Transcript: East Asia Market Realities Malaysia

Poh Poh Tam, NZTE Business Development Manager, Malaysia: Selamat pagi. Good morning, everyone. So today I’m going to share with you about halal opportunities. So I’ve been instructed to share about how big is the halal, global halal market, but before I start, because there’s no any slide about Malaysia so how many of you have been to Malaysia? I’m not talking about transiting in the airport. Visit Malaysia supermarket? So there’s not many actually. And how many of you know the word, ‘halal’? Well done. And how many of you already obtain halal certification? Okay, that’s not many. Okay, that’s a lot of work I need to do. 

So basically just an overview about Malaysia: Malaysia is actually the second highest household income group in South East Asia and when I was checking on tourism New Zealand, Malaysia is now the number one South East Asia visitor to New Zealand. So, that’s the reason why getting your product setting up in New Zealand, growing your brand within New Zealand is very important now because these are tourists. So, when they go back to their country they will go to a supermarket in New Zealand and buy all these [souvenirs] so it eventually helps to open up your trade as well. 

So why do my guys say that you need to find your USP in the market? Because the average distributor in Malaysia gets about 10 enquiries a week from Europe, from the US. People are looking to enter Malaysia and want them to distribute their product, so that’s the reason why finding your niche and your unique selling proposition is so important.

So now I’m back to halal, so first of all, don’t be afraid when you hear the words ‘halal’ and I know that a lot of people say that halal is so difficult, halal is about religion. If you just make halal as one of the food safety standards, just a GNP and [Hessep], you just need to follow the registration process and ensure that all your auditing process is in place. Then you can maintain the consistency and obtain the halal certification because once you obtain the halal certification it’s not just about Malaysia, it’s also about going outside of Malaysia as well, especially Middle East.

So now the total size of the global halal market is now achieving about 458 billion, so the numbers sell a lot. You don’t have to be everywhere but just to show you how big is the size of the global halal market, and basically in Malaysia 68 percent of the population is Malay Muslim so I’m Malaysian Chinese so I’m not Muslim, I’m actually Buddhist so I’m [not] generations of Chinese families who live in Malaysia.

So how do you use Malaysia as one of your platforms to be a global halal market? And why do you choose Malaysia? So I’m going to share with you some of the topics how Malaysia is achieving their vision by 2020. So the Malaysian government actually has a vision to become the global halal hub by 2020 and 15 years ago Malaysia is facing identity crisis. I think most of the country is having the same problem. When you reach a certain economy of skill and economy of stage you will find difficulty to advance your nation, so Malaysia is facing the same problem 15 years ago, so we started as a low cost manufacturer. I think most of you know, there’s a lot of apparel fashions industries in Malaysia but after that we are losing that competitive advantage to other South East Asia countries so the Malaysia government is trying very hard to understand that what is our new identity. Then we realised that we have a very good positioning to become the global halal hub. Why? Malaysia is one of the biggest attractions, tourism destination and also education for Middle Easterns so we have a very good [unintelligible] relationship with the Middle Eastern country and they have become one of our biggest Islamic capital investor. 

So halal items, they are setting up a halal manufacturing hub in Malaysia and we export the product to Middle East, and how is Malaysia transforming into global halal hub? So Malaysia government is the first country in the world – I repeat first country in the world to adopt Blue Ocean Strategy. So how many of you have heard Blue Ocean Strategy? Raise your hand? Okay, so I need to do a lot of explanation now. 

So Blue Ocean Strategy is not about swimming in the blue ocean but Blue Ocean is about finding your competitive advantage in the uncontested market so if you want to find out more about this strategy framework you can come and see me one-on-one and we can actually work out and have a casual discussion how we can help you to assist you to enter the market. 

So in the Blue Ocean Strategy for Malaysia context they have few KPIs to achieve. One of it is to increase Malaysia average salary per annum to $US15,000 and to attract 400 billion investment into Malaysia and to create three million new jobs, and moving towards the country from a medium class to medium upper nation, so these will help to increase the average household income and also the purchasing power as well. 

To date, there are more than 100 national Blue Ocean Strategy initiatives being implemented and it’s also increase gross income to 50 percent and creating two million jobs, so it’s a very significant result that is achieved by the Malaysian government. And again, at the beginning I already mentioned Malaysia has a total population of 32 million so 68 percent is Muslim, right? 

So we also have Chinese, Indian and we also have [aspect] communities. Sixty-eight percent is Muslim, meaning more than 20 million population is actually looking for halaal food and beverage, so that’s the reason why I’ve been telling the New Zealand food and beverage, including large corporations like Fonterra, that getting halaal certification is very crucial, especially when you want to penetrate food service because every year we get a lot of visits, visitors from Middle East, so they are looking for halaal food and they find that Malaysia is the perfect destination because it’s so easy to get halaal food everywhere here.

