Viabilities of manufacturing halal food products in the Republic of Korea

Table of Contens

CHAPTER 1: INTRODUCTION
1.1: BACKGROUND OF STUDY
1.2: AIM AND OBJECTIVES
1.3: RESEARCH QUESTIONS
1.4: METHODOLOGY
1.5: SIGNIFICANCE OF THE STUDY
1.6: LIMITATION OF THE STUDY

CHAPTER 2: LITERATURE REVIEW
2.1: INTRODUCTION – WHAT IS HALAL?
2.2: HALAL MARKET AND THE VALUE OF HALAL FOOD
2.3: ISLAMIC SLAUGHTERING METHOD FOR HALAL ANIMAL MEAT
2.4: HALAL CERTIFICATION
2.5: GLOBAL HALAL FOOD PIONEERS

CHAPTER 3: Halal food industry in Korea
3.1: INTRODUCTION
3.2: HISTORY OF ISLAM IN KOREA
3.3: MUSLIM POPULATION IN KOREA
3.4: MUSLIMS FOOD CONSUMPTION IN KOREA
3.5: (KMF) HALAL CERTIFICATION
3.6: THE CURRENT STATUS OF HALAL INDUSTRY IN KOREA
3.7: CHALLENGES IN DEVELOPING HALAL INDUSTRY

CHAPTER 4: THE VIABILITY OF MANUFACTURING HALAL FOOD PRODUCTS IN KOREA
4.1: SWOT ANALYSIS
4.2: VIABILITY OF THE HALAL ANIMAL MEAT FACILITY
4.3: TOWS MATRIX - POTENTIAL STRATEGY
4.4: RECOMMENDATIONS

CHAPTER 5: CONCLUSION

BIBLIOGRAPHY

Abstract

There are about 1.6 billion Muslims out of approximately 7.2 billion of the total population of the world and they are not only within the confines of the Arabian Gulf States but widespread all around the world. Along with the spread of Muslim population around the world, halal industry is highlighted as significant growing industry – a new “Blue ocean” in global market, not an exclusive to Muslim nation-states. The concept of “Halal” refers to “lawful” according to Islamic law, which recognised as a standard for food, products, behaviours and services that are allowed for Muslims to consume (Esposito, 2003; Burhan, 2000). Halal certificate is given as an evidence of Halal product. Current top exporters of halal products are non-Muslim countries, and many global corporations attempt to produce halal certified products. It seems quite late for Republic of Korea(“Korea”) to join the trend, however, Korea has signed a memorandum of understanding with the UAE on cooperation in halal food and agriculture – as a starting point of the government efforts to highlight Halal industry as a national economic strategy. This study will specifically focus on the possibilities for establishing the halal product manufacturing facilities for the production of slaughtered halal animal meat at the initial stage, prior to examining the viabilities of developing and expanding the industry.

List of Figures

Figure 2.2: JAKIM halal certification evaluation process

Figure 2.3: MUIS halal certification process

Figure 2.4: MUI halal certification process

Figure 3.1: Diet behaviour of Muslim tourists visit to Korea

Figure 3.2: Places of food items purchase by temporary visiting Muslims to Korea

Figure 4.1: Potential impacts of halal meat manufacturing industry to Korea

List of Tables

Table 2.1: Primary instances of non-halal or haram products

Table 2.2: Top ten countries with the largest number of Muslims

Table 2.3: World Muslim population by region

Table 2.4: Top Muslim food consumption market by size in

Table 2.5: Meat and live animals

Table 2.5(a): Meat and live animals – Top exporters to OIC countries

Table 2.5(b): Meat and live animals – Top importers within OIC countries

Table 2.6: Malaysian Standards (MS) development

Table 2.7: Comparison of the requirements – MS1500: 2004 and MS1500:

Table 2.8: Administration of Muslim Law Act in Singapore – 88A(1) & 88(5)

Table 2.9: Types of halal certification schemes

Table 2.10: Meaning of HAS document by applicant category

Table 2.11: Rules of LPPOM MUI Halal certification process applied to the HAS certificate holder

Table 2.12: JAKIM certification application fee

Table 3.1: Muslim visitors to Korea from 2012 –

Table 3.2: Top five countries - Muslim visitors to Korea from 2012 –

Table 3.3: Places of food consumption and frequently purchased food items of Muslims residing in Korea

Table 3.4: KTO Muslim Friendly Restaurant classification

Table 4.1: SWOT analysis

Table 4.2: TOWS matrix

List of Abbreviations

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Exploring the viabilities of manufacturing halal food products in Republic of Korea

Youri Oh

CHAPTER 1: INTRODUCTION

1.1: BACKGROUND OF STUDY

There are about 1.6 billion Muslim population in the world, which is one fifth of the world population, and they are not only within the confines of the Arabian Gulf states but widespread all around the world (Ireland & Rajabzadeh, 2011; Pew Research Center, 2012). Followed by an analysis conducted by Pew Research Center (2012), Muslim population make up about 23% of the world’s population and is expected to reach 26.4% of in a decade’s time, which is equivalent to 10 per cent annual growth of the industry. Muslim communities were created by ties of Islam that bound all Muslims together, requiring them to comply with the basic requirement of the religion in their way of life. However, diversity may be identified among Muslims by differences in appearance, culture, customs and lifestyle through the spread of Islam. Along with the widespread and rapid growth of Muslim population globally, halal industry is highlighted as a significant growing industry – a new “Blue ocean” (KPMG International, 2015; MOTIE & KOTRA, 2015) in global market.

According to the Oxford Dictionary of Islam, Halal refers to “lawful” and “permissible” in Islamic law, which recognised as a standard for food, products, behaviours and services that are allowed for Muslims to consume (Esposito, 2003). Initially, halal industry seems only relevant to Muslim-majority countries, however, it is now increasingly spreading to non-Islamic nation-states. Muslim consumers identify halal food and non-food products as obligatory to consume and use, and non-Muslim consumers often recognise halal food and non-food products as good quality (Riaz & Chaudry, 2004) and healthy because they are specially processed with strict requirements to prevent harms and for the highest standards of Tahara – physical sense of purity, hygiene and quality. Halal certification increasingly gains its trust globally, not only as a religious matter of choice but as a method of accreditation of safety, for example, Malaysian government requests all halal certification applicants to submit Good Manufacturing Practices (GMP) and Hazard Analysis Critical Control Point (HACCP) to ascertain the safety of food to be consumed. Major industrial manufacturing sectors where halal certifications apply are food, cosmetic, beverages, medicines and Islamic finance and seem to extend further in tourism and logistics. Therefore, halal industry is inclusive of food, non-food commodities and those sectors stated above, and can be further applied to everything that relates to human beings lifestyle in general.

Halal certification is given as a guarantee of the ‘halalness’ of halal products, and this is confined by Kang (2016) that halal certification is given as an evidence of halal product. There are several halal certification agents globally and some are highly recognised, such as Jabatan Kemajuan Islam Malaysia (JAKIM) – Malaysia, Majlis Ugama Islam Singapura (MUIS) – Singapore, and Islamic Food, Emirates Authority For Standardization and Metrology (ESMA) – United Arab Emirates and Islamic Food and Nutrition Council of America (IFANCA) – The United States, for example. Each halal certification requires different standards due to its differences in geographic location, Islamic school, customs or tradition and branch of Islam: Sunni or Shia and so are the requirements of those certification-awarding bodies. Also there are issues in importation and exportation of the halal food that countries differ in their recognition of halal standards or preferences on specific halal certification. Therefore, it is important to choose convincing halal certification agents to avoid rage and offence from consumers and rejection by the government.

Halal food industry is the most significant industry among the halal industries because of human beings eating habit and huge consumption for food and there are many well-established Halal guidelines on food. According to the State of the Global Islamic Economy Report by Thomson Reuters, Muslims spending on food and beverages reached US $1.3 billion in 2013 and the demand for halal food still increases although the global economy is in crisis. Therefore the industry has been recognised as a safe investment market. Growth of halal food industry is expected along with increases in demand and consumption, which eventually leads to an increase of halal food supply. Halal cosmetics ranked as the second significant market in the halal industry after halal food, and pharmaceuticals, clothes, tourism and media follows (Thomson Reuters, 2015).

Current top exporters of halal products are non-Muslim countries: Brazil, India, USA, China, Australia, France, Russia and etc. Besides these, there are many global corporations which attempt to accredit their products with halal certification for the purpose of entering halal industry market. Nestlé, Saffron Road, Coca-cola, Danone, Tahira Foods and Al-Islami are well-known major international halal food manufacturing corporations. Not only corporations but also at government level, various support and efforts have been made such as in Rotterdam, the Netherlands, which established halal warehouse thereby completely separating pork and alcohol, and Thailand announced its ambition to be the top halal exporter, the establishment of halal centres for effective management of halal food and its manufacturing. China, Russia and France have been benefiting from halal food industry since they have started to invest largely in halal industry from its great market potential. Currently Japan is keen on halal food industry, at about 230 Japanese corporations are positively seeking to introduce halal products (Kim, 2015) and looking for global halal cooperation with halal certification agents. Accordingly, Republic of Korea (“Korea”) has shown interest in halal food industry.

In 2015, Korea signed a memorandum of understanding with the UAE on cooperation in halal food and agriculture. It is a starting point to venture into the industry that the government highlights halal industry as one of the national economic strategies. The government also has planned to establish a halal industry complex to benefit its economy and to develop the suggested area. However, there are barriers to develop halal food industry as evidenced from recent movement against halal industry on the launching of halal food industry cluster in Iksan, Jeolla province. The plan has deferred due to the protests by publics (e.g.) Drop plan for Iksan Halal food (Hwang, 2016b). Muslim community is still a minority group in Korea – only approximately 35,000 are Korean-Muslims, while 100,000 foreign-Muslims residing in Korea (KMF, 2016), therefore it would be difficult to promote halal industry. Moreover, small Muslim population in Korea raises issue on lack of manpower to process halal food manufacturing if to develop the industry. The Korea Muslim Federation (KMF) is majority halal certification awarding agent in Korea, however, its recognition is only valid in Malaysia and local market but others. For example, Indonesia refused to authorize halal food products accredited by KMF Halal. If then, Korea should seek alternative method to overcome, this problem would be a matter of choice either to choose convincing halal certification or to promote current local halal certification to be more convincing globally.

This study will specifically focus on halal animal meat manufacturing facility at initial stage prior to establishment of halal food manufacturing facilities; and the viabilities of expanding the industry.

1.2: AIM AND OBJECTIVES

This study aims to explore the potentials of producing halal food products in Korea as halal animal meat manufacturing facility at primary stage; and to examine the viability of developing halal food manufacturing industry.

The objectives are:

1) to examine the current global halal market size and the value of halal food;
2) to investigate the current status of halal food industry in Korea (the physical, manpower and institutional infrastructures);
3) to investigate main challenges in establishing such industries in Korea; and
4) to investigate the potentials on halal meat producing industry in Korea.

1.3: RESEARCH QUESTIONS

1) Why is Korea interested in developing halal food manufacturing industry?
2) What are the challenges in developing such industry in Korea?

