REIMAGINING THE ROLE OF BANKS IN THE HALAL ECONOMY

REIMAGINING THE ROLE OF BANKS IN THE

HALAL ECONOMY

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1. The Halal Context

2. Support for SMEs in Halal Industry

3. Halal in One Overview

4. Halal in One Notable Case Studies

5. Halal in One Moving Forward

Content

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Halal

Opportunities Halal Eligible Base Actual Halal Base

Domestic market

Opportunities

Global Halal Market

Opportunities

• Global halal market is valued at

$2 trillion as at 2019

• Malaysia’s domestic Halal market

is expected to reach $150 bil by

2030

• Halal currently contributes to 7.4%

of Malaysia’s GDP, and is targeted

to contribute 15% by 2030.

• Malaysia aims to become a net

exporter of Halal goods

Sources:

NST, Aug 2019, Aug 2020

FM, Aug 2019, Aug 2020

Economic Census 2016, Department of Statistics

The Malaysian Reserve , Oct 2020

SME Segment in Malaysia

• In Malaysia, 9 out of 10 SMEs do

not have Halal certification

• Out of the 200,000 eligible base,

only 7,000 SMEs are Halal

certified

• Out of 907,065 business

establishments in Malaysia,

98.5% are SMEs

• Out of this, 200,000 SMEs are

operating in the Halal ecosystem

Despite the sizeable opportunities in the Halal market and the large Halal-eligible base of SMEs, SME participation in the

Halal sector is still limited.

Halal certified SMEs

Halal and SMEs: Snapshot of Current State of Affairs

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SME’s Appetite and

Readiness

Demand-Supply disconnects impede higher Halal penetration rates in the SME

segment

Early-stage enterprises are

concerned with business

viability and survivability

Low certification readiness due

to lack of production

infrastructure, management

processes and financial records

Prohibitive cost of preparation

for certification; and limited

access to funding

Information Asymmetries

and Support Fragmentation

Varied information and support

for Halal enterprises are

available but dispersed

Asymmetries create agency

risks and fraud incidences,

which generate negative

goodwill for Halal

Halal is not a consideration in

credit and investment models

Halal and SMEs: Factors Causing Limited Participation of SMEs

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5. Halal In One Moving Forward

Content

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Government Initiatives to Encourage Halal SMEs Participation

https://www.theedgemarkets.com/article/smes-need-more-capacity-boost-halal-exports

Tax Incentives

• Halal compliance and

readiness programme

• Halal awareness

programmes

• Partnership with MNCs for

knowledge sharing

Sources: Based on Budget 2020 for SME Annual Report 2018/2019 by SME Corp

• Tradeshows and

international offices to

facilitate business

matching

Capacity Building and

Infrastructure Financing Incentives Market Access

• Tax Exemptions for HDC

Halal Park Operators

• Encourage MNCs’

investment; business

matching opportunities for

SMEs

• Budget Allocation to

encourage SME digitalisation

• Interest Subsidies

• Financing / Financing Grants

• IMT-GT= Promote trade

and investment in Halal

Products at sub

regional level

• Mutual recognition

between global halal

authorities and

certification bodies

• Halal Integrated Platform:

Centralisation of Information

and Services in Halal

Industry

Bank Negara Malaysia

https://www.mtdc.com.my/business-funding/htdf/

http://www.teraju.gov.my/halal-development-fund/?lang=en

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By extending offerings to non-financing propositions, IFIs have the

opportunity to establish stickier relationships with SMEs.

Halal and SMEs: Challenges, Needs and How IFIs can Contribute

Current

IFIs’

Offerings

Insufficient Access to

Financing Support

Depth of Understanding

of Halal Opportunities

General Business

Management Market Access

Challenges

Faced By

SMEs

• Pre-bankability • Lack supporting

documents and credit worthiness due to micro size

• No suitable financing programme ; frequently turn to high cost personal financing

• Lack resources for Halal Market Intelligence and Comprehensive Halal Marketing Strategy

• No proper financial account , payroll and business management systems

• No Digital Presence • Limited business network

• Lack new market entry

capabilities.

• Absence of certifications

exacerbating

disadvantages vs large

corporations.