And one of my key partners supermarket which is Aeon – I’m not sure how many of you have heard about Aeon – it is one of the largest supermarket chains in Japan and they have a huge investment into Malaysia. Now they have about 55 [bit-sized] skills outlets in Malaysia and we just did a [unintelligible] New Zealand promotion, is a supermarket promotion to promote New Zealand food and beverage. So they have a massive restructuring to actually put more emphasis on halal, so when you enter the Aeon supermarket you will see the big sign of halal bakery and they will put out their halal certificate as well, and you will see at the deli they use all the New Zealand lamb and turn it into a deli [unintelligible] product and they will put out their halal certification and also their [Hessop].

This shows that halal certification is so crucial if you want to expand your target market size. So one of the good examples I want to share with you, I’m sure that it is very familiar [Shott] Beverages; they are one of the leading New Zealand [unintelligible] manufacturers so they started in Malaysia three years ago. We found them [unintelligible] and at that time when they entered the market they entered without halal certification and all their products can only access to those independent café, those single chain café, but after that, this came back to them – if you want to expand the business we need halal certification.

So one year ago they just obtained halal certification and they achieved 150 percent growth, and now a lot of fast-food chains have started to talk to Shott Beverages. They want to use Shott Beverages in their [pastry], in their [biza] in their drink manuals, which is customised, so this shows that how important is halal certification. So this is the Malaysia vision – to be the global halal hub by 2020. 

So another opportunity that also similar situation in Indonesia, which is on live food delivery: there’s huge opportunity in creating halal menu for food service especially for this food delivery, so in Malaysia we also have Uber Eats – I think it’s already come to New Zealand – so in Uber Eats you can see that they put a lot of emphasis on creating halal portfolio. Why they do that? Because it's easier for consumers, straight away when you lock into the apps you just click the halal, then you [release] all the restaurant serving halal food.

And we also have started to work with another local food platform called Dak Maken, meaning ‘Have you Eaten’ in [Bassa] so Dak Maken, they actually found out that Malaysians work more than 10 hours a day. They don’t have time to cook at all so what they do is they prefer to dine out than dine in so Dak Maken has started to use New Zealand ingredients to actually differentiate themselves from other food platform. So, they use New Zealand Sea Perch, [unintelligible] mussel to create a manual that is easily delivered to their consumer. So we have worked with them with on promotions promoting Sea Perch, and the reason why they choose Sea Perch is because most of seafood is considered halaal in the Islamic context.

And do you know what is haram? Haram is the reverse of halal so what the item that is haram is, like, pork and dog is considered haram, just to let you know. 
And per meal, we are selling per meal about $8 New Zealand. I know it sounds very cheap because when I’ve been searching around in New Zealand I think most of the average per meal is more than $10, so it sounds very cheap to use New Zealand Sea Perch in Malaysia and you sell in New Zealand $8, but they manage to do that because they work out a long-term promotion with Dak Maken, see how they can [unintelligible] to increase their market share in the positions. So New Zealand seafood is in a high demand right now and we constantly receive a lot of enquiries looking for new fish, and I just checked my email, I just got enquiry on Hoki.

So another opportunity to unlock: You have heard about e-commerce, Lazada, the words keep appearing in the speech. Another new opportunity to unlock is digital free trade zone. Have you heard about digital free trade zones? Malaysia is the first country to sign the partnership together with Ali Baba Group to actually create a digital free trade zone platform and they’re going to use Lazada platform as one of the first to actually test out and how ... The purpose of this digital free trade zone is to actually allow Malaysia' small, medium enterprise to do global expansion, especially in South East Asia using this digital free trade zone, and this digital free trade zone has the expected worth of goods that are moving out is about 65 billion, and you will hear more from Lazada. 

The advantage offered by digital free trade zone – it can become the B2C and B2B [unintelligible] for global brands and as I say, is a lot of SME in Malaysia in global expansion through digital free trade zone, hence it will strengthen our domestic economy positions.

Another opportunity seems very large actually if you assess the Islamic capital. Currently, the Islamic capital worth in Malaysia is about 305 billion and we get a lot of interest coming even from Japan, Sumitomo Mitsui. They’re actually setting up their trust in Malaysia and investing in the halal business, halal manufacturing and those products not just exporting to Middle East, but is actually for their future project which is Tokyo 2020. 