1.4: METHODOLOGY

This study is based on qualitative method, using collected data and information from existing literatures. To examine the potential of halal food manufacturing industry for Korea, data from secondary sources will be used to explore the value of halal industry. Requirements for halal food and halal certification are investigated throughout by referring to relevant publications and Internet sources from halal certification authorities’ guidelines, international halal website, and research report. To understand the current status of “Halal” in Korea, data are collected from newspapers, reports and other literature sources, mainly from Korean government agencies or Islam-related agencies. In literature review, prior to studying halal industry, meaning of “Halal” will be investigated to understand the links between Islam and halal. The status of “Halal” in the global market and its value will also be investigated. Since the study focuses on halal animal meat as the basis of halal product manufacturing facility, method and process of slaughtering halal animal meat will also be explained. The final section of the literature review will introduce halal certification with its role and current global status, and investigate three halal certification among internationally well-recognised halal certification authorities: JAKIM, MUI, and MUIS. In Findings & Analysis section, this chapter will examine viability of halal food manufacturing industry in Korea. Viabilities of halal food manufacturing industry will be investigated from secondary sources and analysed through SWOT analysis, which enables to identify the internal and external factors includes advantages, disadvantages, challenges and acceptability towards viability of the industry if to establish the industry in Korea. In addition, TOWS matrix is used to figure out strategies to develop halal manufacturing industry in Korea and overcome major challenges based on the SWOT analysis. Potentials of sustaining halal food manufacturing industry in Korea will be investigated by supposing the establishment of halal animal meat manufacturing facility as a cornerstone. The study will deduce suggestions based on the status of global halal industry and current status of halal industry in Korea to conclude the study.

1.5: SIGNIFICANCE OF THE STUDY

Halal industry is certainly an expanding niche market, bringing huge benefits to Muslim and non-Muslim countries. Korea is now ready to step forward into global halal market, while many countries have already been competing (e.g. Australia, Brazil, Thailand and etc). There are not much research conducted in Korea yet regarding halal industry. This study aims to explore halal market size and values of halal food and products in global level upon growing concerns on the potentials of halal industry to Korea. This study will also provide reasons for the development of manufacturing halal products in Korea; and its potentials with illustrating constraints in developing such industry in Korea.

1.6: LIMITATION OF THE STUDY

The limitation of this study is using secondary data but first hand information and data from relevant agencies. It is due to the constraints of time and budget that made the author unable to travel to Korea to obtain primary data, for example through face-to-face interview and survey. However, this is merely an exploratory study by which secondary data can provide a basis of study to give some insights into the topic, thereby can indicate important focus or direction in future research in this topic.

CHAPTER 2: LITERATURE REVIEW

2.1: INTRODUCTION – WHAT IS HALAL?

Islam is one of the largest religions in the world with a great increase of its population. Muslim population is estimated to be 2.2 billion by 2030 with an annual growth rate of 3 per cent (Grim & Karim, 2011). Islam implies obedience to the commands of Allah – the Almighty God in Islam, and Muslims are those who become obedient to Islam. Muslim population is a transnational group united in a faith in Islam, regardless of nationality or any cultural background. The primary requirement for all Muslims is to declare no god but Allah, who has no partner and is everything above, and Muslims should dedicate all things and actions only to Allah. There are five fundamental pillars of Islam (Arkan al-Islam): believe the only God, Allah, and Muhammad as the last prophet (shahadah), pray five times a day (salat), pay almsgiving to the needy (zakat), practice fasting in Ramadan month (sawm), and pilgrimage to Mecca at least once in a lifetime (hajj) considered as an obligatory for Muslims (Esposito, 2003). All Muslims must follow Quaranic guidelines and restrictions of Islam such as “the Shariah.” The Shariah is the fundamental framework of Islam based on: the Quran – the scripture of Islam, the Hadith – collected reports describing the prophet Muhammad, and Sunnah – actions and sayings of the prophet. Five types of values (al-ahkam al-khamsah): Obligatory (wajib), Recommended (mandub), Permissible (mubah), Discouraged (makruh), Prohibited (haram) are a network of rules that guide Muslims in social, spiritual, cultural and every aspects of life (Faruki, 1966).

Halal stands for lawful and permissible things and actions that perceived as a guideline to be satisfied by all Muslims. The opposite concept of halal is haram, which is prohibited and unlawful sources for Muslims. Halal applies to food, products, and any actions or services (Burhan, 2000) to ensure Muslims consume good things and to protect them from Haram. The Quran states the importance of consuming halal as below.

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Although the definition of halal is in common, there are complexities in standards by each halal certification-awarding agent. Below are general distinctions for non-halal or haram products as shown in Table 2.1.

Table 2.1: Primary instances of non-halal or haram products

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Source: (AAFC, 2011; USHA, 2012; Riaz & Chaudry, 2004; FAO, 2001)

There are many arguments on identification of halal and kosher. There are confusions about halal and kosher that people believe that they are equivalent (Halal Expertise, 2014). It is important to understand the differences between halal and kosher to prevent the confusion in Korea prior to developing and promoting halal food and products in Korea.

Kosher comes from the Hebrew word kashrut and kasheir, used to denote which is “proper” and “fit” for Jews that satisfied the requirements of Jewish law (KSA, n.d.; Oxford University Press, n.d.). Both concepts are religion-oriented that have been using as a guideline for believers, based on permission and offering proper food, products or services for the believers to prevent consumers from harms. There are similarities and differences in Islamic Jewish laws in terms of prohibition, hence haram. For similarities, examples are pork, blood, insects and rodents or any by-products consumption that are considered poisonous and harmful to human. In slaughtering process, both require to cut animal with a sharp knife to minimize the harm and pain to the animal. In terms of differences, the notables ones can be found in recognition of alcohol consumption, mixture of dairy and meat, seafood species and the subject of slaughterer – a) Islam prohibits all kind of alcohols while Jewish acknowledges wines and other types of alcohol if handled and made with kosher ingredients, b) Kosher dietary strictly prohibits mixing dairy and meat product while the Quran does not encourage people to mix land food and seafood, c) Any fish with scales and fins can be considered as kosher but shellfish, smooth-skinned fish, sharks and crustaceans are not encouraged in Islam, and d) in halal slaughter, the slaughterer must be a Muslim male mumayyiz: who is able to differentiate between good or bad, or better if mukallaf: a person with full legal competence. During slaughtering, the prayer should pronounce in the name of Allah on all animals. However, kosher slaughtering requires special slaughterer, shochet: a kosher slaughter, who believes Jewish faith and educated in kosher slaughtering. A shochet must perform the procedure of slaughtering and often recite the blessing before the beginning of the slaughtering (Lipnick, 2016; Horn, 2007; Halal Transactions of Omaha, n.d.; Kelly, 2013; Qadhi, 2012; Hussaini, n.d.). Therefore, except alcohol and meat originated or contained products, it may be possible to be both halal and kosher at the same time, or either one would or would not be considered as the other.

2.2: HALAL MARKET AND THE VALUE OF HALAL FOOD

Overviews on halal industry were mostly negative in the past as a result of negative perceptions of Islam by the West that tend to link the religion to terrorism and war. However, after the global economic crisis in 2008 its perception has been reoriented more towards positive and now it turns out to be a remarkably expanding industry led by expectations on extending trend of Islamic finance and increasing value and market size of halal industry (Kong, 2012). The leading factor of global trend of halal industry is the spread of Muslim populations worldwide, which increases the demand for halal products. Muslim population make up about 24.1 per cent of the total global population in 2015 and they are expected to consist 31.1 per cent of the global population by 2060 (Lipka & Hackett, 2017). The reason for the rapid growth of Muslim population can be explained by rapid spread of Islam, high fertility rate of Muslim woman. Based on Pew Research Center’s research on Muslim and Non-Muslim Fertility Rates, Muslims tend to have more children than non-Muslims, with an average of 3.1 children, compared with 2.3 for non-Muslims.

By region, the Middle East has the highest percentage of Muslim population and by countries as 13 per cent out of the total global Muslim population. The most Muslim populated country is Indonesia, followed by India, Pakistan (Table 2.2).

Table 2.2: Top ten countries with the Largest Number of Muslim Population

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Source: Pew Research Center (2012)

While Muslim population are mostly populated in the Middle East-North Africa, Sub-Saharan Africa and Asia-Pacific region, they remain as a minority group in Europe and Americas (Table 2.3).

Table 2.3: World Muslim Population by Region

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Source: Pew Research Center (2012)

It is imperative to note here also that there are countries where the Muslim population is a minority, yet the number is larger than some other countries where the Muslims are a majority. For example, in China where 21 million are Muslims which accounts for 1.6 per cent of its total population are actually larger in number compared to the Muslim population in Tunisia, where Islam is major religion and 99 per cent of its population are Muslim, make up only 10 million Muslim populations in total (Pew Research Center, 2009; World Bank, 2011).

The large Muslim-populated regions and countries and its rapid population growth mean increasing demand for halal products and therefore likely to exceed the supply of halal products. This can disable self-sufficiency within the country, therefore necessitate the importation for halal products. In addition, Muslim population in its minority regions are also expected to increase with a growing share of the countries’ population, which eventually will increase the demand of halal products.

Overall, in accordance with the trends of increasing Muslim population globally, the halal market and the value of halal food have also been increasing and are expected to increase further (Komitopoulou, 2015). Indeed, halal has emerged as one of the prominent brand in recent times (Wilson & Liu, 2010), and the trend of halal food now has further extended to non-Muslim market beyond Muslim nations. Global halal market estimated at about US $2 trillion (exclude Islamic finance sector), and the value is expected to reach US $3.7 trillion in 2019 with 20 per cent of an annual growth rate (Ainullah, 2016; Thomson Reuter, 2015; Othman, Sungkar, & Hussin, 2009; Kim, 2015). In addition, Halal Industry Development Corporation (2011) expected that halal products would have great increase. Currently, the two strong markets for halal products are Southeast Asia and the Middle East, where most of the products are supplied (Riaz, 1998).

There are perceptions that halal products are only consumed by Muslims. Indeed, in the past, Muslim predominant countries mainly consumed halal products. However, non-Muslims are also huge consumers of halal products today that perceive halal products as wholesomeness that is safe and hygienic to consume (Riaz & Chaudry, 2004). According to the research carried by Rezai, Mohamed and Shamsudin (2012) shows that at least 79 per cent of non-Muslim consumers are aware of the existence of halal principles and admitted that their awareness of halal principles had improved a lot via advertisement, and 40 per cent of the respondents understood the concept of halal principle. Along with the promotion of halal, non-Muslim consumers interest in halal products and services may increase, which eventually increase the demand. In fact, the outlook of halal industry is promising that there is a strong and increasing demand for halal products for both Muslim and non-Muslim consumers in a number of non-Muslim countries since halal products are also growing in popularity due to the positive perception that halal products are healthier, safer and humane animal treatment (Berry, 2008).

Halal industry brought up to a national level agenda upon its growth and great contribution to nation’s economy. Malaysia as an example, exporter of halal products helps its economy by creating 250,000 jobs and making nearly US $10 billion in 2015, which contributes about 5.1 per cent of the total export of the country (Naidu, 2016). What is more, Malaysian government supports the Department of Islamic Development: JAKIM to achieve the establishment of a global halal standard towards its ambition to become a central hub for halal industry. The government of Malaysia, Brunei and UAE give full support and control the halal certification as accreditation bodies. Recently, Brunei Darussalam established “Brunei Halal” brand as a method for economic diversification, and Singapore is also keen to establish its own halal brand that aims to satisfy the demand from tourists, especially from its neighbouring countries such as Malaysia and Indonesia.

Halal food industry is the most emerging market amongst halal industry. The industry value is estimated at US $1,292 billion in 2013, which represents one-fifth of the global food industry, and the demand for halal food is expected to grow more than 70 per cent of today’s figure by 2050 (Thomson Reuters, 2015; Edbiz Consulting Limited, 2013). Muslims’ consumptions of halal food are estimated to reach US $2,537 billion in 2019, which consist about 21 per cent of global food expenditure (Thomson Reuters, 2015).

