Monthly Archives: August 2015

Halal certification is fast-growing hard currency for trade in halal products

Author: Blake Goud, Thomson Reuters Islamic Finance Community Leader

Trade is important.  Just look at the attention paid to the depreciation of global currencies. The falling Ringgit, the depreciating Chinese renminbi and the newly free-floating Kazakh Tenge.  The fight for competitive advantage in trade is impacted significantly by the value of the currency in countries where goods are produced and where they are consumed.

For trade in halal products, there is another unit of currency—the halal certification—which also affects the value of a halal product differently in the country where it was produced (and certified) and where it will ultimately be consumed.  The value of the certification for the producer determines how wide the market is for their product.  For example, Malaysia, whose halal certification is widely recognized and whose halal exports reached RM 10.8bn ($2.6 billion) in the first quarter of 2015, the halal industry is well connected globally within the Islamic economy for food, cosmetics and pharmaceuticals.

The success of Malaysia in capitalizing on the Islamic economy for economic growth has led other countries to seek similar opportunity.  Pakistan, which has a small but growing meat export industry, hopes the recently launched Pakistan Halal Authority will improve the ability of meat exporters to be the source of food imports into the Gulf Cooperation Council countries which are geographically close but where much of the meat comes from the far more distant Brazil.

The growth in intra-OIC trade is a specific priority for the Organisation of Islamic Cooperation (OIC) which targeted 20% intra-OIC trade by 2015.  Its standards organization, SMIIC, has been promoting a unified halal standard to reduce the barriers to intra-OIC trade in halal products.  A recent effort to promote the adoption of the OIC/SMIIC halal standard was led in Gambia by The Gambia Standards Bureau (TGSB) which highlighted the opportunity that halal trade provides for SMEs.

Efforts like TGSB focused on producers, traders, exporters and importers primarily in food and agricultural products but not all countries are just looking to halal food.  Pakistan’s PHA is not limiting its standards to just meat, where the opportunity is the clearest.  It will also focus on food (including processed foods), cold drinks, toiletries, cosmetics and pharmaceuticals.

This wide-ranging focus on the core sectors as well as products structurally affected by Islamic values (broadly referred to as the Islamic economy) makes for a huge market, a large share of which occurs on a cross-border basis.  The Thomson Reuters State of the Global Islamic Economy Report estimated that the Islamic economy grew 9.5% in 2013 and will grow 10.8% annually through 2019 when it is expected to reach $3.7 trillion.

While not all of that growth occurs within the OIC countries, and not all of that market is traded across borders, a large proportion of it is and that is why countries as diverse as The Gambia, Malaysia and Pakistan are focused on setting up the infrastructure so that their halal brand is valuable with all of their potential trade partners.


The first Thomson Reuters State of the Global Islamic Economy report was released in 2013 at the Global Islamic Economy Summit and the most recent one was released last year.  Join us at the Global Islamic Economy Summit from October 5-6, 2015 in Dubai, UAE for the release of the third State of the Global Islamic Economy report.

New tech competition wltm entrepreneurs with big ideas to win $10,000

The technology industry is abuzz these days with stories of companies raising money at ever higher valuations and the number of technology-focused companies getting huge amounts of capital and even higher valuations. This year alone, 107 companies have completed fundraising rounds with venture capital investors of $100 million or more, according to a report from CB Insights and KPMG.  Of these companies, 35 have entered the ‘unicorn club’ (VC-backed companies with $1 billion valuations).

One area where fundraising from venture capital is rare is in the Islamic economy overall and the Islamic digital economy in particular.  In their Digital Islamic Services Report, Deloitte reports “no VC funds in the Middle East […] specifically targeted at Islamic needs and Digital Islamic Services”.  The dearth of venture capital interest in the Islamic digital economy does not mean there is a lack of a market. Muslim consumers represent an estimated 8% of the global digital economy according to an ongoing Thomson Reuters study on the Islamic Digital Economy that we had an exclusive look at and the aggregate value of Muslim consumers within the digital economy is expected to grow 20% annually through 2020, outpacing the rest of the global digital economy.

The growth rate of the Islamic digital economy, and its potential to outpace the (still rapidly growing) digital economy is entirely understandable with a large Muslim population that is younger on average than the global population.  In some markets, such as Pakistan, the digital economy is just becoming enabled with the recent launch of 4G mobile networks that make it possible for many apps (particularly those relying on GPS technology to customize content based on specific location).

Progress, such as the introduction of 4G in Pakistan, will create a massive opportunity in similar markets where the cost has been too high and the mobile networks not ready to support the demand for capacity from widespread diffusion of smartphones.  This is particularly likely to be the case in markets where the population is younger, which will support rising demand for mobile technology from Quran apps to Halal Travel Apps, online Islamic education websites and location-services software to locate the nearest Halal restaurant.  The Islamic Digital Economy has woven into the lives of many Muslims worldwide and has become part of their day to day lifestyle.

With the backdrop of venture capital funds seeking out the latest ‘hot’ digital economy company and the dearth of Islamic digital economy companies being a part of this ‘unicorn economy’, there is a big opportunity for tech entrepreneurs if they can get noticed.  One way to get noticed is through the first #Innovation4Impact competition that will be a feature at the Global Islamic Economy Summit (GIES) in Dubai, UAE from 5-6 October 2015.

Innovation 4 Impact, which is organized by the Dubai Silicon Oasis Authority and Thomson Reuters, in collaboration with the American Muslim Consumer Consortium, is looking for innovative entrepreneurs across the globe whose solutions will disrupt the status quo across the digital sphere. The competition aims to support start-ups and businesses in the Islamic digital economy and serve will as an incubator for SMEs across the world. The winner will receive a combination of incubation services worth over $10,000 with an all-expense-paid trip to Dubai to showcase their business in GIES.

The Innovation 4 Impact competition is open to any company or entrepreneur with a potentially groundbreaking idea or business venture. Applicant’s ideas will be judged on different aspects including: innovation, economic and social impact as well as the scalability across markets and regions. Visit the website for details on how to submit your idea and to enter.  The deadline is August 10, 2015!

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Written by Blake Goud, Islamic Finance Community Leader at Thomson Reuters.