November 17,
ISEAS - Yusof Ishak Institute
By Syaza Shukri
The halal industry has evolved from a niche religious concern into a phenomenon that connects with economic development and geopolitical strategy. What began as a mechanism to ensure compliance with Islamic dietary laws has expanded into a global industry encompassing sectors such as pharmaceuticals, cosmetics, logistics, and tourism. In 2021, the global market for halal food was valued at US$1,978 billion, and is expected to be worth US$3,907.7 billion by 2027.[1] The halal industry holds such significance for Malaysia that even under pressure from the United States with regards to halal import restrictions in ongoing trade talks, Malaysia remains steadfast in upholding its halal standards.[2] This unwavering stance underscores how deeply ingrained the halal policy is within Malaysia’s economic and cultural framework.
Laluddina et al., in their study, highlight the diverse expansion of the halal sector beyond food and beverages (F&B). They emphasise that halal-certified pharmaceuticals and health products are a growing but underdeveloped niche, while halal cosmetics are projected to become a multibillion-dollar global market.[3] The paper also notes the rise of halal tourism, where compliance in hospitality and services reflects an expanding dimension in halal lifestyle. In Malaysia, the halal sector is also deeply embedded in the state’s political project to present Malaysia as a modern, progressive Muslim-majority nation.
This paper situates the halal industry within the framework of soft power which includes the influence of culture, politics, and foreign policy[4] while also drawing on Peter Mandaville and Shadi Hamid’s concept of “Islam as statecraft” where governments actively deploy Islam as part of their foreign policy repertoire.[5] Just as Mandaville and Hamid demonstrate that Muslim-majority states use Islam to bolster legitimacy, build alliances, and project identity abroad, Malaysia’s halal governance represents a case where religious authority has been translated into economic strategy and foreign policy.
Through institutions like JAKIM and the Halal Industry Development Corporation (HDC), Malaysia has not only established itself as a global authority on halal certification but also shaped the international narrative of what constitutes “trusted” halal. In this sense, halal becomes both a diplomatic resource and a moral brand. Furthermore, Mutual Recognition Agreements (MRAs) play a central role in halal diplomacy by positioning certification not only as a technical trade tool but also as an instrument of international influence. Through MRAs, countries like Malaysia extend the credibility of their domestic halal authority abroad, projecting themselves as standard-setters. This fosters economic diplomacy, as exporters benefit from smoother market access, as well as religious–cultural diplomacy, since recognition of halal standards affirms shared Islamic values.
This article asks whether Malaysia can sustain its normative leadership in the halal sphere amid rising competition from emerging players like Indonesia, and increasing fragmentation in global halal standards. As the global halal economy becomes more contested and commercially saturated, Malaysia faces the challenge of sustaining its soft power.
MAHATHIR AND THE ORIGINS OF HALAL AS SOFT POWER
Mahathir Mohamad’s tenure as Malaysia’s fourth prime minister marked a shift in how Malaysia conceptualised and operationalised Islam within the framework of national development. His Vision 2020, unveiled in 1991, aimed to position Malaysia as a fully developed nation not only in economic and technological terms, but also in its ability to balance modernity with Islamic values. Central to this vision was the strategic integration of Islam into state institutions and policies, a process that scholars often refer to as the bureaucratisation of Islam.[6] The halal industry emerged within this context, not merely as a response to religious obligations but as an instrument of state-led development and identity formation.
However, as Liow argued, JAKIM’s monopoly on halal certification has in effect augmented the state’s hegemony over the practice of Islam, such that even opposition forces have had to subscribe to their established standards. The prominence of JAKIM in this area has also given the state a high degree of visibility in Malaysian society, allowing it in this instance to define the parameters of religiocultural practice.[7]
A key institutional innovation during Mahathir’s era was the formalisation of halal certification under the Department of Islamic Development Malaysia (JAKIM), established in 1997. JAKIM’s role extended beyond religious advisory functions to include the development of halal standards and the regulation of halal products. This transformed halal from an informal cultural-religious practice into a bureaucratised and internationally recognisable certification system, with the state as its central authority. Mahathir’s administration sought not only to give assurance to domestic Muslim consumers but also to position Malaysia as a global leader in halal governance.