• N/A

• Cash management

account and payroll account

• Simple marketing platforms

• N/A

• Mentoring and awareness programme to help SMEs • To navigate through

Halal Market

• Business support ecosystem for SMEs

• Certification assistance via endorsed certification consultant

• Market access support

Sources: https://www.theedgemarkets.com/article/smes-need-more-capacity-boost-halal-exports

Level of Success of Halal Small and Medium Entrepreneurs in Malaysia, Putri Rohiza Tahir and Jalal Hanaysha, 2016

Bank Negara Malaysia

• Alternative financing models

• High priced personal financing

• Limited startup financing

Opportunities

for IFIs

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Content

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i. Food Products / Drinks / Food Supplement

ii. Consumer Goods

iii. Cosmetics & Personal Care

iv. Pharmaceutical

v. Food Premise/ Hotel/ Catering

vi. Slaughterhouse

vii.Logistics

Overview of Halal in One (HiO)

What is Halal in

One?

Objective

Target Industries

• HiO is a complete Halal business support programme, designed to help SMEs tap into and

succeed in the Halal market

• HiO’s proposition for customers includes Halal certification advisory, market access, Halal

financing and digitalisation services

• Visit HiO platform at https://www.alliancebank.com.my/halal-in-one.aspx

i. Food Products / Drinks / Food Supplement

ii. Consumer Goods

iii. Cosmetics & Personal Care

Why Halal in One?

• AIS and ABMB operate in the SME

space

• More than 50% of AIS/ABMB SME

Customers who are eligible to

operate in the halal space are not

halal certified

• Halal in One fits to AIS’s purpose to

become the preferred ESG bank

and ABMB’s to become the most

important relationship for business

owners

Benefits to Bank Benefits to SMEs

• Provide SMEs with services needed

through credible sources on one

platform

• Eliminate information asymmetry in

the market for halal SMEs.

• To create a Halal enterprise ecosystem by providing end to end support for SMEs to start and

expand their Halal businesses

https://www.alliancebank.com.my/halal-in-one.aspx






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AIS’s Purposes and Flagship Initiatives

Mission Mobilize communities to promote economic inclusivity and successful businesses that

impact positively on society and the environment

• AIS’ introduced a complete Halal business support

programme, Halal in One (HiO) targeted to help SMEs

• HiO aims to empower businesses to tap into the large and

fast-growing Halal market

• HiO’s proposition for customers includes Halal certification

advisory, market access, Halal financing and digitalisation

services

Brand Promise

Flagship

Initiatives

Description

We help SMEs grow by providing the

right Halal solutions and advisory

We promote financial inclusion

and help businesses create

positive impact to the community

and environment

• A crowdfunding platform introduced in 2019 to deliver

sustainable social and environmental impact by empowering

the underprivileged communities

• SocioBiz supports entrepreneurship, education and

businesses doing good i.e. social enterprises

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Halal Certification Support

• Advisory services to obtain Halal certification from JAKIM

• On-site visitations and pre-audit for Halal certification

• Online Halal Readiness Checklist and Mobile Site Visit service

• Free Halal Awareness Training Program for SME customers

Business Matching

• Retail listings at e-marketplaces

• Product listing at e-marketplaces and physical stores/hypermarkets

• International Halal export program

Halal Financing and Banking Products

• Halal Financing using SME Financing Program

• Exclusive Halal Financing Packages with special rates (CGC program)

• Alternate funding for SMEs ineligible for banking financing

• Complete Halal Banking solutions (Special financing, BizSmart, CASA,

payroll, Takaful)