Halal food made a huge spread of halal products from low-profile to high-profile that made its debut in major grocery chains such as Wal-Mart, Carrefour, Coles, Woolworths, Tesco, Costco and any other stores in non-Islamic nation-states. Meat, processed food, any kind of beverages, and gourmet are considered as halal food product. As mentioned earlier, the increase in the number of Muslim population contributes to the growth of the halal market. Additionally, social media network is assisting publics, especially Muslims to increase awareness of halal food (Reportlinker, 2016). Such website and blog: The Halal Food, I Ate My Way Through, My Big Fat Halal, The Halal Food Project, Zabihah.com, Halal Girl About Town Blog, halalfoodguy.co.uk, and saltandsheikh.com are well-known halal food blogs and websites in Australia, the UK and many Muslim minority countries that help Muslims to be aware of the availability of halal food and furthermore for non-Muslims to be familiar with the concept of halal.

According to the Global Halal Food Market 2015-2019 report by Infiniti Research Limited, Asia-Pacific dominated the global halal food market that represents more than 60 per cent of the total market, followed by Middle East and Europe. Owing to the largest number of Muslim population in Asia-Pacific, the region dominates the halal food market, although most of Muslim-majority countries are in the Middle East. Indonesia ranked the highest on food consumption among Muslim countries with the expenditure of US $190.4 billion, then Turkey, Pakistan and Iran follows after (Table 2.4).

Table 2.4: Top Muslim Food Consumption Market by Size in 2013

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Source: Thomson Reuters (2015)

Halal has become a common term in the West food industry in the last two decades because of their exporting products to Southeast Asia and Middle East (Riaz & Chaudry, 2004). Several multinational corporations (MNCs) have already facilitated its vendors in halal food markets such as Nestlé, KFC, Starbucks, Saffron Road, Coca-cola, Danone, Tahira Foods, Al-Islami, Kawan Foods, McDonalds, Marrybrown, Tesco, Carrefour, Euro Foods Group and others. Nestlé is the top corporation that produces the largest halal products in the world. Malaysia, as the first market for its halal food market, Nestlé applied halal certification for all of its food products by introduction of voluntary halal certification of Malaysian government in 1994, then it extended its halal production to Indonesia, the Middle East, Europe and the United States (Nestlé, 2012). The top five exporters of halal food are Brazil, India, Australia, the United States and France, where all indicated countries are non-Islamic nation-states as shown in Table 2.5(a).

Slaughtered halal animal meat and live animal is one of the core sectors of halal food industry according to Thomson Reuters in State of the Global Islamic Economy Report 2015, where the top exporters of halal slaughtered animal meat and live animals are identified as the top halal food exporters. Live animals can produce slaughtered animal meat, and the meat and by-products can be used to manufacture other processed food products. The current large halal exporting countries have been benefiting from whole supply chain of halal food. As shown in Table 2.5(b), the top five halal meat importing countries: Saudi Arabia, UAE, Egypt, Malaysia and Iraq have been estimated to have spent US $7.26 billion for importing halal meat and live animals in 2013. In addition, the report stated that 85 per cent of slaughtered halal animal meat and live animal imports are from non-Islamic nation-states.

Table 2.5(a). Meat and Live Animals (Top Exports to OIC Countries)

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Table 2.5(b): Meat and Live Animals (Top Importers within OIC Countries)

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Source: Thomson Reuters (2015)

From the above documentation and analysis which highlight the existing and potentials of the market size and values of halal industry, the focus in considering the industry certainly should not only in the Middle East or dominant Muslim population regions but globally. Owing to the rapid growth of Muslim population, the escalating expenditure on halal food and non-food products and increasing awareness of halal, the demand for halal products will certainly increase. Halal industry has turned from marginal industry to the spotlight in global industry market. The industry is now regarded as a safe and the foremost industry that has revealed huge amount of benefit in both Muslim majority and minority countries and MNCs.

2.3: ISLAMIC SLAUGHTERING METHOD FOR HALAL ANIMAL MEAT

The Islamic ritual method of slaughtering animals to make halal meat is called zibah or zahibah. Land animals become halal through the proper Islamic slaughtering process guided by Quaranic verses. Hence the method which is practiced globally of slaughtering animals by stunning, thereby making them unconscious to reduce the pain prior slaughtering is not acceptable in Islam that the meat of such animals would be haram to the Muslim. Islam also prescribes the right person to do the slaughtering. The person has to be adult male Muslim (mumayyiz) (Ahlul Bayt Digital Islamic Library Project, n.d.). Therefore, as stated by Subki (2011) in his book Kitab muid an-niam wa-mubid an-niqam that the slaughter of the non-believing majusi (fire-worshippers), the wathani (idolaters), all kafirun (disbelievers) without scriptures and the murtad (apostates), is haram.

The Islamic process of halal slaughtering starts from reciting specific prayers in the name of Allah when commencing the process. The importance of the recitation is stated in the Quran 6:121, “And do not eat of that upon which the name of Allah has not been mentioned, for indeed, it is grave disobedience. And indeed do the devils inspire their allies to dispute with you…” After the prayer, the windpipe and oesophagus have to be cut completely with a single sharp during a slaughter. Sahih Muslim (1955) stated, “Verily, Allah has prescribed excellence in everything. If you have to kill, then kill in the best manner. If you slaughter, then slaughter in the best manner. Let one of you sharpen his knife so his animal feels no pain.” Additionally, it is recommended to cut left and right neck muscles of the animal (State Mufti’s Office, 2007). Animals must alive and stays healthy prior to the slaughtering process and if there were doubts on stable life of animals, the meat of those animals would be considered as haram. Thus animals, which have been beaten or crushed to death before the slaughtering, are considered as carcasses. However, an ulama who is in expert in interpretation mentioned “If you manage to see the animal while it is still alive, for example its eyes still see or its tail still moves, then it is permissible to consume such an animal if it was slaughtered at that time.” And the companion Ibnu ‘Abbas said, “When its eyes see, or its legs move or thrust, and you slaughter it, then the animal is halal.” (State Mufti’s Office, 2011, p. 212). According to M. Khawaja, the president of the Halal Food Authority, his statement in 2004 stated that as long as the animal is still alive before the slaughtering process, blood has been drained completely, and a Muslim has done the slaughter, it is acceptable (BBC, 2009). After the cut, blood must be drained from the carcass with the evidence of no bleeding that consuming blood is considered as haram. The Quran 6:145 “… revealed to me forbidden to one who would eat it unless it be a dead animal or blood spilled out or the flesh of swine – for indeed, it is impure – or it be disobedience, dedicated to other than Allah.” highlighted the animal’s stable life in prior to the slaughtering process and complete drain of blood. The Quran does not state ‘slaughter’, instead, stated that Muslims are free to eat animals by killing in appropriate method and commencing the pronouncement of Bismillah (in the name of Allah) during eating (Islam, 2012).

Islam believes that Allah created everything in the world. Therefore, all should be taken care by gentle manner, without any discrimination or inequality but compassion and blessings. Treat of animals are stated in the Quran and Hadith as “There is no creature on the earth or bird that flies with its wings but that they are communities like you (The Quran 6:38),” “If you have to kill, then kill in the best manner. Verily, Allah the Exalted is excellent and He loves excellence (al-Mu’jam al-Awsat 5884),” “Do not mutilate your animals (Sunan al-Nasa’i 4440),” and “A crippled animal whose limp is obvious is not to be slaughtered as sacrifice, nor an animal with a bad eye whose blindness is obvious, nor a sick animal whose sickness is obvious, nor an emaciated animal that has no marrow (Jami` at-Tirmidhi 1493).” Brunei State Mufti’s Office book Animal Slaughter and Handling of Meat (2011, p. 183) also illustrate the kindness and respect in Islam to animals as “Islam dictates that the animal be given food and drink, that it be led in a gentle manner and be gently made to lie down before three of its legs are tied together, leaving the right hind leg free so that the animal may rest comfortably to meet its death…” In summary, the specific Islamic requirements for slaughtering of animals to make their meat halal are: a) slaughtering must be held by an adult male Muslim; b) slaughtering must be held not in the presence of swine and swine-slaughtered area; c) an animal must be alive and healthy before slaughter; d) animal’s head be facing Qibla (Direction to Mecca); e) must commence the process in the name of Allah; f) the process must cut windpipe and the oesophagus at single swipe; g) blood should be drained completely with no flowing of blood from the carcass. In short, Islam prescribes the attributes of persons who can perform the slaughtering, the quality of slaughtering place, the process and method of slaughtering live animals to make their meat halal to be consumed by the Muslims.

With the expanding halal industry and halal products produced and exported by different countries and MNC globally, there are also increasing number of halal certifications, which provide consumers especially the Muslims more choices in selecting the genuine and acceptable halal certification.

2.4: HALAL CERTIFICATION

Halal certification is important to generate assurance and trust among consumers with regard to reliability and credibility of halal product and services. It is to ensure that the products and services comply with the Islamic laws. There are three types of halal certification categorised by Riaz & Chaudry (2004): a) Registration of a site certificate; b) The certificate for a specific product for a certain period time, and c) Yearly certification. They explained each type as: a) a type of certification awarded to a site (e.g. a plant, manufacturing facilities, slaughterhouse, [restaurant], abattoir and any establishment [of] handling food) regarding approval to manufacture halal food. However, this certification cannot be used for a halal product but confined its boundary in a site; b) a certificate issue for a specific duration or quantity of the product. If the certificate is for the quantity, it is called as a batch certificate or a shipment certificate, where each batch or consignment needs to be certified; c) the certification may need annual inspection through halal compliance and payment of the fee. For c), they may have certifications which require fixed duration to renew the certification upon inspection or it may be automatically renew upon inspection or any other requirement from the certifying agents.

It is estimated that there are about 122 halal certification bodies in existence globally, and the criteria for those halal certification-awarding bodies are identified as a) Resource availability, b) Willingness to work with the company on problem solving, c) Ability to clearly explain halal standards and fee structure [of them] (Komitopoulou, 2015). The certification agents can be the government, Islamic organisation, NGOs, privates and an individual Muslim. This section will briefly illustrate three halal certification standard: a) JAKIM – The Department of Islamic Development Malaysia, b) MUIS – Islamic Religious Council of Singapore, and c) MUI – Indonesia Council of Ulama; which are renowned halal certification awarding authorities in the region and globally. JAKIM and MUI are the national halal certification authority respectively in Malaysia and Indonesia and also in control of Islamic affairs, while MUIS is a solitary custodian for halal certification in Singapore (Mohamad, & Backhouse, 2014).

Currently, there is no mutual agreement of recognition for global halal certification of all halal certification awarding bodies in existence globally. However, certain halal certifications can be recognised by the other halal certification authority by bilateral cross-accreditation agreement. Therefore, the acceptability of the certification merely relies on each halal certification awarding body. JAKIM and MUI require certain halal certification that are registered and approved in their foreign recognition list. It is under The Recognised Foreign Halal Certification Bodies & Authorities in JAKIM and List of Approved Foreign Halal Certification Bodies in MUI. For example, Korean manufactured halal products exported into Malaysia with KMF (Korea Muslim Federation) halal certification, Malaysian government would approve the products as halal products because KMF halal certification is listed as a recognised certification bodies. However, in Indonesia, the products may not be recognised as halal products due to no registration record of KMF in the MUI approval list. Malaysia JAKIM recognised 73 certification bodies from 33 nations, 16 government authorities and 57 from non-government bodies. Indonesia MUI categorise the halal certifications in Slaughtering, Raw Material and Flavour. MUI has an expiry format that halal certification bodies should renew their status if to continue their recognition by Indonesia MUI. There are 46 halal certification bodies from 25 countries listed in the list of 2016, which 38 bodies recognised in slaughtering, 37 in processed food, and 14 bodies in flavour category.