By promoting halal as a brand associated with technocratic competence, moral authority, and religious authenticity, Mahathir reframed Islamic governance to be compatible with modern economic development. This narrative allowed Malaysia to present itself as a model for other Muslim-majority countries seeking to harmonise Islam and modernity. Thus, under Mahathir, halal was not merely a regulatory concern but also an instrument of norm-setting and international influence.
ABDULLAH BADAWI AND NORM INSTITUTIONALISATION THROUGH HALAL GOVERNANCE
The leadership transition from Mahathir Mohamad to Abdullah Ahmad Badawi in 2003 marked a moment of continuity and consolidation in the country’s Islamic governance strategy. While Abdullah was less authoritarian “with little of [Mahathir’s] confrontational temperament”,[8] he did not reverse Mahathir’s Islamisation agenda. Instead, he rearticulated it through the framework of Islam Hadhari, a concept aimed at reconciling Islamic principles with modern governance, economic development, and scientific advancement. Within this framework, the halal industry was reaffirmed as a central pillar of Malaysia’s soft power, but now with more explicit institutional and international dimensions.
One of Abdullah Badawi’s most significant contributions to the institutionalisation of Malaysia’s halal strategy was the establishment of the Halal Industry Development Corporation (HDC) in 2006. Unlike JAKIM, which focused on religious certification, HDC was designed to coordinate and promote Malaysia’s halal industry as a key component of national economic growth. HDC’s initiatives bore fruit with Malaysia’s halal exports rising significantly, reaching RM55 billion in 2023, with a target of reaching RM75 billion by 2030.[9] Domestically, the HDC worked to streamline and professionalise the halal supply chain across sectors, whereas internationally, it acted as a trade diplomacy arm, facilitating halal investments, bilateral partnerships, and the international recognition of Malaysian halal standards.
The HDC then launched the Halal Industry Master Plan (HIMP) in 2008.[10] Embedded within the broader context of the Third Industrial Master Plan (IMP3) and the Ninth Malaysia Plan, HIMP envisioned a comprehensive halal ecosystem extending beyond food to include pharmaceuticals, logistics, cosmetics, and Islamic finance. By embedding halal development into long-term national planning, Abdullah ensured that halal would not be treated as a niche concern, but as a mainstream driver of growth and innovation. The latest iteration (HIMP 2030) was launched by Deputy Prime Minister Zahid Hamidi in 2024.[11] This move signaled that halal is a strategic economic asset and a platform for Malaysia’s global engagement.
Abdullah’s administration also invested heavily in international outreach through the organisation of World Halal Forums, trade exhibitions, and policy dialogues that attracted stakeholders from Muslim and non-Muslim countries alike.[12] In doing so, Malaysia advanced a form of state-led norm diffusion, where the state sought to shape how halal was understood, regulated, and consumed globally. This projection of Malaysia as a “halal hub”[13] thus went beyond economic ambitions to become a deliberate soft power strategy for extending Malaysia’s religious and moral influence in the global Islamic economy.
