The halal industry in Asia has experienced robust growth and development in recent years, reflecting the increasing demand for halal products and services in the region.
The State of the Global Islamic Economy (SGIE) Report 2023/2024 outlined a dynamic picture of the global halal industry. In it, the report forecasts a promising growth amidst a global crisis around the Palestinian-Israeli conflict, continued conflict in Ukraine, the worsening climate crisis, and uncertainties from the digital AI revolution.
With an estimated 2 billion Muslims spending around USD 2.29 trillion in 2022, the halal industry has grown remarkably, boasting a 9.5 percent year-on-year from USD 2 trillion in 2021. The SGIE report projected that consumer spending will reach USD 3.1 trillion by 2027, a growth of 4.8 percent compound annual growth rate (CAGR) over a 5-year period from 2022 to 2027.
Today, it is estimated that there are over 2.03 billion Muslims in the world, with the largest concentration of Muslims (65 percent) living in Asia. Some 28 Asian nations record a Muslim-majority population. Countries like Indonesia, Pakistan, India, and Bangladesh, have some of the largest Muslim populations in the world.
Growing Muslim population and young Muslims
A primary factor driving the growth of the halal industry in Asia is the increasing Muslim population. According to the Pew Research Center, the Muslim population is expected to grow at CAGR of 1.8 percent from 2020 to 2025. In the Asia Pacific, Muslims are expected to grow to 1.5 billion by 2025.
Among the growing Muslim population across Asian countries, there has been rising awareness and demand for halal products among the Muslim youth.
In 2023, Muslim youth and young adults (ages 15-29) represented 27.8 percent of the world’s youth and young adults. It is expected that by 2030, nearly three in ten of the world’s youth and young adults are projected to be Muslims. These youthful Gen Z and Millennials, being the largest spenders of the Muslim population are playing a critical role in the booming of the halal economy in Asia.
As Muslim consumers become more discerning about the products they consume, there is a growing preference for halal-certified brands across various sectors such as food, fashion, cosmetics, pharmaceuticals, media/recreation, travel and finance.
Rising consumer spending power
Another key driver of the halal industry in Asia is the rising disposable incomes in many countries in the region. As economies in Asia continue to grow and develop, more consumers have the purchasing power to choose halal products over non-halal alternatives. This preference is particularly evident in sectors such as food and beverages, where consumers are increasingly looking for products that comply with their religious beliefs and dietary restrictions.
According to the IMF, the overall GDP of Organisation of Islamic Cooperation (OIC) member countries is forecasted to increase by 21.7 percent to reach USD25.4 trillion in 2023. The latest World Bank data (2021-2022) also shows that GDP per capita for several Muslim-majority countries is above the global average, including all Gulf Cooperation Council (GCC) countries, Brunei Darussalam, and Guyana.
Greater emphasis in religious values
According to a study done by Pew Research Center, there has been a significant increase in religiosity as compared to two decades earlier. The study indicated that some 70 to 90 percent of Muslims in the Asia-Pacific and the Middle Eastern and North Africa (MENA) region, have prioritised religion as “very important” in their lives. With the findings, it is understandable to expect that Muslim consumers would consider Islamic values central to their lifestyle and consumption patterns.
Surge in sustainable and ethical consumerism
Research shows that more consumers are prepared to spend on sustainable products now than two years ago. While Gen Z seems to be at the forefront of this trend, this increase holds across the “generational divide.” Many
Islamic values underlying various sectors of the Islamic economy have a wider appeal, resonating with universal principles such as sustainability and ethical consumption.
Halal products are increasingly associated with food safety, hygiene, and health. Many halal brands have succeeded in attracting non-Muslim ethical consumers, including brands such as Saffron Road and Iba Cosmetics.
This demographic trend of a more affluent Muslim population, coupled with a youthful generation of spenders, an increase in religious values, and a surge in discerning consumerism are important stimulants for the growth of the market for halal products.
Digital Connectivity, Technology and Sustainability
A new study by management consulting firm YCP Solidiance reported that Asia has experienced a growth in digital connectivity, spurred by increased accessibility to digital devices, investments in technology, and developed digital infrastructure. The halal industry is recognising the crucial role of digital connectivity in boosting the Islamic economy sectors and bolstering consumer confidence.
Key technological advancements, including blockchain, internet of things (IOT), artificial intelligence (AI), e-commerce platforms, and certification applications, are being actively expanded within the halal sector.
Since the Covid-19 pandemic, there has been a heightened focus on sustainability throughout the entire halal supply chain. The primary focus lies in implementing halal traceability services to ensure the absolute verification of the halal supply chain. It was reported that countries like Malaysia, Indonesia and Brunei have incorporated technology into their national strategies to enhance transparency and efficiency within the halal supply chain.