Malaysia is known as a leading global Halal certification awarding body. JAKIM (The Department of Islamic Development Malaysia) has nominated SIRIM Berhad as the only agent to manage the halal standard and any related matters as the National standards development agency. According to Halim and Salleh (2012), Malaysia halal standards are developed through consensus of agreement amongst producers, users, consumers and others who are relevant to halal. Malaysia has been acknowledged as having the standard for the development of halal food industries in the world (Musalmah, 2005), and Khan and Haleem (2016, p. 37) stated “Malaysia [has] been cited as best example in the world in terms of a justification for [h]alal food by the Codex Alimentarius Commission, which is responsible, under the United Nations, for regulations [on] food preparation globally.” The Halal certification program in Malaysia was established in the early 1980s; however, the government had started its study on halal guideline earlier in 1959 (Riaz & Chaudry, 2004; Kong, 2012). JAKIM introduced its halal certification program in 1994, released its first halal standards in 2000, integrated halal logos within the nation to the current logo in 2003, implemented MS 1500: 2009 [MS 1500: 2004 and its renewal version] and Malaysian Standard on Halal Food – entitled “Halal Food: Production, Preparation, Handling and Storage – General Guidelines” (Kong, 2012; DSM, n.d.). Procedure of JAKIM halal certification is shown in Figure 2.2.

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Figure 2.2: JAKIM halal certification evaluation process

Source: JAKIM (n.d.)

Malaysia has developed its halal standard as Malaysian Standards (MS), which strengthen the requirement to ensure the quality and veracity of Halal. MS is summarised as below (Table 2.6).

Table 2.6: Malaysian Standards (MS) development

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Source: HDC (n.d.)

As mentioned before, Malaysia government requires HACCP or GMP or such certification to ensure food hygiene and sanitation. MS 1500, as a general guideline regarding halal food, stated overall process of manufacturing halal food, preparation, handling and storage. MS1500 has developed especially by strengthening and making precise its requirements. MS1500: 2004 classified its requirements into seven categories while in its revision of 2009 extends the requirement to eight. MS1500: 2004 categorised its requirement in sources, slaughtering, process, storage, hygiene, packaging and labelling, and legal aspects. MS1500: 2009 rearrange the requirement as below – see Table 2.7 for development of the requirement from MS1500: 2004 to MS: 2009.

Table 2.7: Comparison of the requirements – MS1500: 2004 and MS1500: 2009

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Created by the author based on data from: DSM (2004) and DSM (2009)

JAKIM has successfully developed its halal standard and value as a leading global halal certification by several revisions of MS to ensure reliability and quality of halal certification and Malaysian government requirements to cope with global food standard such as HACCP and GMP to strengthen food hygiene and sanitation.

Islamic Religious Council of Singapore (MUIS) is the authority of Islam in Singapore. The establishment in 1968 came with the implementation of Singapore Administration of Muslim Law Act (AMLA) section 88A(1) and 88A(5), which clearly state its authorisation on issuing halal certificates (MUIS, 2016a) (Table 2.8). In 1978, MUIS became the sole custodian halal certification awarding body in Singapore (ITC, 2015). The halal certification service of MUIS was formally started in 1978.

Table 2.8: Administration of Muslim Law Act in Singapore – 88A(1) & 88(5)

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Source: MUIS (2016a)

Current MUIS halal standards are a combination of religious component MUIS-HC-S001 (General Guidelines for the Handling and Processing of Halal Food) and technical component MUIS-HC-S002 (General Guidelines for Development & Implementation of Halal Quality Management System (HalMQ)). There are seven types of Halal certification schemes for the food and relevance industry, which are: Eating Establishment, Endorsement, Food Preparation Area, Poultry Abattoir, Product, Storage Facility, and Whole Plant scheme; that mostly limited to food relevant areas (Table 2.9).

Table 2.9: Types of Halal Certification Schemes

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Source: MUIS (2015b)

MUIS has established trust and high recognition globally. The growth of recognition of Singapore halal products seems favoured by high recognition of Singapore brand in international market, which is stated by M. Matter, Deputy president of the Singapore Malay Chamber of Commerce & Industry (SMCCI) in Cheok (2016) as “The Singapore brand is exceptionally well recognised globally. Thus our certification and consultation standards are considered very high and are sought after.” The growth of global status of Singapore halal led to the growth of halal industry in Singapore, and the strong interest of local market to adopt the MUIS halal certification scheme. Cheok (2016) mentioned that according to the annual report 2014 of MUIS shows that around S$4 million was earned from halal certification, which shows the growth of the industry from S$2.9 million in 2013. Followed by Singapore Halal Directory 2012/2013, MUIS have issued more than 9,000 certifications in 2009. The evaluation procedure for MUIS halal certification is shown as Figure 2.3.

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Figure 2.3: MUIS halal certification process

Source: MUIS (2015a)

Although MUIS is a solitary custodian for Singapore halal certification unlikely to JAKIM and MUI, which are the national halal certification authority and also are responsible for Islamic affairs in the nation, MUIS also has set its own halal certification scheme with an integration of religious and technical component, which aims to ensure quality of MUIS certification with strengthening high recognition of the certification value in global market.

In Indonesia, MUI (The Indonesian Council of Ulama) is an awarding body of halal certificate based on assessment carried by LPPOM MUI (The Assessment Institute for Foods, Drugs and Cosmetics, The Indonesian Council of Ulama). Regarding food control and processed food product, Ministry of Agriculture and National agency for Foods and Drugs control are responsible. Halal Assurance System (HAS) needs to be documented before obtaining MUI halal certification. HAS is a system to assure product’s halalness during validity of MUI halal certification, which is valid for a year (MUI, 2008). Procedure of MUI halal certification is shown in Figure 2.4.

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Figure 2.4: MUI halal certification process

Source: MUI (2008)

MUI imposes application fee of Rp. 200,000 to be paid upon registration and certification fee varies upon company and products (LPPOM MUI, 2015). Under LPPOM MUI’s General Guidelines of Halal Assurance System in 2008, it is required to prepare the document to submit the first and the second HAS documents for all applicants. Each HAS document has distinctions by applicant category: a) new applicants without obtaining MUI halal certification; b) obtained MUI halal certification but HAS implementation has not been audited and c) renewal of halal certification which applicants’ HAS has already been audited (Table 2.10).

Table 2.10: Meaning of HAS document by applicant category

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Source: LPPOM MUI (2008)

During auditing, HAS implementation will be assessed by category as stated by LPPOM MUI (2008), “material purchasing system, material receiving, material storage, new product development, material removal/changes, vendor/supplier changes, internal and external communication, production planning, production process, final product storage to transportation.” For auditing HAS implementation, interview will be held with all related staffs, all related production system records and documents will be collected as evidences, and the system will be verified and validated. After the HAS implementation assessment, HAS will report the result to HAS team and LPPOM MUI management and categorise the result into four grades: A (Good) achievement of 90~100%, B (Fair) 80~90%, C (Poor) 70~80%, D (Unaccepted) below 70%. Audit process may be excluded upon condition of HAS certification holder (Table 2.11). HAS Statement letter will be issued after the implementation audit, however, HAS certification will be issued if sustains category A (Good) three respectively (LPPOM MUI, n.d.a).

Table 2.11: Rules of LPPOM MUI Halal certification process applied to the HAS certificate holder

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Source: LPPOM MUI (2015a)

General principle and meaning of halal are in common amongst three halal certifications. However, there are differences found in the amount of alcohol allowed in food items, certification application fee, required renewal and procedure period, and recognition of foreign halal certification. JAKIM allows 0.01 per cent of alcohol usage on the condition that the alcohol is not originated from khamr (intoxicating alcohol and liquor) production. MUIS allows less than 0.5 per cent use of ethanol in halal food flavouring and not exceed of 0.1 per cent of the ethanol content in the final food product (MUIS, 2015c). MUI stated in Fatwa (Islamic Legal Opinion) Of MUI For Materials And production Process (No. 4/2003) regarding alcohol usage in food contents that allows the product with less than 1.0 per cent of ethanol content if ethanol is not detected in the final product (LPPOM MUI, 2008).

According to Shafii and Khadijah (2012), with regards to the processing period for halal certification, JAKIM requires a period of approximately six months while MUIS takes a month. They illustrated that the reason of long procedure period for JAKIM is due to workload of officers in the department that they are in charge of not only approval but also inspection, management and other related matters. For MUI, the processing period seems vary upon materials being used in companies or individuals to apply halal certification. For example, Krispy Kreme took four months while Starbucks took nine months of period to get certified by MUI due to many imported ingredients which did not achieved halal certifications recognised by MUI (Nainggolan, 2016).

With regard to renewal of JAKIM halal certification, renewal shall be made at least three months in prior to the expiry date of the halal certification (JAKIM, 2015). JAKIM imposes a fee on every renewal application, which is required every two years except for slaughterhouse which is only valid for one year as stated in 8.1 of Manual Procedure for Malaysia Halal certification 3rd Revision 2014 (JAKIM, 2015); it used to be valid for 3 years previously. Application fee for the certification varies by annual sales and total number of works (Table 2.12). However, the renewal fee does not show any differences with the application fee for new applicants.

Table 2.12: JAKIM certification application fee

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Source: Created by the author based on data from DagangHalal.com (2010)

MUI also set validation of its halal certification as two years, while MUIS halal certification is valid for one or two years (Wikanaparti, 2016; MUIS, 2016a). As shown in Table 2.10, to renew MUI halal certification, such HAS documents: HAS implementation report on latest condition or HAS Manual or HAS statement letter stated that the company has got at least grade B (Fine) or copy of HAS certificate is required to be submitted. There is a reward for applicants who maintained HAS certificate three times continuously, for the fourth renewal period of MUI halal certification, if there are no changes of materials, processing method or factory, audit on factory location need not to be conducted. If needs of auditing is required, two years of validity will be given, and only administration and documentation will be observed for audit as a reward (LPPOM MUI, 2008).

MUIS suggested to submit renewal application at least one month to three months before the certification is expired. Unlike certification fees, application fee is only charged for the first time applicant for MUIS. Charges for applications that submitted after 1st August 2016: for the normal processing, which attends the application within 14 working days once the application fee payment is made costs S$ 147.66; and for express processing (within 7 working days after the payment of application fee is made) costs S$ 315.65 (MUIS, 2016b).

JAKIM, MUIS and MUI have similarities and differences on their halal requirements and understandings. There are more than 122 halal certification awarding bodies worldwide, yet there is no individual standard recognised globally. It may be competition by each halal certification and also different rules and regulation by different Islamic school and teaching could be a factor that hurdles the integration of global halal certifications and the establishment of global single halal certification.

The Codex Alimentarius by Food and Agriculture Organization of the United Nations (FAO), which is a global food code, standards, guidelines that are related to food (FAO, n.d.). The standard of Codex Alimentarius is well recognised as a collection of internationally recognised and accepted standards that have become indubitable reference in global food trading (Henry & Chapman, 2002). It recognises minor differences that may exist in opinion in understanding of halal animals in slaughtering process according to the different thought by various Islamic School and adopted the term of halal in 1997 at 22nd session of the Codex Alimentarius Commission (FAO, 2001). Not only the slight difference in halal interpretation, but also in the acceptance of such halal certification by each halal certification awarding bodies may be a factor for the Codex Alimentarius Commission to be conscious of uniformed international halal certification.

Generally halal certification is an assurance of safety products to Muslim consumers by investigation of ingredients, facility, labours, method and procedure. Muslim consumers acceptance on halal products varies that some consumers may also be concern on halal issue, for example, on drinks or flour although there are no animal-based ingredients. It depends on individual Muslim consumers’ tendency and decision on their purchase of products. However, to them, it is mandatory for products that contain animal-based ingredients to have halal certification. Therefore, it is recommended to obtain halal certification even for the products without animal or alcohol ingredients for ease and successful marketing of products towards Muslim consumers. Halal certification does not only indicate safety and quality of products by following Islamic regulation, but also a high-level of credibility towards manufacturer and products.