HALAL TODAY: SUCCESS, SYMBOLISM, AND SOFT POWER IN ACTION
Malaysia’s halal industry today represents one of the most comprehensive and institutionalised halal ecosystems globally, extending far beyond food into diverse sectors. By positioning halal as a quality assurance standard with ethical, hygienic, and health-conscious attributes, Malaysia has sought to universalise halal appeal, targeting not only Muslim consumers but also health-conscious and ethical consumer markets worldwide. The halalan toyyibanprinciple underscores that halal is inseparable from notions of quality and safety, and in Malaysia this is institutionalised through MS 1500:2009, which embeds shariah compliance into internationally recognised food safety and hygiene systems.[14]
At the heart of this ecosystem lies JAKIM, whose halal certification has become one of the most widely accepted in the world. JAKIM functions as an instrument of religious legitimacy and bureaucratic soft power. Its certification is recognised in 47 countries, and is often advantageous for companies seeking access to Muslim markets to possess.[15] This gives Malaysia leverage in the global halal economy and strengthens its normative leadership. In fact, Malaysia has occupied the first position for 11 consecutive years in the Global Islamic Economic Index, of which halal certification is one of the key indicators.[16]
However, Malaysia’s halal project is not without contradictions. Domestically, the system has faced criticism over bureaucratic inefficiencies and public controversies that undermine trust. Halal has occasionally been weaponised in public discourse to signal moral superiority, enforce socio-political boundaries, or punish perceived ideological dissent. A notable recent flashpoint in the debate over the meaning and misuse of “halal” in Malaysia was the “ham and cheese sandwich” controversy involving a chicken ham product sold at a KK Mart outlet at Universiti Malaya. Though the sandwich contained no pork,[17] it was labelled simply as “ham”, and bore a halal logo. However, the supplier did not hold official halal certification from JAKIM, making the use of the official logo unauthorised. These tensions reveal the limits of state-led religious governance when confronted with consumer skepticism and political contestation.
CHALLENGE TO MALAYSIA’S HALAL HEGEMONY
While Malaysia has long enjoyed first-mover advantage in the global halal industry, its leadership is now increasingly challenged by rising competitors; most notable of these is Indonesia, which possesses sufficient demographic scale and symbolic capital to rival Malaysian soft power in the Muslim world. As the country with the world’s largest Muslim population, Indonesia commands significant moral and market influence. For years, its halal sector had remained decentralised and largely informal, but recent institutional reforms have radically transformed its positioning.
The passage of the Halal Product Assurance Law in 2014, and the subsequent establishment of the Badan Penyelenggara Jaminan Produk Halal (BPJPH) in 2017, marked a decisive shift. The law mandated halal certification for a wide range of goods and services, effectively centralising what had previously been a fragmented regulatory landscape.[18] Under President Joko Widodo, Indonesia has moved to institutionalise and formalise halal standards through cooperation with the Indonesian Ulama Council (MUI), and state-driven market expansion.[19] While Indonesia formalised mandatory halal certification in 2014, implementation has been slow, with BPJPH struggling to coordinate effectively with the MUI and newly-established halal audit institutions (Lembaga Pemeriksa Halal, LPH).[20]
Indonesia’s Masterplan Ekonomi Syariah Indonesia (MEKSI) 2019–2024 represents the state’s first comprehensive attempt to align halal industry development with broader national economic strategy. This has given rise to a comprehensive halal economy roadmap, which seeks to integrate halal governance into national industrial planning, mirroring the earlier Malaysian model. However, Syafiq Hasyim argues that Indonesia’s halal project is emblematic of broader shariatisation, where religious norms become codified in state law and daily life. This transformation has reshaped institutional authority, intensified debates around the theological rigidity of the Shafi’i school versus market-driven flexibility, and triggered concerns over minority rights.[21]
Indonesia’s halal tourism sector also suffers from fragmented certification, inconsistent promotion across provinces, and limited global visibility despite its rich Islamic heritage and diverse landscapes. In the Global Muslim Travel Index 2025 which tracks Muslim-friendly destinations, Indonesia is ranked fifth behind Malaysia, Turkiye, Saudi Arabia, and the United Arab Emirates.[22] This highlights how Indonesia’s halal diplomacy remains more aspirational than consolidated.
At the same time, other countries have entered the fray. Thailand’s “Kitchen of the World” initiative seeks to capture a share of the halal food market by leveraging its agricultural exports and food-processing infrastructure.[23] The Central Islamic Council of Thailand (CICOT) is the highest Islamic authority in the country to be officially recognised by the Thai government. CICOT oversees halal certification in Thailand, particularly through its Halal Standard Institute of Thailand (HSIT). In the Middle East, countries such as Qatar and Saudi Arabia are developing in-house halal certification systems when previously, Saudi Arabia only required halal certification for imported meat and meat-based products.[24] Ministry of Industry and Advanced Technology of the United Arab Emirates functions as the national regulator in the halal sector. It sets and enforces halal standards and conformity assessments and oversees the UAE Halal Certification Scheme. These moves reflect a broader fragmentation of global halal standards, with regional powers asserting their own regulatory systems.
