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Malaysia’s Halal Crisis

In Malaysia today, halal practices, or those that adhere to Islamic law, are deeply important for increasingly devout Muslims, who make up more than 60 percent of the population. The country’s Department of Islamic Development, known by its Malay acronym JAKIM, is the sole statutory halal certifier although it has neither fully operational forensic laboratories nor experienced staff, despite having enormous and mostly arbitrary power.

Industry figures have told Asia Sentinel the agency is deeply corrupt, with bribes routinely charged to certify establishments and products as halal and with a long string of other problems that endanger the entire process of what should be serious attention to religious requirements but which has none of those characteristics.

One of the casualties is the Malaysian Halal Industry Development Corporation (HDC), established in 2006 to take over halal certification from JAKIM and promote Malaysian halal products internationally. But in 2009 JAKIM, under mysterious circumstances, took back complete halal certification from the HDC and put it into a newly established department called the Halal Hub Division.

The HDC then morphed into a white elephant operation focused on spending hundreds of millions developing warehousing facilities in what were called Halal Parks with few functions. All of these, like the Labuan Halal Complex, have few or no tenants. Asia Sentinel visited the Perlis Halal Park in Padang Besar recently and found it mainly empty except for a tenant using the park as a staging point to smuggle goods in and out of Thailand. The rest of the HDC’s activities involve organizing exhibitions as an event manager.

Traditionally in Malaysia, stalls, eateries, and restaurants were known to be halal through word of mouth. The surroundings and Islamic symbols on the walls with signs saying “bertanggung halal” were enough assurance. These businesses relied on community recognition. Any premises suspected of not being halal would just be boycotted by locals. It’s only been in the last decade that authorities have been pushing small businesses to seek halal registration.

Today, only a small fraction of Malay sole proprietors and SMEs have gained halal certification. In addition, only a small proportion of international hotels and resorts have halal registration. SME owners and food and beverage managers of hotels say the major barrier to gaining halal registration is money. For many sole proprietors and SMEs who ran traditional businesses, the on-site infrastructure requirements were prohibitive and way beyond their financial means.

A dark side to the halal certification process has cropped up, however, for a process millions of Malaysians take very seriously but know very little about. SME proprietors and F&B managers told Asia Sentinel that JAKIM officials routinely request cash payments above the statutory fees in order to guarantee registration.

In addition, they say, Municipal Councils and the fire department also request cash payments above statutory fees to issue the necessary documents required by JAKIM in halal product and premises applications. According to one F&B manager, this practice is not just carried out by a few rogue officers. It appears endemic. One officer, the manager said, brought out his immediate superior to negotiate the payment.

In another case, a Muslim Lebanese butcher from Australia was setting up a halal choice meat cut butchery in Kuala Lumpur for retail and distribution. A JAKIM official requested a RM50,000 payment for registration. Due to the company’s policy of not paying bribes due to the firm’s religious moral philosophy, investment in Malaysia was immediately aborted.

Some SMEs have tried to circumvent the issue of corruption through hiring consultants or brokers who don’t have technical or religious backgrounds but rather, as one proprietor put it, seem to be “sleazy hustlers” to “facilitate” the process.

Companies have found bucking the system by complaining only leads to drastic consequences, like have their operating licenses suspended and being put out of business.

Some JAKIM officers, the purveyors say, are arrogant and refuse to assist in the registration process, leading to a backlash against certification. The high rate of application rejection is discouraging firms to apply, they say, leading to a black market in rented halal certificates, or even bogus logos, now in epidemic proportions that JAKIM can’t handle. As a consequence, 60 percent of halal registrations in Malaysia are to non-Muslim multinational companies.

JAKIM doesn’t have its own compliance officers on the ground, relying on officers from the Ministry of Domestic Trade to assist. With Domestic Trade officers focusing on their own agendas such as price control, the whole halal regulatory system in Malaysia is undermined. Yet JAKIM’s overzealous actions over incorrect reports made by other parties have led to brand damage.

