Home » SCMAP Perspective » The Potential of Halal Logistics

In our last column I posed whether Mindanao could benefit from the development of a logistics corridor similar to what was done in Clark and Subic. I particularly cited how it could benefit the region’s farmers, by providing them greater access to facilities where their produce can be sent to other parts of the country via the Cagayan de Oro port, and to Indonesia via the ASEAN RORO links in Davao and General Santos.

 

There was one thing I forgot to mention, and this could be a game changer: the promise and potential of halal logistics.

 

I first encountered this concept during last year’s Asian Logistics and Maritime Conference in Hong Kong. When tapped properly, it could mean access to over 1.8 billion Muslims around the world, who are obligated to use halal, or “permissible”, products and services. That runs the gamut from foods, personal care products, even recreational facilities such as restaurants and beaches. Therefore, it is important that the products that they consume remain halal from farm to abattoir to manufacturer to distributor to table. This means the entire supply chain of halal items must be halal, too.

 

One of the conference’s panelists, Dato Seri Jamil Bin Bidin of the Halal Industry Development Corporation in Malaysia, said that halal logistics is not as difficult as it sounds. In its essence, he says, it’s about ensuring trackability and traceability, something that the wider supply chain sector already aspires to. “If you buy a vegetable today you want to know where it was grown, where it has come from and how it has been handled,” he said. “Once you develop that you reach a parity between the movement of halal goods and services and any other goods and services.”

 

This aspect is to ensure that halal products remain halal throughout the supply chain. This usually means a stringent series of quality checks and safety measures to ensure it stays halal. Take separate compartments for halal products to avoid contamination: if you transport chicken and pork in the same container, the chicken ceases to become halal; you can prevent this by bringing the two in separate compartments and ensuring they never mingle.

 

Ideally halal logistics also means all players across the chain are certified halal, and that cuts through every supply chain process: responsible sourcing, managing relationships with suppliers and partners, and solving problems as soon as they come up. (Even the banking system must be Islamic, but there is a recognition that this is not easy to achieve in other countries. So, doable in Malaysia, which is predominantly Muslim—and is at the forefront of halal certification—but not in the Philippines, which is predominantly Catholic.) Also important is maintaining trust: the loss of halal status may mean a drastic drop in sales, and it may be difficult to regain this trust even if problems are rectified.

 

While Mindanao is not predominantly Muslim either—60% of its residents are Catholic—its significant Muslim population, particularly in the southern parts of the island, as well as its trade links to other Islamic countries, presents an opportunity. Why can’t Mindanao be a hub for halal logistics in the country as well as in the region? One, it takes some investment from existing logistics players to conform to these standards. We have manufacturers whose products are already certified halal; ensuring they remain so during transport can be a selling point for logistics providers, particularly those with a wealth of experience in Mindanao. Two, the infrastructure is either already in place or is being set up, as we illustrated in our column a fortnight ago. Three, the government is upping its thrust towards halal, having recently gained full membership to the International Halal Accreditation Forum, providing the country a seat in discussions of halal issues—particularly in the thrust towards a global halal standard—and potentially improving its halal enforcement to serve both Muslim and non-Muslim customers.

 

In our recent conversations with the representatives from the Department of Trade and Industry we have pointed towards halal logistics as a possible growth area for Philippine supply chain, and they have also taken interest, citing the efforts of various government agencies to bolster its halal capabilities. And it is a growing market: the IHAF estimates that by 2020 the global market for halal food products alone will hit USD 1.6 trillion. As Jamil pointed out at the panel, only 20% of global demand for halal products is being met. Imagine if Mindanao’s agricultural products can be certified as such before departing for other parts of the country, as well as regional neighbors.

 

If done right, this could further the country’s efforts to focus development on underserved Mindanao, and benefit not just its residents, but that of the entire country’s as well. But, like in the process of halal logistics itself, constant collaboration is needed to see this through.

 

General Membership Meeting: This Thursday, April 19, join us for a discussion of the opportunities presented by the advent of the last mile. Alex Doronilla of Lazada and Ronaldo Bunyi of Robinsons Supermarkets are among our resource persons, providing insights as we gather retailers, logistics providers and technology enablers in a look ahead to supply chain’s next frontier. See you at the Discovery Suites in Ortigas from 1pm; you can register online at scmap.org.

 

Henrik Batallones is the marketing and communications executive of SCMAP. A former board director, he is also editor-in-chief of the organization’s official publication, Supply Chain Philippines. More information about SCMAP is available at scmap.org.

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