Halal manufacturing and exporting is not limited to Muslim-majority countries or within Asia; many Western countries have become major players as well, serving both Muslim consumers at home and exporting to halal markets abroad. For example, Australia, Brazil, Russia, the U.K. and the U.S. are among the biggest halal suppliers in the West, with Brazil and Australia ranking as leading exporters of halal meat.[25] Moreover, established Western companies like Nestlé and Unilever have developed halal-certified product lines to meet global demand.[26] These examples show that halal production is more than just religious compliance, and many non-Muslim countries and companies are deeply involved in the industry.
While Malaysia continues to position itself as the global halal hub, other countries in Asia present notable challenges that could reshape its leadership. As explained by Rozaidah Idris et al.,[27] Brunei Darussalam leverages the credibility of a single, state-led certification system. Japan, though a non-Muslim country, has innovated in halal logistics and tourism to capture inbound Muslim markets, signalling new competition in niche areas. China, meanwhile, commands vast domestic demand and links its halal ambitions with the Belt and Road Initiative. These developments underscore that Malaysia’s leadership requires continuous innovation and diplomacy if it is to remain the benchmark for halal integrity and governance. For example, the mutual halal certification agreement between Malaysia and Indonesia is a significant step towards streamlining regulations and enhancing trade efficiency.[28] This initiative is poised to strengthen bilateral ties and elevate Malaysia’s soft power, fostering collaboration rather than competition with neighbouring countries.
ISEAS - Yusof Ishak Institute
By Syaza Shukri
The halal industry has evolved from a niche religious concern into a phenomenon that connects with economic development and geopolitical strategy. What began as a mechanism to ensure compliance with Islamic dietary laws has expanded into a global industry encompassing sectors such as pharmaceuticals, cosmetics, logistics, and tourism. In 2021, the global market for halal food was valued at US$1,978 billion, and is expected to be worth US$3,907.7 billion by 2027.[1] The halal industry holds such significance for Malaysia that even under pressure from the United States with regards to halal import restrictions in ongoing trade talks, Malaysia remains steadfast in upholding its halal standards.[2] This unwavering stance underscores how deeply ingrained the halal policy is within Malaysia’s economic and cultural framework.
Laluddina et al., in their study, highlight the diverse expansion of the halal sector beyond food and beverages (F&B). They emphasise that halal-certified pharmaceuticals and health products are a growing but underdeveloped niche, while halal cosmetics are projected to become a multibillion-dollar global market.[3] The paper also notes the rise of halal tourism, where compliance in hospitality and services reflects an expanding dimension in halal lifestyle. In Malaysia, the halal sector is also deeply embedded in the state’s political project to present Malaysia as a modern, progressive Muslim-majority nation.
This paper situates the halal industry within the framework of soft power which includes the influence of culture, politics, and foreign policy[4] while also drawing on Peter Mandaville and Shadi Hamid’s concept of “Islam as statecraft” where governments actively deploy Islam as part of their foreign policy repertoire.[5] Just as Mandaville and Hamid demonstrate that Muslim-majority states use Islam to bolster legitimacy, build alliances, and project identity abroad, Malaysia’s halal governance represents a case where religious authority has been translated into economic strategy and foreign policy.
Through institutions like JAKIM and the Halal Industry Development Corporation (HDC), Malaysia has not only established itself as a global authority on halal certification but also shaped the international narrative of what constitutes “trusted” halal. In this sense, halal becomes both a diplomatic resource and a moral brand. Furthermore, Mutual Recognition Agreements (MRAs) play a central role in halal diplomacy by positioning certification not only as a technical trade tool but also as an instrument of international influence. Through MRAs, countries like Malaysia extend the credibility of their domestic halal authority abroad, projecting themselves as standard-setters. This fosters economic diplomacy, as exporters benefit from smoother market access, as well as religious–cultural diplomacy, since recognition of halal standards affirms shared Islamic values.