2.5: GLOBAL HALAL FOOD PIONEERS

Current global halal food industry seems to be dominated by multinational corporations. Indeed the current top halal food manufacturers and exporters consists 80 - 90 per cent of global halal food market and those top exporters are mostly located in non-Muslim majority countries (KPMG International, 2015; Edbiz Consulting Limited, 2013). According to Thomson Reuters (2015), top five halal food-manufacturing companies are Nestle (Switzerland), Al Islami (UAE), Saffron Road (USA), Tahira Foods (UK) and Arman (China). These top five halal food manufacturers worth about US $30 billion to the total global halal food market, and Nestle, one of the largest halal food exporters in the world, alone makes more than US $3 billion annually in 2008, and achieved increased annual sales to US $5 billion in 2013 (UAE, 2008; Edbiz Consulting Limited, 2013).

Nestle had expected the potential of halal market and started to manufacture halal products by establishing its own halal guidelines. For example, Nestle in Malaysia followed the halal principles and guidelines in all of its manufacturing facilities since 1970, and implemented its own halal guidelines ‘Nestle Halal Guidelines’ after the company was certified by JAKIM. Today, Nestle Malaysia has become the biggest manufacturer of halal food products in the world, manufacturing more than 300 halal food and beverage products and exporting to more than 50 countries (Thomson Reuters, 2016). Currently there are 159 halal assembly lines by Nestle, which consists of 34 per cent of its total manufacturing facilities (Hwang, 2016b). Further, Nestle also plans to open US $120 million new halal food manufacturing facility in Dubai, UAE (Alkhatib, 2015).

Starbucks also expanded its markets towards Islamic markets. Currently there are more than 1200 branches in 17 Muslim-majority countries, mostly in Southeast Asia and the Middle East (Yoon & Min, 2016). Starbucks Malaysia obtained JAKIM halal certification in 2000, since then they have established branches in Malaysia and recorded as the country with the most Starbucks branches in Southeast Asia. The first step towards halal by Starbucks started in the Middle East, and then expands its market towards Islamic countries. The Middle East as a starting point, Starbucks made a cooperation with local partner to be certified by local halal awarding bodies, additionally for better marketing in each country. Current annual sales of Starbucks in Islamic countries are approximately US $23 billion since 2014, which consist about 30 per cent of total sales of Starbucks abroad except the United States and contribute to the growth of global value of Starbucks of US $435 billion, increasing by 49 per cent in a year period.

Kentucky Fried Chicken (KFC) is also a pioneer in halal markets (Yoon & Min, 2016). Currently, KFC serves all of its products in halal quality in some countries in Southeast Asia: Malaysia, Indonesia, Brunei, Middle East and North Africa (KFC Arabia, 2015; KFC Brunei, 2013; KFC Malaysia, 2016; LPPOM MUI, n.d.). In non-Muslim majority countries, the company tries to provide halal food in the countries upon requests from communities, for example, in the United Kingdom, 98 branches of KFC provides halal food products as trial; in India, all of its chicken products are sourced from halal certified suppliers; and there are a few halal branches in Australia (KFC UK, 2015; KFC India, 2016; KFC Australia, 2016).

CHAPTER 3: Halal food industry in Korea

3.1: INTRODUCTION

This section is to investigate the current status of halal food industry in Korea to answer the second and third objectives of this study. Tracing the history of Islam in Korea in the past in section 3.2, Muslim population in Korea and Muslim consumers food consumption habit will be investigated relatively in sections 3.3 and 3.4 to figure out the manpower and the demand for halal food products in Korea. KMF halal certification, which is the first and prominent halal certification awarding body in Korea, will be investigated in the section 3.5 with the current status of KMF halal certification in domestic and global halal market and its halal certification procedures. The physical and institutional infrastructure regarding halal industry will be investigated in the section 3.6. Then, challenges in establishing halal food manufacturing industry will be identified in the section 3.7 to investigate the main challenges in developing the industry.

3.2: HISTORY OF ISLAM IN KOREA

Records of Muslims in Korea can be found in historical records of Korea. Muslim merchants visit to Goryeo in the 11th century was written in Goryeo-sa (History of Goryeo Dynasty) (Kim Han, 2016). The record of Muslims also can be found in afterwards in Joseon dynasty. In 4th April 1427, Joseon Wangjo Sillok (Annals of the Joseon Dynasty), a decree from the Yejo (Ministry of Rites) entreated to King Sejong, the 4th King of Joseon Dynasty to prohibit any Islam-related customs and culture in Korea peninsula. In the annals of King Sejong in the year of 1427,

Muslims were called as “hoehoe [¹ ] .”

The author assumes that there was an exchange between Koreans and Muslims that led a number of Muslims to settle in Korean peninsula based on historical records. From Table 3.1, it can be observed that there might be considerable number of Muslims residing in Korea that even the ministry had entreated Muslims’ influences to the king to decree their influence in the dynasty.

Spread of Islam in Korea is briefly illustrated in the video of KMF (2015): Islam attempted to contact Korea peninsula from the 9th century, with the first pioneer of Muslims in Korea was ‘Choyoong.’ Spread of modern Islam was carried out during the Korean War in 1950s through Turkish Brigade. Korean Muslim community initiated the building of a temporary mosque in 1960s. The first mosque was completed in May 1976 in Seoul with Korean government’s support of a site for building the mosque. Currently there are at about 60 mosques in Korea to support Muslims, and especially for Muslim foreign workers residing in Korea. This is a way of supporting not only religious practice but also to overcome cultural or language barriers. KMF provides Islamic education seminar and other religious activities as a way to promote Islam in Korea, and known as a major halal certification awarding body in Korea.

3.3: MUSLIM POPULATION IN KOREA

Halal industry in Korea is still a meagre industry. Islam is still considered a minor religion in Korea due to its small Muslim population. There is no certain statistics to measure Muslim population in Korea, however most research statistics observe the population at about 100,000 to 140,000 (Hwang, Lee, Kim, & Choi, 2015). KMF (2016) estimates Muslim population in Korea at about 135,000, which Korean Muslims are about 35,000 and foreign Muslims consist around 100,000 (KMF, 2016). Fathiah Fathil (2011) stated that the convert rate to Muslim in Korea and Japan is considerably low that only total up at few hundred people, which is supported by KMF’s statistics that only 71 Koreans converted to Muslim in 2006.

Despite of small Muslim population residing in Korea, Muslim tourists to Korea are increasing. Based on Muslim tourism status announcement by Korea Tourism Organisation (KTO) in 2017, 980,000 Muslim tourists visited Korea in 2016, an increase of 33 per cent from the previous year. Muslims from Asia dominate the Muslim tourists to Korea at about 740,000 people, and followed by Middle East with 160,000 people, and 80,000 people from North America, Africa and other regions (Table 3.1 and 3.2). KTO assume the main factors that lead to increasing number of Muslim tourists are Hallyu (spread of Korean culture), promotion of Korean tourism, and efforts to attract Muslim tourists.

Table 3.1: Muslim visitors to Korea from 2012 – 2016

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Source: KTO (2017)

Table 3.2: Top five countries - Muslim visitors to Korea from 2012 – 2016

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Source: KTO (2017)

The number of Muslim students to Korea is increasing as well. As of April 2012, foreign Muslim students in Korea from OIC countries are estimated at 3,139 (Kim, 2012). The seven countries, command an overwhelming majority of Muslim students to Korea, are Turkey, Indonesia, Iran, Afghanistan, Saudi Arabia, Bangladesh and Uzbekistan that consists 3,287 students in 2014, which has doubled the number of 2009 (Lee S. G., 2015).

The above statistics and analysis underline the current small Muslim population which foreign Muslims consist about three quarter of the population with the low convert rate of Koreans to Muslim. Owing to the small Muslim population, the current demand of halal food products in domestic market is considerably low.

However, the increasing number of Muslims to Korea may promote the demand of halal food products in domestic market and will address higher potential of halal food industry in Korea.

3.4: MUSLIMS FOOD CONSUMPTION IN KOREA

There is no certified facility for halal meat production in Korea; therefore all of halal certified animal meats sold in Korea are imported from Australia (Hwang, 2016a). For halal certified lamb meat, it is assumed that all are imported from Australia due to not much demand from domestic market. However, according to Song (2011), from interviews with few foreign Muslims regarding halal chicken meat, respondents stated that there is a facility for halal chicken meat production but only follows the general halal animal slaughtering procedure: playing recorded prayer during the slaughtering process. Although the facility enables halal chicken meat production in commercial quantity, there is no assurance of halal certification from any halal certification authorities.

Due to lack of halal restaurant, 41 per cent of Muslim tourists tend to visit general restaurants which do not conform to Islamic regulations (Figure 3.1). From figure 3.1, Muslim tourists brought food from home country and cook at their accommodation in Korea are 10 per cent respectively. With regard to halal restaurant, 31 per cent of the tourists visit halal restaurants despite of small number of halal restaurants in Korea.

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Figure 3.1: Diet behaviour of Muslim tourists visit to Korea

Source: KTO (2017)

Muslim tourists to Korea chose food as a prior concern for their visit to Korea (KTO, 2017). Temporary visiting Muslims to Korea have high tendency to purchase food items in small and middle size supermarket, hypermart and convenient store rather than halal food shop (Figure 3.2).

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Figure 3.2: Places of food items purchased by temporary visiting Muslims to Korea

Source: Hwang, Lee, Kim, & Choi (2015)

There is lack of halal restaurants in Korea, and most of the current halal restaurants are located in Seoul. In other words, if Muslim tourists were to visit other provinces, it would be difficult for them to dine, hence constraining their choices to only having seafood or vegetarian restaurants. Simply to say, it will limit the choice of food and tourists might not want to try various food in Korea due to halal issues, thereby decreasing their satisfaction of travel. It is indeed extremely hard to purchase halal certified products in Korea besides Itaewon and Seoul. Muslim Friendly restaurant (see the section 3.6 for details) are evaluated positive that Muslim tourists are well-aware and favouring Muslim friendly restaurants and its concept. In Seoul, there are eight five-star hotels provide halal menu (with / without animal meat) and would remove alcohol beverages upon request one to seven days in advance.

According to the research conducted by Song (2011), Korean Muslims lay bare their difficulties on following Islamic regulations on food consumption. Although there are increasing number of halal supermarkets lately that allows them to practice their beliefs, it is still hard to follow the regulation due to social and cultural factors that decision on consumption is not only made by individual’s decision but family, cultural and social dimensions (Inter-dependent and family-centred culture and social values contribute to their consumption patterns). Food consumption patterns of Muslims residing in Korea are shown in Table 3.3 by place and items of purchase. Muslim consumers in Korea tend to purchase grain and its processed products in hypermart and halal food shop, while animal raw meat, processed meat products, seasonings / sauces are highly purchased in halal food shop although there are only a few halal food shops exist currently. Foreign Muslims in Korea also had difficulties in finding halal certified meat according to Song (2011). However, some Muslims come up with the idea to purchase chicken alive from the market then slaughter in Islamic regulation for them to consume. Currently halal supermarkets and restaurants are mostly located in Muslim populated area that explains considerable Muslims settlement in the surroundings. Some Muslims married to Koreans started small halal supermarket to ease the supply of halal ingredients and food products to Muslims in Korea. Residing and Temporary visiting Muslims in Korea show similar tendency on food consumption pattern in Hwang, Lee, Kim, and Choi (2015) research that they observe items for halal certification and animal ingredient free. This tendency is remarkable in animal raw meat and its processed products.

