Halal startups growth hindered by regulatory and education gaps

Varying regulations and awareness are stalling market expansion.  

The global halal industry is expected to hit $7.7 trillion by next year, fueled by growth in sectors like food, cosmetics, and Islamic finance. Yet, as the market expands, startups face significant challenges ranging from regulatory hurdles to consumer education, according to industry experts.  

Startups in the halal sector are struggling with inconsistent regulations across countries and complex certification processes, said Septian Waluyan, Partner at YCP's Indonesia office.

He noted that in key markets like Malaysia and Indonesia, small and medium enterprises (SMEs) face prolonged certification timelines and heavy paperwork. “In the case of Malaysia or Indonesia, a lot of SMEs actually applying to the halal certification might take some time, and also the paperwork that sometimes is quite troublesome,” he said.  

While large corporations can tolerate delays of up to a year, Waluyan pointed out that such wait times could cripple smaller players. “For the big corporations… It's okay to wait for six months to a year for certification. But then for the startups, it might be troublesome already,” he added. Streamlining processes for halal certification bodies could provide much-needed relief for SMEs.  

Umar Munshi, Managing Partner at HASAN Venture Capital, emphasised that while demand for halal products and services exists, startups face difficulties scaling beyond initial market opportunities. “Once that… natural demand is already catered to, then the challenge is for the demand to be bigger and wider,” Munshi said.  

Munshi identified consumer education and awareness as a major hurdle, particularly in non-Muslim markets where halal may not be seen as relevant. “That challenge is something that's directly related to education, understanding and awareness of halal, because in some countries, those who are not from the Muslim faith may not view halal as something for them,” he explained.  

For halal products to achieve wider adoption, Munshi argued that the perception of halal as a universal standard needs to improve. “That education piece, I feel, is the challenge that must be addressed,” he added.  

Both experts highlighted the contributions of non-OIC (Organisation of Islamic Cooperation) countries, particularly Singapore, to the halal market’s growth. Munshi said Singapore plays a critical role in strengthening the ecosystem. “Singapore, it’s a very good example of a non-OIC country that has already been quite involved in halal,” he noted. “Pulling this into the larger, wider halal ecosystem will definitely bring benefits in terms of improving the halal ecosystem, as well as the impact on society.”  

Waluyan agreed, adding that non-OIC nations like Singapore offer opportunities for investment and infrastructure development. “I believe that the non-OIC countries, such as Singapore, can significantly contribute to the market by investing in halal products and services,” Waluyan said. He cited Singapore’s ranking as seventh in the Global Islamic Economic Indicator and its conducive business environment as key advantages.