JAKIM is using the halal certification system to impose its ideas and opinions on the Malaysian community. Just recently alcohol-free beer has been banned in Malaysia, even though these products are widely distributed and sold throughout the rest of the Muslim world. McDonalds Malaysia doesn’t allow customers to bring in cakes that have not been certified halal by JAKIM. Words like ‘chicken ham’, ‘beef bacon’, and ‘chicken char siew’ are not allowed to be used on products certified by JAKIM, even though similar culturally derived food names are certifiable in other countries. JAKIM determines its own standards and opinions about the definition of halal without any recourse to appeal their rulings.

The success and credibility of the agency’s handling of Malaysia’s halal certification system are at stake with 90 percent of Malaysia’s companies outside the scheme. Research indicates that there is a public trust problem with certification, compromising the integrity of the whole halal system.

In order to keep up with the developing sophistication of the international halal trade, JAKIM’s halal certification process requires some innovation to assist Malaysian companies develop a competitive edge. At present, JAKIM’s certification lacks the supply chain tracking element that Thai exporters have perfected, called Hal-Q, and which leads the world with its Halal Science Centre at Chulalongkorn University in Bangkok, established in 1994.

The center focuses on developing standards, a haram (forbidden in Islam) ingredient detection system for certification purposes, halal food production system development with a Halal-GMP-HACCP framework, and developing consumer information systems through Apps, as well as general halal research. The Hal-Q system has not just been widely accepted by Muslim businesses in Thailand but has been taken onboard as an industry standard by many multinational food manufacturers in Thailand.

In addition, many Arab and European countries have also adopted this system and come to Thailand for training on Halal logistic management, putting Thailand more than a decade in advance of any system Malaysia has to offer. This has enabled Thailand to become one of the foremost Halal food manufacturers in the region today.

JAKIM could look at coupling halal certification with Good Agricultural Practice (GAP) and ethical business ratings, such as Tawhid compliance. Tawhid compliance would take into consideration issues far in excess of supply chain management such as management practices, employee exploitation, sustainable production, community flow-downs, and other ethical issues related to business. At the same time, there could be a special certification recognizing the issues related to sole proprietors and small businesses.

In addition to the corruption issues, JAKIM as a certification monopoly has many shortfalls. Staff are viewed as unfriendly. The online application portal doesn’t work most of the time, making applications very difficult for firms domiciled outside Kuala Lumpur. State-level accredited halal certifiers are needed to facilitate easier application and processing. The Halal Hub Division should be made independent, with JAKIM playing more of an appeal and arbitration role for aggrieved applicants.

There needs to be more science put behind the halal process such as the development of standards and enhancing detection techniques, along with much more open public policy discussion. The current method of enforcement relying on the Ministry of Domestic Trade and local government needs rethinking.

However, the major issue in the short-term which is directly related to the whole integrity of the halal application process is eliminating all types of bribery and corruption. A halal certificate issued with a bribe involved under Islam is not halal. The Malaysian Anti-Corruption Commission (MACC) needs to make an investigation of JAKIM’s Halal Hub Division one of the highest priorities to ensure the integrity of Malaysia’s halal certification system.

Murray Hunter is a Southeast Asia-based development expert and a long-time contributor to Asia Sentinel.

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Halal News

Ethereum Blockchain and Ether classified as Halal

Additional rules apply to believing Muslims in financial transactions and those transactions are dictated by Sharia law, the Islamic law. So far, there is no general judgment as to whether cryptocurrencies meet the Sharia requirements. In order to promote the adaptation of the Ethereum platform in the Islamic region, the Ethereum Foundation has had its blockchain examined.

Are Muslims allowed to use the Ethereum platform? Islamic legal scholars from Amanie Advisors, an Islamic financial consultancy that have investigated this question in cooperation with the Ethereum Foundation.