Table 3.3: Places of food consumption and frequently purchased food items of Muslims residing in Korea

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Source: Hwang, Lee, Kim, & Choi (2015)

3.5: (KMF) HALAL CERTIFICATION

There are about a few halal certification-awarding bodies in Korea. The KMF is the first and the most prominent halal certification awarding body in Korea. The requirements for KMF halal certification are not much difference to other halal certification that stated compulsory requirements, such as: manager and worker of halal restaurants must be Muslim; in case of using not halal certified animal meat and ingredients which are not allowed in Islamic law, it may not be certified; ingredients should be out of the bounds of cross pollution; in case of selling liquor and alcohol products, it shall not be certified; all animal raw meat must be certified halal animal meat, and submission of information and necessary documents of supplier is required; and all the ingredients used should be halal products or in accordance with acknowledged status (Korean Food Foundation, 2016). Like other halal certification procedure, KMF also requires factory visit to inspect to ensure halalness of the product without an involvement of non-halal materials and activities. Laboratory test report or copies of HACCP, GMP, ISO and such certifications relevant to safety are required as an evidence to ensure product safety. KMF halal also set the expiry date of halal certification by one year or two years, which indicates that the company or individuals who wish to sustain its halal certificate on product or services should renew the certification.

There is no such measurement to define the degree of halal certification in international halal market, yet there is cross-accreditation among each halal certification. Report by KPMG International (2015) recognises JAKIM (Malaysia), MUI (Indonesia), IFANCA (USA), and MUIS (Singapore) as major international halal certification authorities; MCB (UK) and SANHA (South Africa) are considered well-recognised certification in its regions; and ESMA (UAE) is considered a promising halal certification authority in its region. While JAKIM, MUIS and MUI – Southeast Asia region’s halal awarding-bodies – are competing for their initiative in the region that have established such list of cross-accreditation to recognise other halal certification as halal in its extent. Dr Farkhari, a secretary-general of Halalworld stated that there is an effort to standardise international halal certification, however the negotiations are proceeding with difficulty due to such competition within the region. Although some countries like Indonesia, requires obtaining MUI if wishing to export halal food products to Indonesia, countries in other regions have a tendency to recognise halal certification from OIC member nations (Yoon, 2016). Although KMF halal is a major halal certification authority in Korea, its value and recognition seems only confined to its domestic market. Currently, it has cross-accreditation with Malaysia JAKIM since 2013, and UAE ESMA since 2015, yet Indonesia MUI, Singapore MUIS and other halal certifications cross-accreditation are planned (SUPERICH, 2016; Hwang, Lee, Kim, & Choi, 2015). Nevertheless, KMF halal certification does not have high recognition in global halal market yet, and also it does not have competence and well-improved infrastructure compare to other major halal certifications (Woo, Park, & Ko, 2015; 구경우, 2016). Furthermore, most of KMF halal certification is localised in food products or services while certification of cosmetics, pharmaceutical and others remains at toddling stage as Lee (2016) stated that only a few local cosmetic and pharmaceutical companies have obtained halal certification on their products.

Islam is still a minor religion in Korea, low recognition of KMF in global halal market and undue value of KMF halal certified products to food items are certainly disadvantages for KMF halal certification, which give concerns to individuals and companies obtaining KMF halal certification.

Despite the disadvantages of low level of recognition in global market and its mimic performance status, there are advantages of obtaining KMF halal if to concern with economic factors, especially for domestic manufacturers or individuals who wish to certify their products or services as halal. Professor Lee Hee-yul, known as a halal food expert, recommends Korean companies who wish to obtain halal certification to be awarded by KMF (Weekly Trade, 2015). He presented affordable application and process fee of halal certification as the most beneficial merit of obtaining KMF halal rather than foreign halal certification. In fact, companies have to pay inspection fee as a process of halal certification. Therefore, for example, if a company X, which has its manufacturing facilities located in Korea, wish to apply KMF halal certification for a product, the company have to pay KRW 100,000 (US $87) for registration, at least KRW 150,000 (US $131) to KRW 300,000 (US $264) – differ by province; for inspection, and impose KRW 600,000 (US $524) per item for the first registration, and KRW 500,000 (US $437) for the additional items to be registered – based on the exchange rate of 7th February 2017, US $1=KRW 1,145. Therefore, an average cost to certify one product by KMF halal is: Registration fee, Inspection fee and Certification fee = KRW 850,000 (US $742) and 10% additional tax. The fee charged by KMF is considerably lower than other foreign halal certification awarding bodies. JAKIM imposes US $2100 for the certification fee to companies outside of ASEAN while only RM 2100 is charged to companies if the potential facility is located in ASEAN countries. All other expenses such as air ticket and accommodation and others have to be covered for the inspection process. Thus, KMF halal certification may be more appealing than foreign halal certification for SMEs owing to its lower cost and short processing period. However, if to consider the current issue of cross-accreditation of each halal certification, since KMF halal only can be recognised by JAKIM and ESMA, if a company to consider other halal markets besides Malaysia and UAE, it is required to obtain certain halal certification upon the criteria specified and acceptable by those markets.

In the research of Hwang, Lee, Kim, and Choi (2015), the recognition of KMF by Muslims residing in Korea is considered to be high, if compared to the recognition by temporary visiting Muslims in Korea. While MUI, JAKIM and ESMA are all well recognised by residing and temporary visiting Muslims. One of the main reason causing the recognition issue is difficulty of purchasing KMF halal certified products that does not allow potential consumers to be aware of KMF halal certification, although the promotion of KMF halal certification or halal certified products is as earnest as ever.

3.6: THE CURRENT STATUS OF HALAL INDUSTRY IN KOREA

The previous president Park Geun-hye highlighted halal as a priority for her government in her New Year address in January 2015 (Beer, 2015). Korean government has signed MOU with UAE to seek development of halal food industry in the early 2015. Lee Dong-Pil, the Minister of Agriculture, Food and Rural Affairs (MAFRA) mentioned after the MOU that the ministry would seek to boost halal food export and establishment of Korea Agro-Fisheries & Food Trade Corporation branch office in Dubai (salama, 2015). The ministry signed the tripartite MOU with KMF and Korea Food Research Institute and the establishment of slaughterhouse for halal animal meat and halal food complex was also designated. Introduction of UAE halal certification scheme – ESMA, which is highly recognised globally, might help to overcome a recognition issue of KMF halal. MAFRA expected halal food market’s growth to about 21 per cent by 2019 (Yim, 2016). MAFRA has suggested the establishment of Halal food support centre, such government agencies KFRI, aT, KOTRA and KTO to be in charge of halal food research, market investigation and support, eateries and tourism, and export. Besides, the first halal trade show was held in August 2015 which attracted delegates from 10 countries including the UAE, Indonesia, Turkey and Malaysia. This is a further sign of Korea’s commitment to develop and expand its halal export business. In October 2016, MAFRA announced KSH1061, a guideline regarding manufacturing, processing, handling and storage of halal food, in Korean Industrial Standards (KS). This recent guideline was established through a cooperation between MAFRA and Korea Food Research Institute (KFRI), based on study of Islam nation’s halal standards such as Malaysia MS, Indonesia HAS, UAE GSO and OIC SMIIC to provide basic information and requirements of halal certification for food and food service companies who wish to enter global halal food market (MAFRA, 2016). In Dubai, UAE, MAFRA and aT (Korea Agro-Fisheries & Food Trade Corporation) held the Korean Food Fair in November 2016. Along with the food fair, the second Expert Forum for Halal Food between Korea and UAE also hosted on 23 November that offered more opportunities for Korean participations to understand halal rules and strategies to develop halal food industry (aT, 2016). Currently, the plan for establishment of halal complex had to be deferred after a year due to several campaign and public opinion against the plan.

On contrary to those negative activities towards halal, there are many halal-friendly places in Seoul. That is 10 Usadan-ro (“- Ro” means ‘road’ in Korean) in Itaewon, where often called as ‘Islam village’. The Seoul central mosque locates in Usadan-ro, and along the road there are many halal restaurant and shops. There are more than fifteen halal certified restaurants located in 10 Usadan-ro with various cuisines such as Korean, Indian, Pakistan, Arabian, Indonesian, Malay, Turkish. Besides restaurants, there are halal supermarkets, halal butchers, Muslim bookstores, halal guesthouses and halal bakeries Muslims with Turban and Hijab can be seen. According to an employee in halal supermarket in Usadan-ro, most of customers are foreigners from India, Pakistan and Turkey; however, the number of Korean customers today seems increasing (Lee Y. G., 2015). Halal food courts are also increasing; for example, Hanyang University opened the first halal university food court in Korea in April 2013. The university provides halal food twice a week. There are only 80 Muslim students in the University, and according to the interview in the article, one of the Muslim students expressed satisfaction and appreciation to the university for consideration of Muslim students (Jung, 2013). Not many supermarkets are dealing with halal certified products. In 2016, in Gongdeok-dong, Mapo-gu, Seoul, halal supermarket was newly opened that only sells halal certified products. All supermarkets treat halal products in Korea are located in foreign-populated area, where the demand for halal products and meat from Muslim consumers is high.

In 2014, Korea’s halal agri-food export recorded US $680 million and it is expected to increase in 2017 to US $1.2 billion (KPMG International, 2015). Nongshim, is considered as the most successful example in Korean company in global halal market that received Best Brand Signature Award (BBSA) with Nestle, Coca-Cola, McDonalds, Subway and other major global food manufacturers, by Malaysia APBF (Asia Pacific Brands Foundation); BBSA is recognised as the most authoritative brand evaluation institute since 2004 in Malaysia (Nongshim Co., Ltd., 2014). Nongshim’s Shin Ramyun – Instant noodle product – is certified as halal by KMF without using beef but soybean protein in 2011. In the same year, Nongshim established special halal production facility in Busan to manufacture halal food products, and in 2013, Shin Ramyun was certified by JAKIM. From the sales of halal products, the company recorded US $2.5 million in 2014 (Yoon, 2015). Some snack products of Lotte Confectionery, such as Pepero and Corn Chips are certified as halal products. Orion’s Chocopie is certified as halal by using plant origin gelatin instead of pork origin gelatin and several soymilk products of Dr. Chung’s Food are also halal certified. Besides, CJ, Daesang, Crown, Pulmuone and Our Home obtained KMF halal certification on their several food products such as coffee, snacks and noodles items. Companies, such as BBQ, Nene Chicken, Red mango and Lotteria are using halal certified ingredients in Southeast Asia which have already spread widely within the region (KPMG International, 2015).

KTO published a booklet titled “Muslim Friendly Restaurants in Korea” in December 2014 to give further information of restaurants in Korea that Muslims may able to dine. The booklet identifies 118 restaurants and distinguishes restaurants by Muslim Friendly Classification. The classification was established by KTO as five categories: Halal-certified, Self-certified, Muslim Friendly, Muslim welcome, and Pork-free (4) – for details of each classification, see Table 3.4 and Figure 3.3. Besides, KTO held an event titled “Halal Restaurant Week” from 1st November to 10th December 2016 with participation of 93 Halal and Muslim Friendly restaurants in Korea to promote halal-certified and Muslim Friendly restaurants. There were 404 products certified by KMF as halal products in 2014 and 6 restaurants certified as halal restaurants by KMF in the late 2015 (정재림, 2015; Hwang, Lee, Kim & Choi, 2015). As of August 2016, there was a slight increase – total number of KMF certified products of 597 items of 202 producers and nine restaurants were certified by KMF (Shin, 2016; Korean Food Foundation, 2016). 7 out of 9 KMF halal certified restaurants are located in Itaewon area, and serving Turkish, Indian, Arabic and Indo-Malay cuisine. From these facts, it can be assumed that most of halal certified or Muslim friendly restaurants are serving certain ethnic cuisines where the countries inherit Islamic culture and great number of Muslim population. There are around 140 restaurants in Korea recognised as a Muslim Friendly restaurants, which reveals the need for more facilities to cope with increasing number of Muslim population in Korea. Lack of halal ingredients manufacturing facilities could be one of the main reasons of small number of halal certified restaurants in Korea by giving difficulties for such product and businesses to be certified as halal.

