FACULTY OF BUSINESS MANAGEMENT

UNIVERSITI TEKNOLOGI MARA

Bachelor of Business Management Administration (Hons) Marketing (BM 240)

Issues Marketing(MKT658)

Individual Assignment
Issues of halal logistic

Prepared for:
DR GLUMA SABAN

By :
Nik Syafira Binti Nik Jeffri (2015827004)

July, 2017
 ACKNOWLEDGEMENTS

For the sake of Allah S.W.T and his most Merciful, I extremely grateful and exceedingly
thankful for His numerous gift and direction. He has graced upon us for the duration of our life,
particularly so over the duration of finishing this study. This study couldnt have been finished
without the assistance and backing from quantities of individuals.
First of all, I would like to express our sense of thankful and deep appreciation especially to Dr.
Gluma Saban for his guideline, worth support and teaching to improve our knowledge in this
course.
I would also like to thank all of our classmates for helping giving the guidance regarding
on how to do our assignment.
Not forgetting, I would also like to extend special acknowledgement to MY family who has
always support us because without their morale support, we could be lost.
1.0 INTRODUCTION
1.1 Background of the Study
Halal is an Arabic term which means permissible or lawful in Islam. In reference to food, it is
the Islamic dietary standard, as prescribed in the Shariah (Islamic Law). Haram is another
Arabic term which means impermissible or unlawful in Islam. Rasulullah (sallallahu alayhi
wasallam) said: Halal is clear and the Haram (unlawful) is clear. Between the two there are
doubtful matters concerning which people do not know. One who avoids them in order to
safeguard his deen (religion) and his honour are safe, while if some one indulges in it, he may be
indulging in the unlawful (Bukhari) General Quranic guidance dictates that all foods are
Halal except those that are specifically mentioned as Haram (unlawful or prohibited). The
Glorious Quran reads: O ye who believes! Eat of the good things wherewith we have provided
you, and render thanks to Allah, if it is He whom ye worship. (chapter II, Verse 172) The
unlawful foods are specifically mentioned in the Glorious Quran, in the following verses: He
hath forbidden you only carrion, and blood, and swine flesh, and that on which hath been
invoked any other name besides Allahs.. (Chapter II, Verse 173) Forbidden unto you (for
food) are: carrion and blood and swine flesh, and that on which hath been invoked the name
other than Allah, and the strangled, and the dead through beating, and the dead through falling
from a height, and that which hath been gored to death, and the devoured of wild beasts, saving
that which ye make lawful (by slaughter) and that which hath been immolated to idols and that
ye swear by the divining arrows. This is an abomination. (Chapter V, Verse 3)
In Malaysia as of end of 2015, food businesses consist of 172,252 food services entities and
5,565 food manufacturers where Muslims dominate the countrys population ( Aliff, 2015). The
Muslims as the majority have a significant buying power and subsequently will affect the
demand of halal foods. Halal aspect is not only restricted for ingredients of food products only.
Based on the 5th principle of Halal (HDC, 2012), anything related to the Halal food or/and non-
food products should be complied with Islamic rules including the logistics activities for the
Halal products. Logistics activities are one of the entities in supply chain of products. In a way to
serve Halalan-Toyibban products to end consumers, all part in halal supply chain for halal
products should be conducted according to Halal best practices including logistics activities.
Halal logistics activities involved halal transport, halal warehouse and halal retail (SIRIM, 2010).
As reported by (Malaysia International Halal Showcase [MIHAS], 2013), halal demands for
halal products are increasing due to fast growing of halal industry. About USD580 billion is
needed to fulfil the growing demand for Halalan-Toyibban products. Halal aspect is not only
restricted for ingredients of food products only. Halalan-Toyibban means any consumption of
products, which are not harmful authenticand are safe to be consumed as underlined in the
Syariah law, and thus is allowable and permissible.
This paper aims to preliminary exposing the issues encountered on halal logistics in Malaysia
mainly for the food industry. Data collected for the study are obtained from secondary sources.
1.2 Statement of Problem

The aim of this study is to explore issue of halal logistic among the food industries . The upcoming
standardisation of halal meat designed by several authorities has major logistical consequences.
Organisations cannot decide themselves whether their products are halal compliant. Checking the halal
compliance of products is the task of halal certifiers. Worldwide, there are numerous halal certifiers,
most of them applying different guidelines and logos (Regenstein et al. 2003).