The result should be gratifying for Muslim crypto enthusiasts: the scholars classified both the Ethereum platform and the associated cryptocurrency Ether as “Sharia-compliant”. Amanie Advisors summarized the results of their investigation in a Shariah white paper

Being Sharia compliant means that ether can be lawfully traded and exchanged by the Muslim community. It is permissible for a Muslim to buy, sell or hold Ether to participate in the Ethereum Blockhain and take full advantage of the technology.

The purpose of the investigation was to remove any uncertainties in order to stimulate interest in the Ethereum platform in the Islamic world. The head of the initiative is Virgil Griffith, who is responsible for special projects at Ethereum. He made contact with Amanie Advisors and the legal scholars then set out to highlight the “Sharia parameters” of Ethereum and Ether.

Ether is not considered a currency

In the Shariah White Paper , the authors first discuss the question of whether Ether should be classified as a currency from an Islamic perspective. The scholars deny such an assessment; instead, Ether is designated as a valuable commodity, because they recognize the primary function of Ether as a utility token for the Ethereum platform.

Ether therefore primarily serves as an incentive for miners to confirm transactions and as such, it only has value within a limited ecosystem. In contrast, the use of Ether as a store of value and a universally valid medium of exchange is only of marginal importance from the perspective of the experts.

The scholars then check whether Ether meets the Sharia requirements for goods. The principle applies here: What does not include anything prohibited is allowed. Following this maxim, they come to the conclusion that the exchange of Ether does not include interest nor is there an inevitable uncertainty. After all, trading in Ether could not be compared to gambling thus, from an Islamic perspective, there is no reason why Ether should be considered banned.

The Ethereum blockchain is also sharia-compliant

Amanie Advisors also assessed the other components of the Ethereum ecosystem. They classified both the platform and the mining of Ether as permitted. They also saw no fundamental objections regarding smart contracts and dApps, however, it is important to check the specific content of the contracts and applications from case to case.

Incidentally, Ethereum is not the first Crypto project to undergo a Sharia check. The Stellar cryptocurrency received a Sharia certificate in 2018 .

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Halal News

Halal Travel – How Muslim travelers change tourism !

Ever heard of Halal Travel?  No population group in the world is growing faster than that of Muslims and now the tourism industry is adapting to the new target group – also in Europe

With its sweet and juicy baklava, dates and dried fruits from the Arabic welcome treatment, the view of the Brandenburg Gate at Pariser Platz can be embellished in the suite of the “Adlon Kempinski Berlin“.

An Arabic transmitter is quietly playing in the background, the Koran is at hand, the prayer mat too. An arrow shows the right Kiblat to the person praying.

Refreshments are waiting in the minibar, but no alcohol – if you get hungry, you can order food with confidence, there is also halal food here. No population group worldwide is growing faster than that of Muslims and the tourism industry is taking on the new target group with halal-friendly trips.

“Halal” describes according to Islamic law “all things or actions that are permitted, in contrast to haram”, says professor Jamal Malik from the Institute for Religious Studies at the University of Erfurt. This means compliance with Islamic dietary regulations, the waiver of pork and animals that are not properly slaughtered, but can also relate to the entire lifestyle and is “to a certain extent a matter of interpretation” due to various legal schools.

This includes praying to Mecca five times a day, following dress codes such as wearing headscarves, and refraining from alcohol, drugs and extramarital sex.

“Customers no longer want to compromise”

Those who live according to Islamic rules also value halal services when traveling. No matter whether on a business or city trip, a wellness weekend or a beach vacation. Like the “Adlon Kempinski Berlin”, more and more hotels across Germany are trying to reach the target group – also because the so-called “Halal Travel” market is exploding:

According to the “Muslim Millennial Travel Report” (2018), the number of Muslim travelers will be close to 160 million and the numbers are rising.

By 2020, the new jet setters are expected to spend $ 220 billion annually, by 2026 it should be $ 300 billion. The growing interest in halal-friendly travel is also due to the rapidly growing group of young and affluent Muslims.