In summary, the halal industry in Asia benefits from a growing Muslim population including the Muslim youth; rising consumer spending power; greater importance placed on religious values; surging preference for ethical and sustainable products; increasing awareness among non-Muslim consumers; and and advancement in technology. These factors collectively contribute to Asia halal industry’s positive trajectory.
Growth across Islamic economic sectors
DinarStandard, a research and advisory firm unveiled findings in the latest State of the Global Islamic Economy (SGIE) Report 2023/2024. Into its tenth edition, the annual report shed light on the performance of 6 Islamic economic sectors and ranks 81 countries against them, to assess which countries are best able to support the development of Islamic economy business activity relative to their population size and GDP.
In the halal food sector, there has been a surge in investment in halal food-related companies, with food delivery services and agri-tech receiving the most attention from investors in 2022/23. Overall, 44 deals related to halal food were recorded in 2022/23, with 30 disclosed deals amounting to US$2.2 billion. Muslim spending on food was USD 1.4 trillion in 2023/2024 and is forecasted to grow to USD1.67 trillion by 2025.
Technological innovation, particularly the role of fintech are propelling Islamic finance towards greater digitalisation, sustainability, and financial inclusion. Sukuk issuance has been a major driver of global Islamic finance expansion. In 2021/2022, the Islamic finance industry reached USD3.96 trillion, and is predicted to grow to US$5.95 trillion by 2025.
As the appetite for travel returns strongly, vast opportunities await Muslim-friendly tourism destinations, service providers, and hospitality businesses. The Muslim-friendly travel industry valued at USD133 billion in 2023/2024, an increase of 17 percent over the previous year’s value at USD114 billion is expected to reach USD174 billion by 2027, growing at a CAGR of 5.5 percent.
As modest fashion steps into the spotlight and gains more recognition in fashion schools, fashion events, and mainstream retail stores, this dynamic segment of the fashion industry is bound to continue expanding. Muslim spending reached US$318 billion in 2023/2024, up by 8.4 percent from USD293 billion in the previous year, and is projected to reach USD428 billion by 2027, growing at a CAGR of 6.1 percent.
As more halal medicines and innovations are commercialised, and accreditation practices are increasingly harmonised, halal pharmaceuticals will continue to scale up and expand. Muslim spent USD108 billion on pharmaceuticals in 2023/2024 and forecasted to reach USD142 billion by 2027.
As halal cosmetics brands continue to meet consumer demand for unique products such as alcohol-free fragrances, and as they continue to put their brand communities first through product co-creation, the sector is expected to grab a bigger share of the global beauty market. Muslim spend on cosmetics was estimated at USD 84 billion in 2023/2024 and is expected to reach USD129 billion by 2027.
With the growing use of digital technologies to augment traditional Islamic interactions and the rising demand for Muslim-centric gaming and content platforms, Muslim-themed media is expected to record strong growth and
profitability in the years ahead. Muslim spend on media and recreation was valued at USD247 billion in 2023/2024. By 2027, it is projected to reach USD344 billion.
Global Islamic Economy Indicator (GIEI) and Mastercard-CrescentRating Global Muslim Travel Index (GMTI) 2023
In the tenth edition of SGIE Report 2023/24, Singapore remains within the top 10 ranking in the Global Islamic Economy Indicator (GIEI), which measures how leading national ecosystems are best able to support the development of Islamic economy business activities.
Malaysia retains the top spot for the 10th consecutive year, while Saudi Arabia remains in second position. This year, Indonesia moved up one spot to the third position, with Bahrain returning to the top five for the first time since 2019/20. South Africa entered the ranks of top 15 countries, while Kazakhstan dropped out this year. The biggest gains within the top 15 were achieved by Iran, Qatar, Pakistan, and South Africa. It is to be noted that the top 14 countries are in Asia.
Under the respective sectors of the Islamic economy, Singapore ranks among the top 4 across all sectors except Islamic finance and Muslim-friendly travel. Singapore continues to rank first in pharmaceutical & cosmetics sector and 2nd for media & recreation. Previously ranked 7th position for modest fashion and halal food, Singapore has moved up to 4th this year, on both sectors.
Singapore wins big as a Muslim-friendly destination
In the travel sector, although Singapore is no longer within the top 10 of the Global Islamic Economy Indicator (GIEI), the Mastercard-CrescentRating Global Muslim Travel Index (GMTI) 2023 ranked Singapore as the only non-OIC country to make it to the top 20 of the GMTI rankings and solidified its position in the top of non-OIC destinations. Singapore also tops the list of Muslim Women-friendly destinations in the non-OIC category. The ranking takes into account factors such as accessibility, communications, environment and availability of services.
GMTI 2023 reveals that international Muslim traveler arrivals are projected to reach 140 million in 2023 and get back to pre-pandemic levels 160 million in 2024. The visitor arrivals is projected to reach 230 million with an estimated expenditure of USD 225 billion by 2028. Singapore has demonstrated its unwavering appeal and unmatched prowess in catering to the needs of Muslim travelers.
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Resources
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