1.3 Issues of the Study

I. The lack of Bumiputera entrepreneurs in producing halal food products regardless of our local
market or for oversea demand .

II. The lack of certified-clean containers for halal shipments.

III. The inconsistency number of non-Muslim and Muslim companies that are interested to practice
the halal logistics.

1.4 Significance of the Study

In general, the significance of the study is to discover or identify the Malaysian consumer towards the
issues of halal logostic affecting their buying behavior. It was found that consumer still has skeptical
attitudes towards halal logo and certification, even though industry has found that the logo and
status can be a marketing tool for business expansion. Halal governance hinders the process of
certification, and thus has made it difficult for small and medium enterprise to establish halal status.
Halal validity and traceability need to be established via research and development process. However, it
is still under development and in need of support from universities and research centers.
Additionally, there are still many areas need to be explored in implementing halal especially in hospitality
sector. It is suggested that all public and private sectors to work together to overcome the issues
and challenges of halal implementation in Malaysia.

1.5 Research Objective

The main objective of the study is to explore issue of halal logistic among the food industries in three
areas:

I. Halal Certification

II. Certified-Cleaning

III. Halal Practices

1.6 Limitation of Study

Limitation of study is the barriers that cannot be avoid or boundary to the researcher to get
information in this research. In conducting research, there were several limitations that faced by
researcher and might be affect to the result. The limitation is time constraint. The problem is to
complete this study are time constraint. It quite difficult and challenging for researcher to complete this
studys in short period of time. Researcher needs a time to search information, gather and analyze the
data.

1.7 Methodology of the Study

These research using secondary data. Secondary data are refer to the information which gathered
from another study that already done by pervious study (Sekaran & Bougie, 2009) which is data
published in journal, website, articles, and information that are available. Secondary data can help
researcher to understand and to define the problem. Get the information from government agencies
bulletin (SIRIM) website, Jabatan Kemajuan Islam Malaysia (JAKIM) articles and many more.

1.8 Scope and Challenges of the Study

The lack of enforcement by the Department of Islamic Developments (JAKIM) personnel in monitoring
the logistic of an organizations of certified halal logo has caused the public to question the validity on
some of the products or services claiming to be halal. Based on data collection LSP Companies facing a
problem to design the SOP for their Halal Logistics operation.
2.0 FINDING AND DISCUSSION

2..1 Halal Certification

In general, the halal certification issued by JAKIM is not compulsory for product and service producer,
manufacturer, distributor, trader, repackaging, food premise, and abattoir but it is encouraged by the
willingness (JAKIM, 2015). From overall number of 5400 certified halal companies recorded in the HDC,
less than 30% of them are Bumiputera entrepreneurs. This has shown that non-Bumiputera are more
willing to invest (financially, effort and time) to acquire the halal certification. They have known the true
value of Malaysians halal certification to endearing the billions of Muslim consumers around the
globe. Unfortunately, many of Bumiputera entrepreneurs that mostly coming from SMEs are not willing
to make the same effort. They are likely to be in the nature of judgement to invest in acquiring the
halal certification. As a consequence, they are hindering themselves to sell their products locally as well
as to export in the halal international markets. One of the CEOs logistics companies said Indeed, in
term of numbers, Bumiputera (entrepreneurs) are far left behind as compared to them (non-
Bumiputera) in producing halal food products regardless of our local market or for oversea demand! On
the other hand, I think we (Bumiputera) entrepreneurs are still having a negative rationality on halal
certification procedures! They are also lacking of expertise as well as knowledge on the international
halal industry! Perhaps, they are also thinking of high cost for halal logistics implementation! Lastly, they
have no idea what kinds of products can be exported! Thus, our government should do more ground
works to support these companies.

