Taiwan’s opportunities and challenges in Southeast Asia's halal market:PwC

Taiwan food companies need to improve understanding of Muslim culture to enter Southeast Asia market

Indonesian Muslims gathering in front of Merdeka National Monument to pray.

Indonesian Muslims gathering in front of Merdeka National Monument to pray. (By Central News Agency)

TAIPEI (Taiwan News) - The Southeast Asian market's large Muslim population and demand for halal products that meet Islamic law requirements present huge market opportunities for Taiwanese companies, but there are a couple of hurdles to overcome, according to global auditing company PricewaterhouseCoopers' (PwC) forum on halal market opportunities in Southeast Asia at its office in Taipei, Friday.

Based on a UN global demographic survey, about 60 percent of the world’s Muslim population resides in Asia, and is projected to soar from 1.59 billion in 2010 to 2.76 billion by 2050, said Irina Abd Rahman, Associate Director of PwC Risk Services in Malaysia.

Southeast Asian countries with the biggest Muslim population encompasses those listed in the Taiwan government’s new South Bound Policy, such as Indonesia, India, Pakistan and Bangladesh, but there is a gap in understanding these countries culture and languages.

Halal originates from the Arabic word for permissible, and for food to obtain the necessary certificate, it must be conducted by a pious Muslim well-versed in the Koran and related laws, said Dhaliff Anuar, Manager of PwC Risk Services in Malaysia.

Taiwanese food companies' greatest advantage in the Malaysian market is their good quality reputation compared to Chinese products, due to fewer food safety incidents, and manufacturing advantages, said Alan Chien (簡汎亞), Director of International Business Services at PwC Taiwan

He did not recommend companies to establish manufacturing sites in Malaysia, which is also suffering from labor shortages similar to Taiwan or turning to automated manufacturing.

Taiwanese culture is also popular among the local ethnic Chinese population, said Chien, who spent two years in Malaysia.

Low-priced products from China are a major challenge for Taiwanese food companies because of their tariff-free status under trade agreements signed with ASEAN.

In addition, large global food companies in Malaysia, such as Nestle, Anchor, Unilever and others, are already deploying their local market strategy.

Market conditions in Indonesia are following a similar trend, Aqua, a mineral water brand backed by French mineral water giant Evian, acquired nearly 91 percent of the local mineral water market share, said Carrie Chung (鐘若梅), Manager of Financial Services, PwC Taiwan, who resided in the country for two years.

Both Chien and Chung noted in their presentations that the packaging of Taiwanese products often only features Chinese texts instead of the local language or English making it difficult for Muslim consumers to recognize if the product was halal certified.

Chung highlighted in her presentation that companies need to adjust their product flavor to meet local preferences, such as Indonesians' taste for extremely sweet foods.

She suggested Taiwanese companies can consider partnering with local food companies, such as the success of Nu Green Tea in Indonesia, which is backed by Uni-President Enterprises Corporation (統一集團), and uses its green tea formula.

Since each ASEAN member nation has its own halal standards, Chien recommended Taiwanese companies evaluate the targeted market, while large companies should consider applying for Malaysia’s Halal Certification (MHC) issued by the federal government agency Jobatan Kemajuan Islam Malaysia (JAKIM), the gold standard among ASEAN members that has been around for more than 10 years.

Applicants for MHC must have at least one Muslim consultant well-versed in halal, which can present a big challenge for finding a qualified talent in Taiwan where the religion is the minority.

Taiwan’s Muslim population comprises “only around 50,000, while the expat community contributes to a population of 180,000,” said Anuar, Manager of PwC Risk Services in Malaysia.

The MHC application process on average takes six months to less than one year, can cost US$2,100 per product application, and is only valid for two years. Moreover, MHC can be revoked anytime a company no longer meets halal standards, said Anuar.

Although, JAKIM recognizes Taiwan Halal Integrity Development Association (THIDA) certification for the halal manufacturing process, it only lowers the barrier for the company applying for MHC.

“THIDA’s mark is recognized in Singapore, Indonesia, Malaysia, the United Arab Emirates, and Saudi Arabia,” said Chien. As of March 2017, THIDA certified 450 Taiwanese companies products.