2.25)
Water
(Residential)
USD 0.08~-0.33/ m3
(BND 0.11~0.44)
USD 0.16 ~ 0.56 / m3
(MYR 0.57~2.00)
USD 0.78/m3
(IDR 9800)
USD 1.45~1.85/m3
(SGD 1.93~2.47)
Industrial
Complex
USD 0.13-0.21 /m2/month
(BND 2-3.3/m2/year)
USD 5.37 /m2/ month
(MYR 19)
USD 7-9 / m2/month
(Billed in USD)
USD 0.92-6.43/m2/month
(SGD 1.28-8.58)
Commercial
OfficeUSD 5-20/m2/month
USD 20/m2/month
(MYR 70/ month,
Central KL)
USD 50/m2/month
(Billed in USD,
Sudirman)
USD 28-145/m2/month
(SGD 38-194,
Raffles Place)
Retail
ShopUSD 5-20/m2/month
USD 18/m2/month
(MYR 62,
Central KL)
USD 80-150/m2/month
(Billed in USD,
Plaza Senayan)
USD 279-292/ month
(SGD 372-390,
Orchard Road)
Utility
Re
al-e
sta
te c
ost
Source) Interview、JETRO
24
3. Competitiveness of Brunei
Tax in Brunei Tax in Brunei is very competitive. For new entrants, corporate income tax can be zero present.
Cost Comparison
Category Brunei Malaysia Indonesia Singapore
Corporate
Income
Tax
18.5%
(0% for condition)20% or 25% 25% 17%
If pioneer status is approved, 0%
for 8 years
(1)Market capital less than 2,500k
MYR;20% for < 50k MYR and 25% for
above
(2) Market capital more than 2,500k
MYR:25%
20% for some listed companies75% of first 10k SGD and 50% of
next 290k SGD are exempted
Personal
Income
Tax
0% 0-25% 5-30% 2-20%
No income tac for individualsProgressive
25% for over MYR400,000Progressive Progressive
VAT
0% 6% 10% 7%
No VAT VAT, Standard rate VAT, Standard rate VAT, Standard rate
Source) Interview、JETRO
25
3. Competitiveness of Brunei
Investment Incentives in Brunei There are several investment incentives in Brunei as shown below. It is important to take maximum advantages
of these schemes when one company enters into Brunei.
Tax Incentives
Equity Investment
Grant
Menu Remarks
Pioneer status For industries which are new to Brunei, corporate tax and tariff for ingredients and
machineries are exempted
Exemption is valid for 8 years with options to extend 3 years
Strategic
Development Capital
Fund (SDC)
Government owned fund which can make equity investment into companies enters into
Brunei
Research &
Development (R&D)
Grant
Provides up to BND 5 million R&D budget for R&D conducted in Brunei
Training Grant By training local Bruneians, up to BND 5 million per annum or 10% of fixed asset,
whichever lower will be provided for 5 years
100%
Foreign Ownership 100% foreign ownership is allowed
One-stop
Service
Government owned entity Darussalam Enterprise established Business Support Centre in
2016. It helps SMEs to resolve disputes with governments
FDI
Promotion
26
3. Competitiveness of Brunei
Companies Obtained Pioneer Status (Extract) Major companies obtained pioneer status are listed below. For instance, several pioneer statuses are given in
the food industry since each company manufactures different products.
Reference
Source) Interview、Brunei Gov Document
Company Overview Company Overview
Brunei Methanol
Company
Methanol production from natural gas
Invested by Mitsubishi Gas Chemical and
Itochu
Simpor Pharma
Halal pharmaceuticals production
Invested by Viva Pharmaceuticals and
others
Cryogas & Chemical Industrial gas production Gold Coin FeedmillFeed production for fisheries
Taiwanese company
Hana Soy & World Manufacturer of soy related products Golden CorporationSeafood processing
Taiwanese company
HLDS Steel Manufacture of steel related products SEC MASHIBAH Manufacture of steel related products
MC BiotechAstaxanthin production
Invested by Mitsubishi CorporationSC Tubular Solutions Manufacture of steel related products
Fatakun Chemical productionBrunei International
GatewayITC
Ayamku slaughter house Slaughter house and packing PDS meat industries Processing and packaging of halal meat
27
4. Summary
28
4. Summary
Suggestions to Build Win-Win Relationship Between Brunei and Japan
Proposal
Winning Point What to Do to WinCurrent Situation
1
2
3
Maximum use of
incentives
Target export from the
beginning
Increasing
Recognition of Brunei
Halal
1 Use available investment
incentives as much as
possible
2Develop business model
to market product both
domestically and
internationally
3 Increase recognition
of Brunei Halal and its
stringency abroad
Land and utility cost in Brunei is competitive
Relatively low labor cost
Small domestic market
Good location (close to major Muslim countries)
Such stringency can be a differentiating factor for Brunei Halal Brand
Stringent certification
Many investment incentives
29
Appendix 1. Media Coverage of This Study
30
Appendix 1. Media Coverage of This Study
This Study Was Widely Covered by Local Media
31
Researched Organization
Smart Shield International (B) Sdn BhdInquiry info@ssibsdn.com
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