The notion of halal economy is rooted in the development of the halal industry ecosystem. It basically refers to an economic ecosystem which is guided by Islamic values and principles. The ecosystem consists of several major categories of Shariah-compliant business such as food, tourism, lifestyle, finance etc.
Based on the projections made by KFH Research, by 2018, the global halal economic value is expected to reach USD6.4 trillion (MIFC, 2014). This figure is slightly higher than the projected 2018 Japan Gross Domestic Product of USD5.16 trillion which is the world’s third largest economy. Of the USD6.4 trillion, Islamic finance and halal food sectors are expected to contribute USD3.91 trillion and USD1.6 trillion in 2018 (MIFC, 2014) respectively.
According to the Global Islamic Economic Indicator (GIEI), Malaysia and the United Arab Emirates (UAE) are two Islamic countries among the 57 OIC countries and 16 non-OIC countries studied that have the best halal ecosystems. While Singapore is the only non-OIC state listed among the top 15 GIEI countries (Thomson Reuters, 2016, 9-10).
Based on reports issued by Islamic Development Bank (IDB) or Thomson Reuters, the rapid growth of halal economy worldwide is driven by strong demand from Muslim and non-Muslim consumers. This scenario is further propelled by the rise of education systems and the increase of purchasing power of Muslim consumers.
The scenario consequently leads to several questions worth discussing. What drives producers to engage in the halal economy? Why countries like Italy, Spain, Thailand, Japan, China or Brazil and other non-Muslim countries are so keen in the halal industry sector to the extent of spending heavily on halal initiatives in their respective countries? Why are the world’s conventional financial giants interested in the Islamic financial sector? Similarly, what has led BRF, Nestle, Carrefour, Walmart, Mastercard and Marriot to seriously engage in the provision of halal products and services through their branches around the world?
There are some criticisms of developments taking place in the halal economic ecosystem. To attract consumers, producers and service providers highlight Islamic values such as purity, integrity and caring as replicas to the products and services they offer. Karim Crow (2013) argues that these marketing and branding efforts are nothing but to gain and increase market share.
In 2006, 63% of Britain’s population, 87% of the French population and 88% of Dutch residents believe that Islam is a religion that has tendency to promote violence (Nazrin Shah, 2014, 37). This is very ironic and untenable generalisation to perceive Islam as a religion that supports terrorism while at the same time, Western-owned companies are racing to dominate the world’s halal market. Sadly, it is not an exaggeration to say that profitability is the main motive that drives these companies to venture further into the global halal market.
Similar observation is made in the Islamic financial system. A look at statistics related to the Islamic financial sector both nationally and globally will impress us with its rapid growth. For instance, its total assets in 2011 is US1.3 trillion. However in 2014, the figure settled at US1.8 trillion—an increase of 38.46% over three years. This figure is projected to double within the next five years (Kunt, Klapper & Randall, 2013, 2; Nazrin Shah, 2014, Hisyam, 2014).
Ironically, if we look at the fast-paced developments in the Islamic financial sector— be it at local or global level—we certainly cannot accept the fact that the rate of poverty and the issue of inequality among Muslims remain unresolved or not dealt with properly. According to 2010 World Bank estimates, there were about 1.7 billion people in the world living below the poverty line. Of this total, 44% or 748 million lived in Muslim-majority countries (Edbiz Consulting Limited, 2012, 185). In this regard, we may argue that the Islamic financial system, which is also a halal ecosystem entity, has failed to meet at one of its original objectives of raising the standard of living of society through the concept of justice, social equality, brotherhood, welfare and cooperation. To some extent, it has been perceived by some Islamic scholars as part of the conventional financial system operating in the capitalist economy.
In short, it is quite difficult to confirm that the halal economy supports sustainable development. This conclusion points to a contradictory reality. While it provides platform to halal stakeholders such as entrepreneurs and consumers to take advantage of this ecosystem, on the same issues emphasised by sustainable development concept such as poverty, unsustainable consumption and environmental degradation still persists and remains to be addressed by industry players. The focus is mainly concentrated on efforts to strengthen the position in the marketplace and increase business profits.
It admits that halal economy is an innovative and creative notion which is based on a concept that is close to Islamic teachings. It had begun with a common concept known only to Muslims. But today, the concept of halal has been adopted and applied to the business world by not only Muslim entrepreneurs but also non-Muslim companies. The effect of the concept is not limited to profits generated by business sectors, but also to the consumer communities where they have more choices of products or services available in the market.
Despite these positive outcomes, it is imperative to note that anything built upon an Islamic epistemological foundation, should also abide by and operate in accordance with the principles promulgated by Islam. So if we want to achieve sustainable development through halal economy, all parties need to ensure that the Quranic guidelines and Islamic values are adopted and practiced in every production, consumption and distribution activity.