This article asks whether Malaysia can sustain its normative leadership in the halal sphere amid rising competition from emerging players like Indonesia, and increasing fragmentation in global halal standards. As the global halal economy becomes more contested and commercially saturated, Malaysia faces the challenge of sustaining its soft power.
MAHATHIR AND THE ORIGINS OF HALAL AS SOFT POWER
Mahathir Mohamad’s tenure as Malaysia’s fourth prime minister marked a shift in how Malaysia conceptualised and operationalised Islam within the framework of national development. His Vision 2020, unveiled in 1991, aimed to position Malaysia as a fully developed nation not only in economic and technological terms, but also in its ability to balance modernity with Islamic values. Central to this vision was the strategic integration of Islam into state institutions and policies, a process that scholars often refer to as the bureaucratisation of Islam.[6] The halal industry emerged within this context, not merely as a response to religious obligations but as an instrument of state-led development and identity formation.
However, as Liow argued, JAKIM’s monopoly on halal certification has in effect augmented the state’s hegemony over the practice of Islam, such that even opposition forces have had to subscribe to their established standards. The prominence of JAKIM in this area has also given the state a high degree of visibility in Malaysian society, allowing it in this instance to define the parameters of religiocultural practice.[7]
A key institutional innovation during Mahathir’s era was the formalisation of halal certification under the Department of Islamic Development Malaysia (JAKIM), established in 1997. JAKIM’s role extended beyond religious advisory functions to include the development of halal standards and the regulation of halal products. This transformed halal from an informal cultural-religious practice into a bureaucratised and internationally recognisable certification system, with the state as its central authority. Mahathir’s administration sought not only to give assurance to domestic Muslim consumers but also to position Malaysia as a global leader in halal governance.
By promoting halal as a brand associated with technocratic competence, moral authority, and religious authenticity, Mahathir reframed Islamic governance to be compatible with modern economic development. This narrative allowed Malaysia to present itself as a model for other Muslim-majority countries seeking to harmonise Islam and modernity. Thus, under Mahathir, halal was not merely a regulatory concern but also an instrument of norm-setting and international influence.
ABDULLAH BADAWI AND NORM INSTITUTIONALISATION THROUGH HALAL GOVERNANCE
The leadership transition from Mahathir Mohamad to Abdullah Ahmad Badawi in 2003 marked a moment of continuity and consolidation in the country’s Islamic governance strategy. While Abdullah was less authoritarian “with little of [Mahathir’s] confrontational temperament”,[8] he did not reverse Mahathir’s Islamisation agenda. Instead, he rearticulated it through the framework of Islam Hadhari, a concept aimed at reconciling Islamic principles with modern governance, economic development, and scientific advancement. Within this framework, the halal industry was reaffirmed as a central pillar of Malaysia’s soft power, but now with more explicit institutional and international dimensions.
One of Abdullah Badawi’s most significant contributions to the institutionalisation of Malaysia’s halal strategy was the establishment of the Halal Industry Development Corporation (HDC) in 2006. Unlike JAKIM, which focused on religious certification, HDC was designed to coordinate and promote Malaysia’s halal industry as a key component of national economic growth. HDC’s initiatives bore fruit with Malaysia’s halal exports rising significantly, reaching RM55 billion in 2023, with a target of reaching RM75 billion by 2030.[9] Domestically, the HDC worked to streamline and professionalise the halal supply chain across sectors, whereas internationally, it acted as a trade diplomacy arm, facilitating halal investments, bilateral partnerships, and the international recognition of Malaysian halal standards.
The HDC then launched the Halal Industry Master Plan (HIMP) in 2008.[10] Embedded within the broader context of the Third Industrial Master Plan (IMP3) and the Ninth Malaysia Plan, HIMP envisioned a comprehensive halal ecosystem extending beyond food to include pharmaceuticals, logistics, cosmetics, and Islamic finance. By embedding halal development into long-term national planning, Abdullah ensured that halal would not be treated as a niche concern, but as a mainstream driver of growth and innovation. The latest iteration (HIMP 2030) was launched by Deputy Prime Minister Zahid Hamidi in 2024.[11] This move signaled that halal is a strategic economic asset and a platform for Malaysia’s global engagement.
