What is Halal?
What is the Halal Consumer Market?
By: Dr. Tausif Malik
Being a Muslim and a professional involved in the Halal consumer market, I am always asked the same question “So, Halal means Halal Food, right?”. This is the wrong perception held by a majority of non-muslims of what Halal means. But then I have to explain that Halal is about food and an umbrella code of conduct encompassing personal lifestyle, investment decisions, professional and business dealings.
The other question people often ask is, “Muslims don’t take ‘Interest’ on investment or pay ‘Interest’?”. The answer is always yes. Muslims don’t take ‘Interest’ or pay ‘Interest’ since it is the biggest sin mentioned by the Almighty Allah SWT and the beloved Messenger & Prophet Muhammad PBUH, but I also remind them that ‘Interest’ is forbidden in the Bible & Torah and other Holy books as well.
If you analyze ‘Interest’ closely, you will notice it gets the borrower into the debt trap. Most of the time, one can’t get out of the debt trap. It also creates an unrealistic demand in the market. After some time, it leads to a market crash, just like the subprime mortgage crisis of 2008.
According to the quasi rent theory, if interest rates are high, people will use safer and guaranteed investment options like keeping their money in the bank, leading to lower economic activity.
If you study the stock market, you will notice that companies with a lower debt to equity ratio perform better when compared to companies that have a high debt to equity ratio. For example, Apple Inc. doesn’t have any debt, and their stock is always performing higher.
Now, let’s address what Halal is?
In the Quran, the word Halal (permitted) is contrasted with Haram (forbidden) in clear binary opposition.
We will analyze the above to explain this concept in light of personal lifestyle, professional, business, and investment decisions.
Muslims are allowed to eat certain kinds of animals so long as the animals are slaughtered in the prescribed manner. It is similar to the concept of Kosher (Jewish dietary code).
Islam encourages you to look good, smell good, and when it comes to fashion, the only restriction is that the apparel has to be modest and not revealing.
Muslims are encouraged to fulfil their professional duties with honesty and dignity and refrain from working with companies whose source of income is interest or companies that take loans with interest to fund their business. Muslims are not allowed to work in companies that operate in the Food & Beverage and Hospitality industry and offer alcohol, haram meat such as pork, or promote a lifestyle not encouraged by Islam.
A Muslim professional has to put in 100% of his efforts to fulfil his duties to the employer as per the employment contract. They are discouraged from moonlighting during their defined office hours. Otherwise, they are not honoring their contract with the employer. Hence, the income is not Halal.
Business & Investments:
Islam encourages both women & men to pursue Tijara (trade & entrepreneurship) since it creates wealth and most of the Sahaba (the Companions of the Prophet PBUH) were businessmen. But, the cornerstone of the business or entrepreneurship journey should be honesty and integrity towards all the stakeholders such as Government by paying their due taxes, Team members by paying their salaries on time, Environment by engaging in sustainable business, Suppliers by paying them on time and Community by empowering the underprivileged by sharing charity (Zakat, Fitra, & Sadaka) directly with them. One of the pillars of Islam is Charity.
It clearly states to find the underprivileged and give them Zakat, their share ordained by Allah SWT.
Here, I would like to share some Hadiths (Prophetic sayings) for the readers about the viewpoint of Islam and entrepreneurship.
‘An honest and trustworthy merchant will be [raised] with the Prophets, the truthful and the martyrs.’ (At-Tirmidhi)
The Sahabi Hazrat Abdul Rahman Bin Auf (RA) was an outstanding entrepreneur. When his Ansari brother Hazrat Sa’ad Bin Ar- Rabi’ah (RA) offered him his house and business, he responded to him by saying, “May Allah bless you with your family and money but show me the way to the market which was “The market of Qainuqa.”
In Islam, we learn that 9/10 of the sources of Rizq (income) can be derived from business activities. And in running our own business, we also seek the Barakah and Redha (the blessings and satisfaction) of Allah SWT.
I am finally coming to the other important part of the article related to discussing the Halal Consumer Market.
