Halal Food Market in Vietnam Small, but Huge Export Opportunity
As a key food manufacturer in Southeast Asia and sharing a maritime border with Indonesia – the world’s most populous Muslim nation, Vietnam is uniquely placed to benefit from rising demand for halal foods. Here’s how.
On a visit to Brunei Darussalam, earlier this month, Vietnam’s Prime Minister Pham Minh Chinh advocated for cooperation with Brunei in several key sectors, one of which was halal food production.
This is in line with similar plans for Vietnam to prioritize halal food production and exports to the two biggest Muslim markets in the ASEAN region: Malaysia and Indonesia.
Despite the strong regional demand for halal products, however, Vietnamese enterprises have found it difficult to penetrate the market. But that is not to say they cannot. A number of food producers are already certified halal and more are slowly entering the market as Vietnam’s potential as a key regional halal food producer is realized.
Halal food market in numbers
The halal food market was valued at over US$2 trillion in 2022, according to the latest report from the IMARC Group. This is a huge market, growing rapidly as Southeast Asian wages rise and consumer purchasing power soars.
Furthermore, approximately 70 percent of the world’s 1.9 billion Muslims live in Asian nations. Specifically, 860 million Muslims live in the Southeast Asia–South Asia–South Pacific region. This area is also the world’s largest consumer of halal food. A market worth US$470 billion in 2018.
And this market is expected to keep expanding with the Pew Research Center estimating that the Asia-Pacific region will have 1.5 billion people or 52.8 percent of all Islamic people by 2050.
Interestingly, non-Muslim majority countries, such as Brazil, the United States, and Russia, account for the majority of halal food production.
Top five countries exporting halal meat to the Organisation of Islamic Cooperation (OIC) countries
Though Vietnam only has very few Muslims, the data suggest that this is unimportant to halal food consumers.
Vietnam’s halal food exports
Domestic enterprises only meet a fraction of the demand of OIC members. According to the Vietnam Halal Center, Vietnam has the potential to produce up to US$34 billion worth of halal goods for OIC nations.
Currently, due to the strict halal criteria on animal food items, Vietnam’s halal exports are primarily farm produce and raw materials. Vietnam’s halal products only account for a small proportion of Vietnam’s overall exports to Islamic markets.
However, the number of businesses obtaining halal certification has been increasing in recent years. About 60 percent of Vietnam’s provinces and cities were producing halal certified goods for export by 2021.
Certification for Vietnam’s halal food producers
To approach Islamic markets, Vietnam’s exporters must acquire halal certification authenticated by an accredited authority.
Halal certification is even more complicated than other certifications due to inconsistencies in the testing process. There is no unified international entity to issue halal certificates. Instead, each country has established its own agencies. It must also meet the country of production’s regulatory standards as well as those of the recipient country. For this reason, regulations for each market vary, which can make it difficult for businesses to meet halal certification requirements.
Halal Certification in ASEAN
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Halal food consumption in Vietnam
The Muslim community in Vietnam is only about 40,000 people strong, however, the purchase and consumption of halal goods is not just driven by religious conviction.
Over the past few years, the demand for halal products has been increasing among non-Muslim consumers. This is a by-product of halal certification requiring products not only meet strict requirements for religious purposes, but also quality control, food safety, and hygiene standards.
Halal certified products have, therefore, become known domestically for their relatively high-quality. This is, however, still a very small domestic market with the real opportunity being in exports.
ASEAN and Vietnam’s halal food industry
A range of FTAs that Vietnam has signed on to have opened up a broad range of opportunities for halal food production and export. These agreements serve as a bridge between Vietnamese businesses and new halal markets particularly in Southeast Asia.
Being a part of ASEAN has linked Vietnam with key halal markets in Asia. The country is also a member of the ASEAN Working Group on Halal Food serving to strengthen ties with the halal consumer markets in the region..
As an extension of this working group, Vietnam and several other countries in ASEAN have started negotiating mutual recognition of halal certification. This is significant for Vietnamese businesses because it will allow them to achieve halal certification more easily and faster in Vietnam, rather than the recipient country.
Vietnam has also engaged in bilateral discussions around halal food with other ASEAN member nations.
Bilateral discussions with Brunei
In his meeting in Brunei earlier this month, Prime Minister Pham Minh Chinh advocated for greater cooperation between Vietnam and Brunei in the field of halal food. Chinh suggested that Vietnam could provide raw materials, and Brunei could process and manufacture halal products for export..
Bilateral discussions with Indonesia
Indonesia has accepted a request from the Vietnam Trade Office to support Vietnamese enterprises to apply for halal certificates. At the same time, the archipelago has also agreed to speed up recognition of the Halal Certification Authority of Vietnam (HCA).
This is good news for Vietnam, as Indonesia’s halal food market is enormous and getting bigger, according to Jennifer Halim, the Assistant Manager of the International Business Advisory of Dezan Shira and Associates’ Jakarta Office.
“As the world’s most populous Muslim country, Indonesia is naturally also the world’s largest Halal market, particularly for the food, tourism, cosmetic, and pharmaceutical sectors,” she said.
“Before the pandemic, global spending on Halal products reached over US$2 trillion with Indonesian consumers spending some 10 percent or over US$200 billion of this total on Halal products and services.”
Bilateral cooperation with Malaysia
Collaboration between Vietnam and Malaysia on halal production and certification has been ongoing for a number of years.
A Memorandum of Understanding (MoUs) between Global Haltech Sdn Bhd and the Vietnam Halal Centre (VHC) outlines a plan to develop and further strengthen standard operating procedures in, and the integrity of, the halal supply chain in Vietnam.
In particular, Malaysia boasts strength in providing halal certificates, training, and building halal product supply chains which will be used to support Vietnam to develop its own supply chain.
Vietnam’s most well known halal food producers
Halal certification can be a barrier to shipping Vietnamese products abroad but becoming certified is not impossible. Two of the biggest, certified halal food producers in Vietnam are TH Milk and Trung Nguyen Legend
Almost all TH Milk’s dairy products have achieved halal certification since 2014. These include high-profile certifications, such as ISO, FSSC, BRC. TH Milk has also been an active participant in halal trade fairs in Singapore and Malaysia in recent years.
Trung Nguyen Legend, a major coffee producer and retailer, has been granted halal certificates for 26 products. As a result, Trung Nguyen Legend has been able to quickly enter the halal market in Muslim-majority countries, such as Malaysia and Indonesia, and is becoming a relatively well-known coffee brand in the region.
The future of halal foods in Vietnam
The halal food industry has a huge global market that is steadily growing as key emerging economies with large Muslim populations begin to enjoy higher spending power. Moreover, halal products are associated with stricter standards, which can be used to brand them positively across markets, irrespective of religious consideration. While Vietnam’s own halal consuming market is small – it enjoys geographical proximity to the world’s biggest markets for halal goods – presenting a big opportunity for producers and export-oriented businesses in Vietnam.
Vietnam’s myriad of free trade agreements beyond the ASEAN region, for example the EVFTA and CPTPP, also create ideal conditions for foreign investors to use Vietnam as a stepping off point for entering Southeast Asia’s lucrative halal food market.
Understanding how best to utilize this opportunity can best be done by consulting the Business Advisory Unit at Dezan Shira and Associates. You can reach our experts by emailing at firstname.lastname@example.org.
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