2.2 Certified-Cleaning

Some previous research has done so far to identify the critical issues in the halal logistics, especially in
three main areas; the transportation and movement, the storage and warehousing and the operations
and processing in the terminals (Tieman et al., 2012; Tieman, 2013; Talib et al., 2014; Talib et al., 2015).
To fulfil halal principles, these areas must be separated by non-halal (haram) parts or products physically
even inside the container, shelves, and cold-rooms or packaging. If there is a breach or contamination,
the process of undergo an additional cleaning or site must be applied by using clay and water. As one
of the largest shipping lines in the world, the APL Company has launched the certified-clean containers
(e.g., certain sticker stamped on containers) for halal shipments from Malaysia to Southeast Asia and
Middle-East countries. Other logistics companies such as Kontena Nasional, Gerimis Baiduri, and
MISC also offers the same service of sertu in dry and refrigerated containers. Unfortunately, not many
of the manufactures are keen to make use the service at the moment. An interview with a senior
manager from one of the companies said We have offered sertu container for quite some time, but the
responds are not encouraging. Last time, we had offers from one of the hypermarkets since we are
practicing the halal logistics, they had to withdraw... That was because they are still practicing the
mishmash of non-halal and halal but with different packages. To get another view about the halal and
sertu containers, we have visited one of the seaports. And the companys operations manager said
We have a dedicated area for halal containers which can amount up to 50 units of forty-foot long
containers if I am not mistaken since two years ago. But as you can see the area still waiting for
dedicated containers empty since we offer it to any container operators. until now! Lastly, we have
one operator Nippon Express they have an agreement with Brahim (food manufacturer) to make
use the halal area at last.

2.3 Halal Practices

Studies from Jaafar et al. (2011) and Talib et al. (2013) reveal that many of the logistics companies
start to explore and invest more halal service in their operations, such as procurement, storage
and warehousing, transportation and delivery that specialized for halal products. However, the number
of non-Muslim and Muslim companies that are interested to practice the halal logistics are not
equivalent. According to HDC (2015), there are 2.35 million of halal certified products in Malaysian
markets, which produced by 5400 halal registered companies. As reported by HDC (2015), the value of
halal export in 2014 by the non-Bumiputera was MYR34.25 billion as compared to Bumiputera was
MYR3.44 billion. The large differences between them shows that Bumiputera exporters are lack of few
steps behind. To get a picture of the matter, an interview with a senior manager of one of
Bumiputeras exporters has been arranged. He said More than half of business exporting mainly
for food are not fully technology-based! That is the most important obstacle for us! Secondly, we
as SME players are impossible to get access to entrepreneurial knowledge and skills including the
financial assistance! And thirdly, we need some kind of supply chain networks locally and
internationally. Perhaps government should look these matters in depth! And lastly, during last three
years, we see more Bumiputera involved in halal industry, but most of them are not aware the
importance of halal certification issued by JAKIM.
3.0 RECOMMENDATION AND CONCLUSION

As JAKIM is the only main body that could certify halal food certifications, they should improve
current halal logistic in food industries

Halal logistics and supply chain management is important in ensuring halal integrity for the Muslim
consumer and protecting the brand of manufacturers and retail chains. As todays food supply chains are
complex and require crossing borders, logistics plays a key role in extending the halal integrity from
source to the point of consumer purchase. As an international halal logistics standard has been
developed, there is today a reference in how to organise halal logistics for the halal industry, which
addresses both the differences in market requirements (based on the Islamic schools of legal thought,
local fatwas and local customs) as well as the complexities of last-mile logistics in nonMuslim countries.
As the halal industry is a large and fast growing industry, which is demanding a higher level of integrity
throughout the supply chain, there is an evident need for robust, effective and efficient halal food supply
chains. Halal logistics plays a central role in connecting the individual links in the halal food supply chain
according to the requirements of the destination.
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