With over 1.93 billion followers, Islam is currently the second largest religion in the world. Notably, the number of Muslims has been increasing rapidly in recent years. Therefore, the market for goods and services for Muslims (according to Halal standards) is very large and growing rapidly. However, it is regrettable that Vietnamese businesses have not yet exploited this potential market area.
Halal food booths participate in the International Halal Exhibition 2023 in Malaysia. Photo: Hang Linh-VNA
Market full of potential
According to experts, the global Halal standards market is one of the markets with great potential in terms of scale, growth rate, spending level and product diversity.
Mr. Agustaviano Sofjan, Consul General of Indonesia in Ho Chi Minh City, said that the Islamic economy has huge potential on a global scale. In 2021, spending on Halal products and services (excluding Islamic finance) reached 2,000 billion USD.
According to the Global Islamic Economy (SGIE) 2022, spending on Halal products and services is expected to reach US$2.8 trillion by 2025. In particular, spending on Halal food has grown by 6.9% even during the COVID-19 pandemic, from US$1.19 trillion to US$1.27 trillion in 2022, and is expected to reach US$1.67 trillion by 2025.
According to Mr. Agustaviano Sofjan, in addition to food, other areas of Halal life, including modest fashion, pharmaceuticals - cosmetics, Islamic tourism services and media - entertainment, also have significant potential. The Islamic finance sector has grown and reached 3,600 billion USD (2021) and is still in need of further expansion.
“Halal is no longer simply a standard for Muslims but is gradually becoming a new standard for ensuring product safety, hygiene and quality. Currently, more and more consumers and non-Muslim countries are interested in and choosing to use Halal products and services,” Mr. Agustaviano Sofjan emphasized.
Talking about Vietnam's potential in the field of Halal goods and services production, Ms. Cao Thi Phi Van, Deputy Director of ITPC, said that Vietnam is a country with strengths in exporting large agricultural and aquatic products in the world, and is geographically close to markets consuming Halal products. In addition, Vietnam has advantages and is a deeply integrated country with participation in many free trade agreements such as the Vietnam-EU Free Trade Agreement (EVFTA), the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) and the Regional Comprehensive Economic Partnership (RCEP)...
Regarding the Indonesian Halal market, Mr. Le Chau Hai Vu, Director of Consultech Joint Stock Company, commented that Vietnam has many advantages in penetrating the Indonesian Halal market as it has exported raw and processed agricultural products, seafood, and spices to the host country; and has good relations with Muslim countries. Vietnam currently also has a Muslim community concentrated in An Giang, Ho Chi Minh City, Ninh Thuan, and Binh Thuan.
Solutions needed to tap the Halal market
Ms. Cao Thi Phi Van said that although the market potential and advantages are very large, the level and effectiveness of Vietnamese enterprises' participation in the global Halal market is not commensurate.
Khanh Hoa Sanest bird's nest drinks meet Halal standards. Photo by Vu Sinh - VNA
According to statistics from the General Department of Vietnam Customs, in the first 9 months of 2023, Vietnam's total import-export turnover to Muslim countries in the ASEAN region reached just over 26.37 billion USD, of which Brunei was 143 million USD, Indonesia was 10.18 billion USD, Malaysia was 9.31 billion USD, Singapore was 6.7 billion USD. These are quite modest numbers compared to the potential of this market.
Up to now, Vietnam has only about 20 export items to the Halal market - a very low number compared to market demand. In addition, up to 40% of Vietnamese localities do not have Halal-certified export products, or in other words, Vietnam has only just begun to approach the Halal market. Vietnam's limitation is that not many businesses have a good understanding of Halal, Halal certification is still difficult, and to be granted Halal certification, businesses need to invest a lot of money.
Ms. Ly Kim Chi, Chairwoman of the Ho Chi Minh City Food and Foodstuff Association, commented that Vietnam's export products are mainly agricultural and aquatic products, but in raw and pre-processed form, and account for a small proportion of the total export structure. Although Vietnam's food export capacity is in the top 20 in the world, it is not yet on the list of 20-30 countries providing typical Halal food globally.
According to Ms. Ly Kim Chi, the challenge comes from differences in business culture, consumer tastes, and religious beliefs. Businesses that want to be Halal certified must have sufficient information and knowledge about which products are allowed and which are not allowed under Islamic law, for example, rice is allowed, but pork is not. Halal and non-Halal products cannot be produced on the same production line. Removing a non-Halal ingredient will not make the product Halal again.
Experts particularly emphasize the importance of having a Halal certificate. According to Mr. Le Chau Hai Vu, a Halal certificate in Indonesia is considered a passport to enter this market. Without a Halal certificate, even when participating in trade promotion fairs or selling directly, importers cannot sell to supermarkets, retail stores or import raw materials from Vietnam.
Meanwhile, the current Halal certificate is not valid forever, not recognized equally in all countries, for all products. This causes many difficulties for businesses to re-certify many times and must base on each export market to register for appropriate certification.
Therefore, in order for Vietnamese enterprises to successfully penetrate the Halal market, according to experts, enterprises need to proactively research, build a system and register for Halal certification for the market in line with their development orientation; build products that meet Halal standards for the target market; promote product brand image, and strengthen trade connections.
Regarding Indonesia's Halal market, Mr. Pham The Cuong, Vietnam Trade Counselor in Indonesia, recommends that businesses should proactively apply for Indonesian Halal certification, SNI national standard certification; participate in the Indonesian e-commerce market; take advantage of overseas Vietnamese channels and Vietnamese businesses in Indonesia.
According to Mr. Pham The Cuong, in case the local authorities initiate trade defense measures related to products, enterprises should proactively contact and closely coordinate with relevant Vietnamese authorities to find effective response solutions.
Mr. Pham The Cuong also reminded businesses to be alert to current situations of fraud and commercial disputes; in which, businesses need to be vigilant when seeing partners negotiating prices and contracts quickly, with little bargaining, accepting high prices; not providing or providing legal documents of the business under many different legal entities. In addition, absolutely do not transfer deposits to personal accounts; contract terms need to be strict, especially there must be provisions for handling disputes and complaints./.
Vu Hoa
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