By 2030, almost 30 percent of the world’s population will be Muslims between the ages of 15 and 29. While globetrotters with an interest in halal offers have so far mostly come from rich oil countries such as Saudi Arabia, demand is now increasing in countries such as Malaysia and Indonesia, where the middle class is growing. “But the second and third generation of Muslims in Europe also want to make nice trips,” says Malik.

“With the new purchasing power, customers have become more demanding and don’t want to compromise anymore,” says Ufuk Seçgin from the booking portal
Seçgin, who was born in Hamburg with Turkish roots and has lived in London for 16 years, knows the dilemma himself. “When I travel, I’d like to go to a chic star restaurant, and I don’t always fancy Turkish cuisine. “In the meantime, many British restaurateurs in London have prepared themselves for Muslim guests from home and abroad, while hip bars are expanding their cocktail menu with non-alcoholic alternatives and leisure organizers such as “Muslim History Tours” offer sightseeing trips with a focus on British Muslim history. For many cities, tourism associations, tour operators or hoteliers there is a lucrative potential.
Prayer rugs in the room and corresponding culinary offers are just the beginning and for many people, halal travel begins with the arrival of the appropriate food on the plane or even prayer rooms on board and at airports, continues with leisure activities and ends with the quiet place.
“It is common in the Muslim world to clean yourself with water after going to the toilet,” says Seçgin. “Anyone who adapts to this as a hotelier with special sanitary facilities really serves a great demand.”
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Halal News

Religiously correct cosmetics : Everything Halal

  • Large cosmetic companies have been using halal labeling for some time. A billion-dollar business beckons worldwide.
  • Halal identifies care products and perfumes that, for example, contain neither pork fat nor alcohol.

The trend comes from Southeast Asia: Indonesia, the largest Muslim country in the world with around 260 million inhabitants, passed a law requiring all products to have a halal label since last year. Perfumes with alcohol or lipsticks with pork fat fail – instead, manufacturers have to do without animal products and alcohols.

Cosmetics giant L’Oréal and the German chemical company BASF pay attention, the market finally grows – after all, according to several studies, Islam is the fastest growing religion in the world.

L’Oréal has long had hundreds of its products certified as halal and the French company also check production for religious admissibility.

A few years ago, halal cosmetics was a niche market for some small businesses in Muslim countries but that has changed in the meantime, as can also be seen at the Festi Ramazan, the huge Ramadan festival currently in Dortmund: the word “halal” is often found on a tour of the 22,000 square meter festival site.

The global market already reached a volume of 18 billion euros in 2014 and according to the British market research company Tech Navio, this could double again by 2020 and account for six percent of the global business with beauty products.

No waiving of Plastic – so far

French perfume manufacturers have also discovered Dadestal for themselves: tons of roses are exported to Grasse in France, the “world capital of perfumery”, where they are used to make perfume. “There is so much on the market that can be done even better, even fairer – for everyone involved,” says Fritz confidently.

Halal is a very exciting business, explains Julia Fritz and it is an ethical task.

For example, it is not enough for them to do without animal products or alcohol. “Halal has to be good for everyone, for the producer, the retailer, the consumer. It has to be fair and transparent for everyone.” Many Muslims are too concerned with prohibitions and commands and lose sight of the essentials, she says. “The basic idea of ​​every Muslim should actually be that we should take care of this earth,” says Fritz, who converted to Islam at the age of 22.

So far, al-balsam has not been without plastic. Not yet. The market would be there, as you can see at the Dortmund Religious Festival. The festival is a large consumer fair, in which German automobile clubs or, for example, electricity retailers also take part. Visitors can buy bed linen and real estate here as well as stay in two tent mosques to pray.

Next door tens of thousands visit the international tattoo fair at the same time, many are tattooed from top to bottom – but some of them end up at the Festi Ramazan. Because of the culinary specialties that they like to emphasize and, of course, they are all halal, of course.

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