When Dubais ruler Sheikh Mohammed bin Rashid al-Maktoum set out a plan earlier this year to take a bigger slice of the global Islamic economy, he was aiming at a market estimated to be worth $2.3 trillion. The world of sharia-compliant products includes everything from banking, insurance and other financial services to cosmetics, pharmaceuticals and food.
If the definition is stretched further, it can also include, for example, holiday travel, if hotels that do not serve alcohol but do offer halal foods are included.
Dubai is taking as broad an approach as possible to the issue in its bid to become what Sheikh Mohammed has described as the capital of the Islamic economy. The aim is to place Dubai on the international economic map as the global destination of choice that provides Islamic products, finance and services, he said at the launch of the strategic plan on 5 October. The emirates push into this market is being organised by a new Higher Committee for Development of the Islamic Economy led by Mohammed Abdullah al-Gergawi, who already chairs the rulers Executive Office.
The Dubai governments approach is based on seven pillars, which in turn include 46 initiatives, all of which are meant to be implemented within the next 36 months. Those seven pillars range from becoming a global hub for Islamic finance to being a centre for halal food production and accreditation, for family tourism, and for Islamic e-commerce and other digital activity. It is also targeting areas such as Islamic design and innovation, and establishing the city as a centre for research and education in all aspects of the Islamic economy and as a hub for sharia-compliant economic standards and certification.
The most important region for halal products is Asia, which accounted for $416bn of sales in 2010
With an estimated global Muslim population of more than 1.6 billion, the potential here is clearly huge, although it is not a straightforward process for any one place to become a recognised centre for all these activities. The market is dispersed around the world and interpretations of just what is considered acceptable can also vary greatly. Even if some global norms can be agreed on, the levels of adherence to them still varies from country to country and from region to region.
The Islamic finance industry has been grappling with such issues of standardisation for many years. Although some bodies have grown up, such as Bahrains Accounting & Auditing Organisation for Islamic Financial Institutions (AAOIFI), there are still competing centres of influence in the Gulf and southeast Asia. In addition, individual members of the sharia boards of Islamic banks and other companies can still exert a lot of power and influence.
It is a similar tale when it comes to halal products. The basic tenets of what is halal (lawful) and what is harem (sinful) are widely understood. For a product to be considered halal it should not include any pork products or alcohol, for example. But beyond such basic strictures there are many areas open to interpretation. Differences can spring up about whether it is permissible to stun an animal prior to slaughter, whether a mechanical slaughter machine can be used, and whether or not non-Muslims should be allowed to perform the slaughtering.
Part of the problem is that different countries have developed their own halal certification systems, with the awarding bodies ranging in scale from national organisations to individual mosques. Countries will often have many domestic certifying bodies, but will also recognise groups in other countries that can help in terms of easing imports. Malaysia has approved 45 certification bodies, while neighbouring Indonesia has approved 40, although the International Halal Integrity Alliance, based in Kuala Lumpur, says only 24 of them are common to both countries. The estimates of the total number of recognised halal certifying bodies globally ranges from 120 to as many as 200.
One fact that everyone involved can probably agree on, however, is that the market for halal products is large and statistics suggest it is also growing at a healthy pace.
According to figures from the World Halal Forum, also based in Kuala Lumpur, in the six years from 2004 to 2010 sales of halal products around the world grew by almost $65bn, from just over $587bn in 2004 to more than $651bn in 2010.
These halal figures also include products such as pharmaceuticals, dietary supplements and toiletries, although the vast majority comes from food sales. The halal cosmetics market is estimated to be worth about $13bn a year and is growing at a compound rate of about 12 per cent a year. However, the vast majority of halal purchases are for food.
Overall, the worldwide market for halal food accounts for about 16 per cent of the $4 trillion global food market.
The most important region for halal products is Asia, which accounted for $416bn of sales in 2010, or almost 64 per cent of the total. Within that region, the biggest single country is Indonesia where about $78.5bn-worth of halal products are sold each year. The six GCC markets account for almost $45bn of sales. China accounts for just over $21bn. After that come India and Malaysia, with sales of $24bn and $8.4bn respectively.
As well as being the largest market, Asia has also been growing more quickly than other parts of the world. Sales in 2010 were up 4 per cent compared with a year earlier and 12.6 per cent compared with six years earlier. By contrast, annual sales growth in most other markets in 2010 was less than 2 per cent.
Even so, the halal market still represents a significant market opportunity in other regions of the world. In Africa, sales were worth more than $153bn in 2010, in Europe they totalled $67bn, while North and South America contributed a combined $16.2bn to global figures and Australia and the Pacific countries accounted for $1.6bn.
The relative importance of different regions around the world has stayed remarkably consistent over recent years. Asia might be the most important and fastest-growing region, but it has only increased its market share by a small amount, from 62.9 per cent of total halal sales in 2004 to 63.9 per cent by 2010.
The only other region to show an increase over that time is Africa, where sales grew fractionally from 23.3 per cent of the total in 2004 to 23.5 per cent six years later.
The other markets saw their relative size either remain the same or fall slightly. Europe accounted for 11 per cent of all halal sales in 2004 and 10.3 per cent by 2010, while the Americas saw their relative weight decline from 2.6 per cent of the total to 2.5 per cent over that period. The Australia and Oceania region remained flat at just 0.2 per cent of all sales.
The importance of halal food is not just a matter for those living in a particular region. A recent report on the Muslim travel market by New York-based Dinar Standard found that the global Muslim tourism market in 2011 was worth $126.1bn in outbound expenditure, excluding travel for Hajj and Umrah. That was equivalent to 12 per cent of the total global outbound tourism market of just over $1 trillion.
The largest single contributor from Muslim-majority countries was Saudi Arabia. The kingdoms nationals accounted for $23.8bn of the total, followed by Iran, the UAE, Indonesia and Kuwait.
As part of its report, the US consultancy conducted a survey of 922 Muslim tourists and found that one of the main issues they had when travelling for leisure was finding halal food. About 67 per cent of respondents cited that as an important issue, followed in order by price (53 per cent) and finding a Muslim-friendly experience (49 per cent).
The next stage in Dubais plans to tap into such concerns will come on 25 November, when it hosts a two-day Global Islamic Economy Summit. The event is due to include discussions about Islamic finance and the halal industries.
In the meantime, some private-sector firms in the emirate are already expanding to meet the rising demand. In June this year, the local Al-Islami Foods announced it was setting up a halal food-processing facility in Dubai worth AED100m. The new 11,500-square-foot facility will be located in Dubai Investment Park and will be able to process more than 1,500 tonnes of halal meat a month. It should be operational by the end of next year.