KUALA LUMPUR: Malaysian businesses must actively tap into global halal market opportunities as they increasingly look outside the country’s borders for growth, according to speakers at the recent Export Excellence Awards (EEA) 2021 webinar.
Entitled Halal Export Opportunities, the second webinar in the EEA 2021 Webinar Series featured experts from a wide range of industries, starting off with Standard Chartered Bank Singapore economist (Asia) Jonathan Koh’s economic forecast for Malaysia and the world.
Anticipating 5.7% year-on-year gross domestic product (GDP) growth for Malaysia this year – a rebound from the -5.6% contraction in 2020 – Koh noted that the GDP may contract yet again in the first quarter owing to the movement control order 2.0 (MCO 2.0).
The impact is expected to be “milder” this time around, as MCO 2.0 is less restrictive than the initial set of measures in Q2’ 2020.
“Similar to many economies across the region, we expect sequential growth to really pick up in H2, as vaccination becomes more widespread and mobility restrictions can be eased further, ” he said.
As such, external demand will start to pick up and help support export growth in addition to the existing accommodative monetary and fiscal policies, with Koh pointing to opportunities in exports such as mining and electronics.
He said that while the demand for electronics may taper after the one-off demand from work from home solutions fade, it may continue to be supported by the demand for digital solutions and 5G among others.
That said, he noted several risks that could impact global economic growth, apart from those related to the pandemic, highlighting premature withdrawal of policy support and leverage where there are “pockets of stress on debt financing”, as well as geopolitics such as the one between the United States and China.
With that in mind, Standard Chartered Bank Singapore ASA FX research head Divya Devesh noted that the Malaysian ringgit is “a good proxy for the global reflation rate” as it tends to perform strongly during periods of improving global trade and emerging markets (EM) growth.
“In fact, among EM Asia currencies, the ringgit is most strongly correlated with global trade volumes. The strong performance of commodity prices also supports Malaysia’s exports. So, we are positive on the ringgit and expect a strong performance this year.
“We expect US dollar-ringgit to decline towards 3.90, ” he opined.
As such, he believes that exporters will likely face the challenge of a strengthening ringgit versus the US dollar this year and recommended that exporters maintain a high hedging ratio on their foreign currency receivables for H1 2021.He said: “Also, exporters should look at tactically fading any upticks in US dollar-ringgit caused by an external risk event.”
Following his session was a panel discussion themed Tapping into the Halal Export Market, which saw the participation of Julie’s Manufacturing Sdn Bhd director Martin Ang, Matrade exports promotion and market access division halal, F&B and agro-based section senior manager Leany Mokhtar, Standard Chartered Saadiq Malaysia Islamic business and product management director Bilal Parvaiz and Tanamera Tropical Sdn Bhd founder and managing director Faisal Fadzil.
Halal Development Corp Bhd (HDC) industry development vice-president Hanisofian Alias was moderator for the discussion, where the speakers provided valuable insights for businesses seeking to tap into halal exports.
In introducing the topic, Bilal explained the growing awareness of halalan toyyiban over the years, which calls for shariah compliance to be assessed throughout the entire supply chain of a halal business.
“The integration between the halal industry and Islamic finance poses a huge potential for the growth of Islamic economics in Malaysia and abroad.
“Consumers worldwide, both Muslims and non-Muslims, are increasingly seeking options and business models that are ethical and responsible in generating a positive and sustainable impact to the community, economy and environment.
“The synergy between the halal industry and Islamic finance will spur the creation of new halal businesses and the expansion of halal trade into global markets, ” he said.
However, Bank Negara reports that only 54.1% of halal businesses are bank-financed, with less than a quarter through Islamic finance – which is what Halal360 by Standard Chartered Saadiq wants to address.
By offering a comprehensive set of syariah-compliant solutions, Halal360 seeks to support the ecosystem of the halal industry and the expansion of halal businesses, leveraging the bank’s strength as an international Islamic bank with a network spanning across Asia, Africa and Middle East.
EEA 2021 is organised by Star Media Group in partnership with Standard Chartered, with Matrade as patron.
It is audited by BDO. Those keen to apply can visit exportawards.com.my, contact Pei Wen at firstname.lastname@example.org or call 03 7967 1388 ext 1857 (events department).