Abdullah’s administration also invested heavily in international outreach through the organisation of World Halal Forums, trade exhibitions, and policy dialogues that attracted stakeholders from Muslim and non-Muslim countries alike.[12] In doing so, Malaysia advanced a form of state-led norm diffusion, where the state sought to shape how halal was understood, regulated, and consumed globally. This projection of Malaysia as a “halal hub”[13] thus went beyond economic ambitions to become a deliberate soft power strategy for extending Malaysia’s religious and moral influence in the global Islamic economy.
HALAL TODAY: SUCCESS, SYMBOLISM, AND SOFT POWER IN ACTION
Malaysia’s halal industry today represents one of the most comprehensive and institutionalised halal ecosystems globally, extending far beyond food into diverse sectors. By positioning halal as a quality assurance standard with ethical, hygienic, and health-conscious attributes, Malaysia has sought to universalise halal appeal, targeting not only Muslim consumers but also health-conscious and ethical consumer markets worldwide. The halalan toyyibanprinciple underscores that halal is inseparable from notions of quality and safety, and in Malaysia this is institutionalised through MS 1500:2009, which embeds shariah compliance into internationally recognised food safety and hygiene systems.[14]
At the heart of this ecosystem lies JAKIM, whose halal certification has become one of the most widely accepted in the world. JAKIM functions as an instrument of religious legitimacy and bureaucratic soft power. Its certification is recognised in 47 countries, and is often advantageous for companies seeking access to Muslim markets to possess.[15] This gives Malaysia leverage in the global halal economy and strengthens its normative leadership. In fact, Malaysia has occupied the first position for 11 consecutive years in the Global Islamic Economic Index, of which halal certification is one of the key indicators.[16]
However, Malaysia’s halal project is not without contradictions. Domestically, the system has faced criticism over bureaucratic inefficiencies and public controversies that undermine trust. Halal has occasionally been weaponised in public discourse to signal moral superiority, enforce socio-political boundaries, or punish perceived ideological dissent. A notable recent flashpoint in the debate over the meaning and misuse of “halal” in Malaysia was the “ham and cheese sandwich” controversy involving a chicken ham product sold at a KK Mart outlet at Universiti Malaya. Though the sandwich contained no pork,[17] it was labelled simply as “ham”, and bore a halal logo. However, the supplier did not hold official halal certification from JAKIM, making the use of the official logo unauthorised. These tensions reveal the limits of state-led religious governance when confronted with consumer skepticism and political contestation.
CHALLENGE TO MALAYSIA’S HALAL HEGEMONY
While Malaysia has long enjoyed first-mover advantage in the global halal industry, its leadership is now increasingly challenged by rising competitors; most notable of these is Indonesia, which possesses sufficient demographic scale and symbolic capital to rival Malaysian soft power in the Muslim world. As the country with the world’s largest Muslim population, Indonesia commands significant moral and market influence. For years, its halal sector had remained decentralised and largely informal, but recent institutional reforms have radically transformed its positioning.
The passage of the Halal Product Assurance Law in 2014, and the subsequent establishment of the Badan Penyelenggara Jaminan Produk Halal (BPJPH) in 2017, marked a decisive shift. The law mandated halal certification for a wide range of goods and services, effectively centralising what had previously been a fragmented regulatory landscape.[18] Under President Joko Widodo, Indonesia has moved to institutionalise and formalise halal standards through cooperation with the Indonesian Ulama Council (MUI), and state-driven market expansion.[19] While Indonesia formalised mandatory halal certification in 2014, implementation has been slow, with BPJPH struggling to coordinate effectively with the MUI and newly-established halal audit institutions (Lembaga Pemeriksa Halal, LPH).[20]
Indonesia’s Masterplan Ekonomi Syariah Indonesia (MEKSI) 2019–2024 represents the state’s first comprehensive attempt to align halal industry development with broader national economic strategy. This has given rise to a comprehensive halal economy roadmap, which seeks to integrate halal governance into national industrial planning, mirroring the earlier Malaysian model. However, Syafiq Hasyim argues that Indonesia’s halal project is emblematic of broader shariatisation, where religious norms become codified in state law and daily life. This transformation has reshaped institutional authority, intensified debates around the theological rigidity of the Shafi’i school versus market-driven flexibility, and triggered concerns over minority rights.[21]
Indonesia’s halal tourism sector also suffers from fragmented certification, inconsistent promotion across provinces, and limited global visibility despite its rich Islamic heritage and diverse landscapes. In the Global Muslim Travel Index 2025 which tracks Muslim-friendly destinations, Indonesia is ranked fifth behind Malaysia, Turkiye, Saudi Arabia, and the United Arab Emirates.[22] This highlights how Indonesia’s halal diplomacy remains more aspirational than consolidated.