Table 3.4: KTO Muslim Friendly Restaurant Classification

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Source: (KTO, 2014; KTO Malaysia, 2014)

3.7: CHALLENGES IN DEVELOPING HALAL INDUSTRY

As mentioned above, Korea has a small percentage of Muslim population. Followed by several protestant campaigns held against halal industry, it can be assumed that establishment of halal industry would encounter a lot of opposition. It cannot be denied that most of consumers of halal products are Muslims, while in Korea; non-Muslim population is still an absolute majority. Islamophobia is certainly a strong word to use, which is against Islam and any Islam-related matters. However, the idea of Islamophobia cannot be ignored to consider acceptability in Korea. What more, it seems quite adhered in the society that it is easy to find and hear Islamophobic opinions from Koreans. In fact, the proposed taxation law with the facilitation of Sukuk – represent the proportional ownership of assets, referred to as ‘Islamic bonds’ (Afshar, 2013) – was rejected in 2010. Regarding the halal complex establishment, there was 23,000 online users have signed a petition against the establishment plan in Daum, a leading portal website in Korea, and such movement seems increasing public fears on terrorist attacks by the Islamic State group (Cho Chung-un, 2016). There was a performance in front of Korean government complex in Gwanghwamun – located in the central Seoul; by Coexistence of Animal Rights on Earth (CARE), a local animal rights activist group is against the government’s plan to establish halal slaughterhouses in halal complex that halal slaughtering method is more humane and cruel than conventional methods because the animals requires to stay alive and conscious before the slaughtering process is conducted (Yim, 2016). According to JTBC’s Fact Check Show (2016) with regards to rumours on establishment of halal food complex in Iksan, rumours are: become a IS outpost, the government will provide land of 1.7km[2] to establish halal food complex, more than a million Muslims include Muslim butchers, Imams, and their families will enter Korea with the government support of 1.5 million Korean won as resettlement funds. A reporter Kim Pil-gyu stated in the show that halal food complex has been planned to establish in Korea National Food Cluster in Iksan city, but has not confirmed the size of distribution in national food cluster. Followed by professor Lee Hee-yul denies the rumors that Nongshim, CJ, Daesang and other large food manufacturers who produce and export halal food products, there are no such case or duty of Muslim employment found in their food manufacture facilities. And added that there seems to be more Muslim labours in other manufacture industry cluster than food manufacturing sector. An officer of Agriculture, Livestock and Fisheries Department of Jeollabuk-do provincial government stated that such slaughtering facility is non-permitted industry in national food cluster, hence the facility cannot be established. The government had to deny the rumours, and announced deferment of the plan with the reason that less demand and that the government is reviewing the plan (Cho Chung-un, 2016). Besides, some Protestants seem fear on expansion of Islamic belief and its influence in Korea. Followed by an interview of Sung Il-kwang who is a representative of the Center of Middle East Studies, due to the rise of terrorism group IS and several terror attacks by extremist Islamic groups, the reputation of Islam has worsened in Korea. And added that some Protestants in Korea shows Islamophobic tendencies in several campaigns opposed Islam, for example, campaigns against halal food complex in Iksan. He illustrated that the plan for halal complex became controversial upon strong opposition from some protestant groups. There is no clear solution to prevent the image of Islam continues to be worsen, however, publics should distinguish the difference between Islam and Islamic extremism – terrorists groups (Cho Sang-hyun, 2016). There is an argument based on the rejection of the halal food cluster which politicians are motivated by Christian lobbyists. Either such lobby really happened to be motivated or failed to motivate politicians, an established factor for the rejection is due to a strong opposition by the other religious group. In articles of Mohammed (2014) and Parker (2010), the objection of such plans and veto of Islamic-products are mostly overwhelmed by Islamophobic views and strong opposition by Christian evangelical groups. This can be deemed as a careless example by not referring such affairs to public opinion in prior to implication or action but push forward unilaterally by government or companies, which rose strong opposition from other religion groups. No proper understanding or information on halal and Islam as a religion provide reasons to spread Islamophobia in public, and further give false perception to other religion groups are apt to be misunderstood.

Not only protests from several organisations in off-line, opinions against Islam or related issues can be found in online as well. For example, in web forums, which are commonly used in Korea, allow people to share certain topics upon their interest. There are many forums under several categories, which also include several forums on Islam where in fact some forums only consist of Muslims residing in Korea for sharing information or gathering. A member in a web forum in a context of district-residents in Seoul raised a question to ask opinions on the halal supermarket in Gongdeok-dong, Mapo-gu, Seoul. Most of the replies on the question seems to have an opinion against the supermarket that: why Islamic character (Arabic) is on the sign of the supermarket which looks very repulsive; whether the supermarket is a headquarter of the Islamic community; why did it open in front of the residential area; saw many Muslims went to the supermarket which can cause the area to feeling of hatred and scary and for Non-Muslims and so on; that the idea of Islamophobia is immanent mostly. In addition, based on my observation and experience, my non-Muslim friends and acquaintances frequently asked and were curious about the reason for this study, which is scary that even the society may not accept the religion but rather seeing it as an aversion. A simple question was asked to them on possibility of purchasing halal products. Most of answers were: not preferable or probably not, because halal is only for Muslims. Only few were indifferent to halal products that had an experience to travel or live in Muslim-majority countries. From those reactions from random Koreans, it can be assumed that although there are many articles and opinions released on pro-halal and potentials on halal industry, it will be difficult to persuade Korean consumers who are against on Islam and any related matters.

Lack of manpower and infrastructure due to small Muslim population in Korea and Islamophobic views are main challenges of developing halal food manufacturing industry in Korea. Muslim labours are essential in all halal food manufacturing procedure. The author believes that the current manpower shortage issue can overcome by importing foreign Muslims. However, it is difficult to overcome Islamophobic views by publics, other religion groups and animal welfare groups that may need a long time and promotion to surmount the challenge.

CHAPTER 4: THE VIABILITY OF MANUFACTURING HALAL FOOD PRODUCTS IN KOREA

As stated in Chapter 1, one of the objectives of this study is to investigate the potentials of sustaining halal manufacturing industry in Korea (by diversifying into other halal commodities using the by-products of halal meat). This section applies SWOT analysis in order to see the potentials of such industry in Korea based on collected data from secondary sources; the viability of the halal animal meat facility; and TOWS matrix to figure out strategies to develop halal manufacturing industry in Korea and overcome major challenges identified based on the SWOT analysis.

4.1: SWOT ANALYSIS

SWOT Analysis is a structured analysis for strategic planning. In this study, the method is used to identify the strengths, weaknesses, opportunities and threats involved in development of halal food manufacturing industry in Korea. To assess the viability of halal food manufacturing industry in Korea, the analysis will recognise strength and threats in Korea to develop halal food manufacturing industry with possible opportunities to improve the development of the industry and weaknesses to be improved to foster the growth of the industry. Data obtained from the literature review and findings are used in this section to assess the viability of halal food manufacturing industry in Korea.

The SWOT acronym is defined as 1) Strengths are the positive attributes and the advantages of a certain study, 2) Weaknesses are the negative attributes, 3) Opportunities are the factors that help to prosper and flourish, and 4) Threats are the factors that could hamper the growth that cause a setback. Using the SWOT analysis, will help to investigate the viability of halal food manufacturing industry in the following manner:

- It will act as a source of brief information for strategic planning
- Helps to maximize the strengths and tackle the weaknesses.
- To improve the opportunities and overcome potential threats to the industry.
- By analysing, it helps to understanding the past, present and future of the industry. The future plans for the development of the industry can be chalked out.

Table 4.1: SWOT Analysis

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4.1.1: STRENGTH

High reputation of Korean products in international market due to its high quality and advanced technology (백예리, 2016; McGlade, 2014) is strength of Korea that may give good reputation on Korean manufactured halal products. Korea spends considerable amount of GDP on research in proportion to its income of approximately 3.2 per cent while OECD countries average remained at 2.4 per cent in 2015 (OECD, 2017). There are several food research institutes that exist in Korea which Korea has achieved, such as: advanced agriculture, food processing, food manufacturing and packaging technology which can be facilitated or establish further research on halal food or other products. Governments’ interest and efforts are the driving force of the current status of halal industry in Korea, such as MOU with UAE for further cooperation on halal industry and certification, halal cluster plan and establishment of Muslim Friendly classification. Hallyu (Korean Wave) contributes remarkable impacts to increase awareness on Korean products, culture and society in general. In addition, tourism has affected remarkably from hallyu that increasing number of Muslim population in Korea is identified. As stated in the section 3.3, the number of Muslim tourists visited Korea in 2016 recorded 980,000 which is increased by 33 per cent from the previous year (KTO, 2017). In addition, halal industry has functioned as a synergy to various economic subsectors especially in tourism, food manufacturing and F&B that shows growing number of halal certified food products and restaurants.

4.1.2: WEAKNESS

Despite advanced technology and high reputation of quality Korean products, small Muslim population in Korea and lack of halal infrastructure are the main disincentives to develop the industry in Korea. Currently there are an estimated 100,000 to 140,000 Muslims in Korea and Korean-Muslims only consist a quarter of the current small Muslim population. Thus, indicates a limitation of supplying manpower on halal manufacturing industry where Muslim manpower is essential and requires Muslims’ engagement in all manufacturing process as a prerequisite. Due to small Muslim population and lack of studies regarding halal industry, there is a limitation of supplying experts on halal industry as well. Domestic labour cost in Korea is considered high if compare to the current leading exporting countries. For example, the minimum wage of Korea is higher than Brazil, which minimum wage of Korea in 2017 is at KRW 6,470 (US $5.68) per hour and Brazil’s minimum wage is at R$4.26 (US $1.36) per hour (Ahn, 2016; Forte, 2016) – based on the exchange rate of 15th April 2017, US $1=R$ 3.14=KRW 339,589. Higher labour cost will increase the production and selling cost which may weaken Korean halal products’ competitiveness in global market. The current halal animal meat sold in Korea is mostly imported from abroad, for example from Australia, although there is a facility which follows halal slaughtering method and produces halal chicken meat which was established recently. The recognition of KMF halal is nominal as it is mostly well-known only among Muslims residing in Korea. Thus, there is a need to increase the awareness of local halal certification in global level. The government has been putting efforts to promote halal industry such as halal restaurant week or halal expo, however, halal products are still in unaccustomed to Korean consumers and publics’ poor understandings on halal and Islam gives false information and image to halal products that are identified as an element of Islamophobia. There is no mega global food brand in Korea that may give difficulty to pierce the current major halal food market with Korea-manufactured halal products unless the company has formed well-established foundation in the Muslim-majority countries’ market.

4.1.3: OPPORTUNITY

Halal food manufacturing industry will lead to greater progress on research of halal food, products, services and towards halal industry overall. It will also provide an opportunity to promote proper understandings and ethical values of halal and Islam to publics that gives potentials to overcome the negative image on Islam. Throughout the promotion of locally produced halal food, domestic non-Muslim consumers may give trust on the products that lead to the purchase and consumers’ satisfaction will increase the awareness on halal food as quality and hygienic products. Locally produced ingredients, product and by-products can offer fresher and lower cost due to short delivery time and low freight charge. Furthermore, locally produced quality products and ingredients can be used in other halal commodity production and can supply to halal service industries in affordable cost. It may be possible to diversify halal food products and non-alcoholic food products with local halal food products as well. Korean companies can manufacture halal meat, food products or commodities to satisfy the increasing demand of halal in domestic market by increasing number of Muslim tourists and residents. Food manufacturing companies can produce scarce items such as authentic halal Korean traditional food products that can export to Muslim-majority countries along with the popular trend hallyu. Halal food products can also provide benefits to domestic consumers with wider variety choice of quality and hygienic products. Many Korean major food companies have already started to manufacture halal food products and those companies have earned a lot of benefits from halal products and further expanded their market towards Middle East and Southeast Asia region. If halal manufacturing industry could be established successfully, it is expected to create more employment opportunities as it is shown in Malaysia and other halal pioneering countries that bring economic advantage to those countries. All of these, of course need further research and development, as well as studying the possible changes on the consumers’ preferences.