Digitalization Support

• Assistance for SMEs to be onboarded onto e-commerce platforms

• Advisory support for SMEs on how to enhance existing e-commerce

platform

Value Propositions Benefits to SMEs

• Increase transparency of Halal

certification costs

• Provide assistance through

credible parties with pledged

TAT

• Provide SMEs with markets to

capitalize on their newly Halal

certified status

• Assist SMEs to tap into Halal

business opportunities locally

and abroad

• Provide SMEs with financing

access to assist with costs of

certification, market access and

business expansion

• Assist SMEs to maintain

viability by digitalising their

business

Halal in One Value Propositions

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2018-Mar

2019

Sep 2019

Jan 2020

Oct 2020

Dec 2020

-Present

Pilot of Halal certification

proposition

Awareness generation

and lead building

Official launch of HiO

Onboarding of new

partners to improve

propositions

Digital marketing drive

Brief Description Proposition Launched Leads Generated

• Talks and Event

Sponsorships

• JAKIM Consultation

• Soft Launch at Halfest

• Halal Certification Packages

Launch with HQC Commerce ~400 leads + 3000 mined leads

• Official partnership

with HQC

Commerce

• Addition of funding and

market access to

propositions

• Addition of international

market access and digital

version of halal certification

support

Awarded with Critics' Choice

Most Innovative SME

Product Award 2020 by

Cambridge IFA

~1,000 warm leads in less than 2

months

~Planned onboarding of

additional partners to diversify

value proposition

Halal in One Journey

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Halal in One Architecture

Gap Analysis

Training

Mock Audit

E-Commerce

Physical Shelving

Domestic

Abroad

Domestic

Abroad

On-site

Online

On-site

Mobile

Mainstream

Alternative

Financing

Non financing

Financing

Bank’s

Programmes

Government

Funds

YaPEIM

YaPEIM

AIS / ABMB Halal Funding

and Banking

Support

Halal

Certification

Support

Halal

Market

Access

Digitalisation

E-Commerce

On-boarding

Online Platform

Building

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Additional Support by AIS / ABMB for SMEs and Business Owners

What is it?

How Does it

Work?

An online bazaar by Alliance Bank that lists

and promotes local products in an effort to

support SMEs impacted by COVID 19

• SME registers with Alliance Bank

• SME lists products on the platform

• Interested customers click on the SME

products they are interested in

• Customers are redirected to SME’s online

portal / page

• Digitalisation

• Complimentary marketing platforms for SMEs

• No additional portal needed: SMEs still can operate using their existing online platforms

An online community for business owners to

network, acquire products & services and

promote their own products

• Business owners become Alliance Bank

customers

• Business owners register to join BizSmart

Partner Portal

• Business owners advertise and enjoy

services from network partners at

preferential rates

Benefits to the SMEs

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Content

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Support

Received from

Halal in One

Halal in One – Notable Case Studies

Company

Background • Premium healthy snacks

• Distributes exclusively online

• A non-certified halal company selling

‘Muslim Friendly’ products looking to

expand and penetrate the halal market

locally and abroad .

• Customers mainly consist of non-Muslims; looking to attract more Muslim customers and

expand locally and to the Middle East countries

• Lack financing to increase production capacity

• Financing of RM0.5 mil for working capital

• Halal certification through HiO’s partner – HQC Commerce Sdn. Bhd.

• HiO provided marketing support for the now Halal certified Status of Signature Snack’s

products

Impact of

Support from

Halal in One

• Successfully obtained Halal certification

• Public awareness on the Halal status of their products, via Signature Snack’s

testimonial video (HiO landing page, The Edge Markets and TV3)

Issues Faced /

Needs for

Expansion

Plans

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Halal in One – Notable Case Studies

Issues Faced /

Needs for

Expansion

Plans

Support

Received from

Halal in One

Company

Background

• A halal-certified company looking to grow

by increasing production and exporting to

various overseas markets

Impact of

Support from

Halal in One

• Manufactures and distributes frozen foodstuff

• Distributes through nationwide agents, supermarkets and own website

• Constrained production capacity and limited markets

• Plans to expand abroad

• Lack of payment gateway for website

• Financing of RM 1.4 mil for machineries

• Expansion into the UK market through HiO’s partner – Halalstreet UK

• Payment gateway for the website to increase efficiency

• Increased production capacity

• Exploring channels to supply to wholesalers in the UK

• Tisha’s website now accepts online payment

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Content

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Halal in One – Plans Moving Forward

Moving Forward, AIS plans to diversify its offerings to be more inclusive

towards all SME players of the Halal Industry

Financing Assistance

Capacity Building

Market Access and

Business Matching

• Provide a more inclusive financial assistance through:

• Peer to peer crowdfunding

• Social financing

• Other inventive alternative financing modes

• Provide guidance/consultation for pre-bankables and pre-Halal ready customers

• Improve and expand current market access propositions to new markets

• Increase business matching propositions beyond packaged F&B,

pharmaceutical and beauty products

Community Building

and Engagement

• Expand proposition and reach of Halal in One

• Calibrate programme features to the evolving needs of the Halal in One

community

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Halal in One – Grow Your Halal Business With Us!

Visit our landing page at (https://www.alliancebank.com.my/halal-in-one.aspx) or be in

touch via email: [email protected]

alliancebank.com.my

Documents

REIMAGINING THE ROLE OF BANKS IN THE HALAL ECONOMY