Here are some key highlighted research data on this topic:
1. The global Halal market size will reach USD 9.71 trillion by 2025 (Reuters, 2019).
2. The economic development of leading Islamic countries such as Indonesia, Malaysia, India, Pakistan, Nigeria, and Iran is expected to boost the global halal products market reach over the coming years (Reuters, 2019).
3. Comprising halal food, travel, cosmetics, modest fashion, and Islamic finance, demand for goods and services that align with Islamic principles is on the rise, but just $745 million in disclosed private equity investment was invested in the Islamic economy over three years, far less than the $595 billion in private equity and venture capital investments that occurred globally in 2017 according to the report (Wamda)
4. Asian Muslim tech startups hope to lure Islam’s 1.8 billion followers. (Nikkei)
5. Muslim communities are as technology savvy as any other, especially their younger members, who form part of the global rise of ‘millennials’ and their forward-thinking, can-do mindset. With the breaking down of borders through digital platforms, it is easier than ever for Islam-centric entrepreneurs to access the global Muslim population of 1.7 billion people. (Gulf Business)
6. With the worldwide Muslim consumer lifestyle market and halal economy set to reach $3.7 trillion by 2019, there’s heaps of potential for the Islamic market. (startups.co.uk) However, taking the effect of the pandemic into account, the global halal economy is now estimated to be worth $3.2 trillion by 2024. ( arabnews.com )
Based on our experience & understanding of research data (Primary & Secondary):
●Various organizations and governments are organizing Halal Expos to promote Halal products and services.
●There are many micro-finance, crowdfunding, venture capital companies helping Halal Businesses. Still, they are limited to a geographic region due to legal jurisdiction.
●Indonesia is the only Muslim country with the top billion-dollar unicorn startups.
●Halal Angels Network is the only Angels Network trying to connect International Angel investors with startups.
●Many non-Muslim countries have identified colossal market potential to offer Halal goods & services to 1.8 billion Muslims. Vietnam has taken new initiatives for this market.
●The Halal Businesses & Entrepreneurs face funding challenges; hence they are not scaling and emerging as multimillion or billion-dollar unicorns.
●If the funding challenge is not resolved, then the Halal Consumer market will not reach its full potential.
Many countries and organizations have understood the potential of the Halal Consumer Market to be estimated at 5 trillion USD and to grow to 9.7 trillion USD with 1.8 Billion customers, and are paying close attention to how this can be leveraged for economic gain.
According to the Global Muslim Travel Index (GTMI) 2019, produced by Mastercard and CrescentRating, spending by Muslim travelers is expected to reach US$300 billion by 2026, an increase of 35% from US$220 billion in 2020, with the number of Muslim tourists growing to 230 million from 156 million in 2020. In fact, Japan and Italy have taken a step forward to put a roadmap for Halal tourism. They have actively pursued this for a decade by creating infrastructure (Hotels, Restaurants, Mosques, & Lifestyles) for Muslim tourists.
As a founder of Halal Angels Network, we have been trying to educate Governments, Investors, Entrepreneurs, Innovators & Scientists about the potential of the Halal Consumer market and its commercial impact to beat the COVID-19 pandemic economic chaos.
Hence, we can conclude that the Halal Consumer market can offer a huge economic potential for Governments, Investors, Entrepreneurs, Innovators & Scientists to develop policies, products & services to meet the needs of the fast growing Halal Consumer market (Lifestyle, Food, Hospitality & Tourism, Investment, Services & Investments).
Dr. Tausif Malik is an Indian American Social Entrepreneur based out of Chicago, USA & Pune, India, and resides with his mother.
In 2020, he launched the World’s First Halal Angels Network targeting the US$5 Trillion Halal Consumer market, and wants to support the Government of India reach its US$5 Trillion GDP target by 2024.
He is also a founder of TMA Worldwide, a holding company that owns AIMBSN (All India Muslim Business & Startup Network), Editor & Publisher of GCCStartup.News, StartupBerita.com, & HalalBizNews.com