At the same time, other countries have entered the fray. Thailand’s “Kitchen of the World” initiative seeks to capture a share of the halal food market by leveraging its agricultural exports and food-processing infrastructure.[23] The Central Islamic Council of Thailand (CICOT) is the highest Islamic authority in the country to be officially recognised by the Thai government. CICOT oversees halal certification in Thailand, particularly through its Halal Standard Institute of Thailand (HSIT). In the Middle East, countries such as Qatar and Saudi Arabia are developing in-house halal certification systems when previously, Saudi Arabia only required halal certification for imported meat and meat-based products.[24] Ministry of Industry and Advanced Technology of the United Arab Emirates functions as the national regulator in the halal sector. It sets and enforces halal standards and conformity assessments and oversees the UAE Halal Certification Scheme. These moves reflect a broader fragmentation of global halal standards, with regional powers asserting their own regulatory systems.
Halal manufacturing and exporting is not limited to Muslim-majority countries or within Asia; many Western countries have become major players as well, serving both Muslim consumers at home and exporting to halal markets abroad. For example, Australia, Brazil, Russia, the U.K. and the U.S. are among the biggest halal suppliers in the West, with Brazil and Australia ranking as leading exporters of halal meat.[25] Moreover, established Western companies like Nestlé and Unilever have developed halal-certified product lines to meet global demand.[26] These examples show that halal production is more than just religious compliance, and many non-Muslim countries and companies are deeply involved in the industry.
While Malaysia continues to position itself as the global halal hub, other countries in Asia present notable challenges that could reshape its leadership. As explained by Rozaidah Idris et al.,[27] Brunei Darussalam leverages the credibility of a single, state-led certification system. Japan, though a non-Muslim country, has innovated in halal logistics and tourism to capture inbound Muslim markets, signalling new competition in niche areas. China, meanwhile, commands vast domestic demand and links its halal ambitions with the Belt and Road Initiative. These developments underscore that Malaysia’s leadership requires continuous innovation and diplomacy if it is to remain the benchmark for halal integrity and governance. For example, the mutual halal certification agreement between Malaysia and Indonesia is a significant step towards streamlining regulations and enhancing trade efficiency.[28] This initiative is poised to strengthen bilateral ties and elevate Malaysia’s soft power, fostering collaboration rather than competition with neighbouring countries.
THE FUTURE OF HALAL DIPLOMACY
The entrenchment of the halal industry within Malaysia’s economic and diplomatic architecture makes a full reversal of its global role highly unlikely. Over the past three decades, halal has become deeply embedded in Malaysia’s international identity, functioning as both a national brand and a tool of cultural diplomacy. Malaysia’s halal industry has emerged as a crucial instrument of its soft power, enabling the country to strengthen diplomatic engagements across both Muslim and non-Muslim contexts. By positioning itself as a global leader in halal certification and standard-setting, Malaysia projects cultural and religious legitimacy. As Anwar Ibrahim has highlighted, the persistent international demand for Malaysia’s halal expertise reflects the credibility of its institutions.[29] This credibility enables Malaysia to extend influence beyond trade by shaping global halal norms and creating pathways for trust-based partnerships.
