As at Q4 2018, halal exports amounted to RM40.0 billion or only 4 percent of total Malaysian exports, of which halal exports by small and medium enterprises (SMEs) account for a mere 8.4 percent2. To capture the market, businesses in the halal industry need to be agile and be quick to respond to changing consumer preferences and behaviours. This means business practices and processes need to be re-calibrated to be more aligned with sustainable expectations. Similarly, quality enhancements are given expectations in terms of product offerings, using a more current and efficient distribution channels and payments methods. In conjunction with Japan Olympic 2020, for example, there is a strong demand for halal products with high traffic of tourists, supporters and spectators. Companies which are able to satisfy the high bar placed by Japan on production, quality, safety and health aspects, will be able to open up a series of medium to longer term opportunities to export to other countries. As such, securing a suitable financial solution to upgrade and upscale production to meet the demand and requirements, would be an important prerequisite for businesses. Recognising these key success factors, recent announcement by Government to introduce The Halal Industry Strategic Development Programme, or ‘be-Halal’ — under the National Halal Council Secretariat to drive the growth of the halal industry is timely.
In adapting to changing economic environment, businesses must have in place adequate risk management and protection. This is key to ensure business sustainability. Takaful operators offer a wide range of commercial protection schemes to help businesses build its risk management. These include protection against risks associated with natural disaster, weatherrelated events, payment default, professional indemnity and damage in crops, among others. For example, trade credit takaful solution to be launched in 2020 complements the wide range of trade finance solutions for importers and exporters that transact on an open account basis. Islamic finance is a natural fit for halalan-toyyiban Let me now move on to the final component – the underlying strength which ties the halal opportunity with Islamic finance – synergy. At the national level, the government supports and recognises the role of Islamic finance as an important tool to develop and grow businesses and SMEs. In the 2019 Budget, the SME Shariah-Compliant Financing Scheme was established to strengthen the development of SMEs. Under the Scheme, the government has committed to subsidise 2 percent of profit rate or borrowing cost for total financing worth RM1.0 billion. A number of other strategies are also being pursued to better position Islamic finance solutions to meet the needs of halal businesses. The industry players have participated in mega events such as Halal Expo 2019, Halfest 2019, and Festival Islam dan Halal Antarabangsa Johor Darul Ta’zim 2/3  BIS central bankers' speeches  2019 to create awareness on its offerings.