As you know, Tokyo 2020 is not just about Asia; it’s about the global and you will get visitor from Middle East as well and that’s the reason why they’re looking into Malaysia seriously.

So another company – it may be too large for you to [relate], but I just want to share with you their halal journey and how their capital lies. Malaysia is their halal platform to actually expand some of their brand like Calpis. So Asahi also has an investment in New Zealand, I believe. Most of you already know Asahi, so Asahi, when you talk to any Malaysian, Asahi always relate to alcohol so they know that it’s pretty hard for them to change their mind-set so they also see that there’s a lot of opportunity in dairy in Malaysia because [unintelligible] for example, liquid [milk] is actually dominated by [Dashredi] which is Friesland and Campina, because they have manufacturing hub in Malaysia.

So Asahi sees that there’s a lot of limitation to import milk from other countries into Malaysia because you need to apply quota, and the quota is not automatically given – the approval will be done by [Cedence]. So that’s the reason why Asahi had purchased a Malaysia company called Etika Dairy who also has a small investment in New Zealand as well. 

[Hollis], I think most of you know Hollis, so Etika Dairy has a small investment in New Zealand but in Malaysia they are one of the fourth largest dairy manufacture and they own the brand called Goodday. So through Goodday, Asahi managed to penetrate into supermarket, learn about the halal experience, learn about what are the buyers, and supermarket and the consumer; when they want to buy, especially the Malaysia, when they want to buy a product, what type of packaging they are looking at, what kind of message they want to see.

So after that they launch Calpis, and Calpis I’m sure that you don’t have it in New Zealand, I tried to search high and low, I can’t find it so Calpis is a yoghurt culture drink so it’s meant to promote digestive and this category is a growing category in Malaysia. Don’t ask me why; Malaysia like culture drinks so we have [Vitogen], we have [Yakut] from Japan and now Calpis is entering the market. Now they are using Malaysia as their hub and we [aspire] to 40,000 point of sales. So immediately after purchasing Etika it helped to expand all the penetration. 

Another example, which is probably is too large for you to [relate], I just want to share with you how Nestlé halal journey in Malaysia. So Nestlé obtained their halal certification but they also pledged to become world largest halal food manufacturer. Now they have won about 300 billion, so Nestlé look at halal certification very seriously because after obtaining halaal certification it is not just obtaining and getting the certificate to hang on the wall or in the office, but it’s also about maintaining the process,. So, Nestlé is the first international manufacturing foreign company that set up their own halal committee. They had their own halal committee and they have all the halal experts sitting in the committee, reviewing all their process. So remember, consistency is the key to success as well.

The most interesting part, because in the networking session I get a lot of questions like, “Do I need halal certification to enter Malaysia?” Actually not necessary because we already got some New Zealand brands that are on your supermarket shelf as well, like Pics peanut butter, I will say the most famous peanut butter in New Zealand, so they already start selling in Malaysia, like, two years ago, and we have Chia drinks, they don’t have halal certification, and we also have Proper Crisps which is made in Nelson. They don’t have halal certification but they made it into a supermarket channel because in Malaysia is a very unique portfolio. 

We have a gourmet supermarket chain and it doesn’t require halal certification. What they want is a huge mix for the consumer, so that’s the reason why halal certification is not critical for this confectionery item. But, these key items - beef, lamb, dairy - it's mandatory because it’s targeted to the mass. If you need to find out more about the registrations and the market as such you can talk to Erin and myself later. 

And how do you attain halal certification? So if you look at the wording it might confuse you but let me explain: JAKIM is actually Malaysia's halal authority, so they actually [unintelligible] two certifying body in New Zealand which is [Fien] and [IDT], but in Indonesia may be different so you might need to get more information from Fiona and Erin. 

And do you know that more than 90 percent of New Zealand slaughterhouses are actually halal certified, so if the slaughterhouse, New Zealand slaughterhouse willing to go through the halal process I think it’s not difficult for you to follow through those same process as well. 

So my key that I want to address today is I know that halal sale is very difficult, very problematic, but don’t see it in this light; see it as part of your food safety standards like GNP and [Hesset] that you need to fulfil. Your ISO as well and the halal opportunity is not just Malaysia, it's also other Islamic countries and halal markets like Middle East and also China as well - they have huge Muslim populations.

And I just got question just now that once I got halal do I get my market share immediately. It doesn’t happen like that, it does not make magic potion. I think [unintelligible] once you've got halal you have to increase penetration but it doesn’t mean to increase your market share. Your market share will have to come to your [unintelligible] your local distributors and how much that you’re willing to invest in the market and there’s no initial cut and there’s no any magic potion.