The diplomatic implications of halal cooperation are evident in Malaysia’s growing partnerships with countries such as Senegal and Japan. In West Africa, halal engagement forms part of broader collaborations in trade, haj management, and waqf, thus embedding Malaysia within the socio-economic fabric of Muslim societies.[30] With Japan, a non-Muslim majority country, halal trade and certification cooperation not only expand Malaysia’s export base but also enhance its role as a bridge between Muslim and non-Muslim worlds.[31] In both cases, halal functions as a form of normative power that aligns economic diplomacy with cultural diplomacy. Through these initiatives, Malaysia leverages its halal industry as a strategic platform for cultivating long-term diplomatic goodwill through cooperation in trade and investment.[32]
Nevertheless, maintaining influence in an increasingly competitive and fragmented global halal market demands more than historical legitimacy. Soft power, by nature, is not static. It must be continuously cultivated and adapted to remain persuasive. Malaysia’s current halal strategy, while institutionally robust, risks stagnation if it fails to evolve alongside shifting consumer expectations and geopolitical dynamics. The next phase of halal soft power must align with contemporary global concerns, particularly around ethics, sustainability, and social responsibility. One promising path forward is the promotion of “ethical halal” in addition to halalan toyyiban, which expands the concept of halal beyond ritual compliance to encompass issues such as environmental sustainability, labour rights, and animal welfare. In Malaysia, the halal industry has been embraced by non-Muslim companies; these play a pivotal role in its success, given their dominance in most of Malaysia’s industries.[33] This also demonstrates that halal products can be more aggressively marketed even in non-Muslim-majority societies as well, therewith enhancing Malaysia’s soft power and inclusive approach.
Another problem is the proliferation of unauthorised halal logos. Fraudulent use of logos such as in the ham sandwich scandal enables actors to bypass established certification processes. In this regard, technological innovation offers a promising solution. The adoption of blockchain technologies for halal certification and traceability can create a transparent and tamper-proof ledger that records every stage of production, distribution, and certification. Rather than relying solely on a printed logo, consumers and regulators could verify the authenticity of a product through digital records accessible via QR codes or similar tools.[34]
Additionally, Malaysia could maintain its leadership role by championing regional coordination, such as developing an ASEAN Halal Standard to streamline trade within the region, and reaffirming its authority in halal governance.
Finally, linking halal governance to Malaysia Madani, which is the current administration’s values-based development vision, is a unique normative proposition. By aligning halal with Madani principles of ethics, justice, and moderation, Malaysia can promote a distinct halal model that resonates both spiritually and socially. Beyond mere rhetoric, Anwar Ibrahim’s government is as dedicated as his predecessors to expanding Malaysia’s halal industry. The administration has announced plans to establish a Malaysian Halal Commission and develop Halal Industrial Parks in three states. These initiatives are projected to boost the halal export value to RM80 billion.[35] This not only revitalises Malaysia’s soft power credentials but also positions the country as a thought leader in the next phase of global halal discourse. As reminded by the prime minister himself during his speech at the Global Halal Summit 2025, “halal is more than just a label, it is an international symbol of trust.”[36]
For endnotes, please refer to the original pdf document.
About the author: Syaza Shukri is Visiting Senior Fellow at the ISEAS – Yusof Ishak Institute and an Associate Professor at the International Islamic University Malaysia.
Source: This article was published by ISEAS – Yusof Ishak Institute
ISEAS - Yusof Ishak Institute
The Institute of Southeast Asian Studies (ISEAS), an autonomous organization established by an Act of Parliament in 1968, was renamed ISEAS - Yusof Ishak Institute in August 2015. Its aims are: To be a leading research centre and think tank dedicated to the study of socio-political, security, and economic trends and developments in Southeast Asia and its wider geostrategic and economic environment. To stimulate research and debate within scholarly circles, enhance public awareness of the region, and facilitate the search for viable solutions to the varied problems confronting the region. To serve as a centre for international, regional and local scholars and other researchers to do research on the region and publish and publicize their findings. To achieve these aims, the Institute conducts a range of research programmes; holds conferences, workshops, lectures and seminars; publishes briefs, research journals and books; and generally provides a range of research support facilities, including a large library collection.
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