4.1.4: THREAT

Due to small Muslim population in Korea, the current demand on halal products is considered low. The number of Muslim population to Korea is increasing, yet Muslims are still a minority community in Korea that does not have huge power of influence in domestic market. To obtain halal certification, there are certain charges for registration and long procedure that can give burden to applicants who wish to obtain halal certification. With the current nominal recognition of KMF halal certification, current food manufacturing companies tend to choose prominence foreign halal certification such as JAKIM or MUI rather than KMF. There are several companies have manufactured halal food products and halal product plant for exporting yet no specialised halal food brand or company are existed in Korea that might give difficulties for companies to promote their halal products with low recognition of the brand and certainty issue in Muslim-majority countries. Islamophobia, opposition from animal welfare groups and other extreme religious groups can be considered as barriers to establish halal industry. Indeed, public opposition deferred halal food complex plan in Iksan in national food cluster. And it is easy to find negative views on halal and Islam in online and off-line forum. Korean made food products considered as high price. For example in China, Korean food products observed as luxury food products, hence mainly purchased by middle class and high class (최보성, 2016; Shin, & Kim, 2011).

4.2: VIABILITY OF THE HALAL ANIMAL MEAT FACILITY

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Figure 4.1: Potential impacts of halal meat manufacturing industry to Korea

Source: Created by the author

Once the halal animal meat facility is established, it is possible to produce halal animal meat and halal meat by-products. Final products from the facility will be able to supply in domestic market to satisfy the demand of halal meat and its by-products. The current demand on halal products and services in Korea still retain low, however, it is expected to increase upon increasing number of Muslims to Korea in recent years. Halal animal meat facility gives great capabilities to cope with the current and increasing demand in domestic market. More halal commodities and infrastructure can embrace more Muslims to Korea by overcoming Muslims’ concerns on food consumption that enables ethical consumption of Muslims in Korea. Furthermore, capability of halal animal meat production will lead to high quality and hygiene meat production, which will widen domestic consumers choice on quality meat. Throughout the competition in domestic market with other non-halal products, halal manufacturing companies will put more efforts to manufacture better products, such as investment on advanced technology, research on halal products and wide range of halal products; which will benefit companies by improving the quality of products and increasing competitiveness of the company value. Halal animal meat facility is an opportunity to companies for halal commodity manufacturing, which can boost the benefit of the company by quality production and extension of the market towards global halal market, particularly to Middle East and other Muslim-majority countries where the demand of halal commodity are high. Final product from the local facility can give synergy to other economic subsectors such as Tourism and F&B by supplying qualified local halal animal meat to those service areas, which can reduce time and cost generated by importing halal meat. The facility would also enable the export of halal meat and product with ‘Made in/by Korea.’ The current spread of hallyu and good reputation of Korea has built a great demand of Korean products in global market. Companies can expect global name value and economic benefit from the facility by satisfying the demand not only a domestic market but also a global market. Overall, consumers, companies, industries and all stakeholders will gain benefits from the facility that enables the procedure of halal manufacturing industry and further development of halal industry in Korea.

Therefore, halal animal meat manufacturing facility benefits all stakeholders as economic benefits and quality food products. Manufacturing companies and industries will earn income and high competitiveness in domestic and global market by supplying their quality food products. Halal commodity or service providers can furnish quality local products with affordable price from the facilities that may encourage development and diversification of halal industry in Korea. Muslim consumers can overcome their difficulties on food consumption in Korea and non-Muslim consumers will have wider choice of quality products purchase. The facility also can promote economic circulation in Korea which increases the demand of logistics and labour to facilitate the manufacturing production. Thus, the facility lays the foundation of halal manufacturing industry in Korea which has a potential to accelerate the development of the industry and benefits all stakeholders.

4.3: TOWS MATRIX - POTENTIAL STRATEGY

TOWS matrix is a way of combining strengths or weaknesses with opportunities and threats to develop a strategy. This section figures out strategies to develop halal manufacturing industry in Korea based on SWOT analysis and overcome challenges addressed previously.

Strength-Opportunity (SO) strategy uses strengths to take benefit of the opportunities; Strength-Threat (ST) strategy is taking advantages of strengths to avoid the exist and potential threats; Weakness-Opportunity (WO) strategy uses the opportunities to overcome the weaknesses and Weakness-Threat (WT) strategy is a defensive strategy to minimize and weaknesses and avoid threats addressed in SWOT analysis.

Table 4.2: TOWS matrix

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4.3.1: STRENGTH-OPPORTUNITY (SO) STRATEGY

Korean food products have a good reputation in global market by its advanced food processing technology and high quality. And the demand of Korean products is increasing globally along with the spread of hallyu. Using the current reputation of Korean products and flows of cultural trend, Korean made halal food products may value high in global market. The capability of halal food production is certainly huge benefits which open wider trading network towards Muslim-majority countries and also provide further opportunity to develop halal industry in the country. With regard to increasing Muslim population to Korea, Korea has more reasons and potentials to develop halal industry. Indeed, the government has been seeking to develop the industry recently due to rapid growth of the industry with rapid increase of Muslim population worldwide and the number of KMF halal certified products and restaurants are increasing. The leading domestic food manufacturing companies also established halal food manufacturing plant expecting the growth of global halal food industry and has been experiencing economic benefits by their locally produced halal food products. To utilise benefits of the opportunities with strengths, more investments and researches are required to pursue the development of the industry. KFRI, aT, MAFRA and KOTRA may collaborate with KMF to research on halal food, promote proper information of halal food and Islam in publics to avoid Islamophobia and negative views and also extend the current Korean market forward to Muslim-majority countries with Korean made halal food products. The quality and range of products can be improved and diversified by investment and researches which will enhance the quality, technology and knowledge of halal food manufacturing industry, thereby increases the competitiveness of local halal food manufacturing industry and food products globally.

4.3.2: STRENGTH-THREAT (ST) STRATEGY

The author assumes Islamophobia and negative views on halal food and Islam are main threats for development of halal food manufacturing industry in Korea. It is recognised that halal food industry is a global industry that many countries have been benefited from the industry which in fact, the current top halal product exporters are non-Muslim countries, for example, Brazil, Australia and USA. Those countries and international food manufacturing companies, for example, Nestle and many others are huge halal product manufacturers with well-established infrastructure, facilities and active researches. As mentioned in the section 4.3.1, the government must put stronger supports to the industry by more investments and efforts to improve the current status of halal industry in Korea and to place the industry in global stage. Halal restaurant week and KTO Muslim Friendly Restaurant Certification are great efforts made by the government agencies to promote awareness of halal food and Islam to publics and attract Muslims visit to Korea as attempts to reduce Muslim tourists’ barriers to visit Korea, especially food consumption. Export of manufactured halal products to abroad will solve the issue on the current low demand of halal food in Korea derived from its small Muslim population. To overcome publics’ Islamophobic and negative views on halal food and Islam, a promotion of proper information on halal food and Islam is suggested with highlights of economic and social benefits of the industry to Korea.

4.3.3: WEAKNESS-OPPORTUNITY (WO) STRATEGY

The current negative views on halal and Islam is due to poor understandings and lack or promotion on Islam. However, the number of Muslims to Korea is increasing owing to the spread of hallyu. The government’s interest in the industry is consistent that the industry was identified as one of the economic development strategic industries. In fact, the government has carried several efforts to develop the industry as one of the economic development strategies, yet the industry is still considered as a niche market in Korea. Low recognition of KMF halal certification in global halal market is one of weaknesses which needs to overcome prior to develop the industry. Throughout the production of quality hygienic products from the halal manufacturing facility will increase the recognition of KMF halal certification in global halal market by exporting, achieve self-sufficiency on halal animal meat and food products with economic benefits, train halal experts and also may increase halal infrastructure and facilities that can remove barriers of Muslims consumption and living in Korea. To maximize the opportunities to overcome weaknesses, it is necessary to cooperate with global leading halal exporters and halal certification awarding bodies to adopt and learn those global leading groups’ requirements and strategies to cope with the global halal trend. The cooperation with those global leading halal agencies and countries can be used as a method of effective promotion of Korean halal products and halal certification in global market which may increase the competitiveness of local halal manufacturing industry globally.

4.3.4: WEAKNESS-THREAT (WT) STRATEGY

In order to develop halal food manufacturing industry, publics’ Islamophobic views on halal food and Islam need to overcome which has deferred the halal food complex plan in Iksan. It is more beneficial if halal food manufacturing industry can be established in Korea which lower down the freight cost and time and provide fresher quality food products in domestic market. Moreover, the final products from the facilities can be exported with ‘Korean made’ label which is recognised as high quality products in global market. Manufacturers who wish to manufacture halal food products may target Muslim-majority countries rather focus domestic market as the only market if considers the demand of respective markets. If publics’ opposition on halal and Islam sustains or worsen, the facility can be established in Muslim-majority countries where has less barriers and opposition on halal and Islam.

4.4: RECOMMENDATIONS

Currently most halal products are imported from abroad to satisfy the demand of halal products. However, Muslim population is constantly increasing and the demand is expected to increase as well. To cope with the increasing demand in domestic market, establishment of manufacturing facility is essential for self-sufficiency and economic leakage driven from the import of the products and services. Halal animal meat can be used for halal food and commodities manufacturing and halal services, which can satisfy the domestic demand and also give opportunity to export Korean manufactured halal products as well. The current top halal animal meat exporters are also top halal product exporters in global market, while Malaysia, Singapore, Indonesia and such global halal leading hub countries’ dependency on halal animal meat import also remains high on those halal meat exporters. It can be assumed that exporting halal animal meat is an essential requisite to become global top halal exporter, which identifies the need of slaughterhouse as a pillar to enter halal manufacturing industry. Additionally, the recognition of domestic halal certification also requires reaching in global level to overcome the awareness and trust issue of domestic certified products. Although halal is recognised as a quality, hygienic and safe, it is a religious term that there were strong opposition and Islamophobic views exist in Korean society. It may be suggested to promote with highlights on quality, strict requirements and process for the certification rather than give emphasis on religious. Promotion and building good image of halal is important because halal is still an unfamiliar term to Korean consumers that it is not easily found in Korea unless in Muslim-populated area. Promotion with a highlight on quality and hygienic aspects may be more beneficial to build its recognition to domestic consumers rather than approaching religious aspects to avoid alienation on halal and improve its Muslim-exclusive image of halal. Overcoming the current Islamophobic views and opposition on halal are absolute matter in prior to facilitate halal manufacturing industry. It would be advantage to all stakeholders for halal manufacturing industry if it is able to facilitate such facility in Korea. However, it would be able to establish the facility abroad where such impacts of threats are lower than Korea if threats may hardly overcome. Muslim-majority countries with lower labour cost, closer-geographical proximity to Korea and low set up capital would be the most potential places to be considered in that case.

CHAPTER 5: CONCLUSION

It is obvious that halal industry is no longer a niche market but a major global market that is valued at trillion dollars with remarkable growth. The term ‘Halal’ is originated from Islam as a guideline for Muslims to follow in their lifetime that halal does not only confine to food, commodity or services but all aspects of Muslim’s lifestyle. Halal was conceived as an exclusive term for Muslims, however, there is increasing awareness among non-Muslims acquainted strict halal standard as a guarantee of hygiene and safety that gives further potentials on development of halal industry. Halal mark and certification are given as an assurance to certify that such product or service is halal that followed strict requirements and Islamic regulation to satisfy the quality and purity.

The industry has already become a global major market with the current demand of the industry. The demand and growth of the industry are expected to increase along with the increasing number of Muslim population in worldwide. Several countries and companies have already benefited from the industry that extended the market, earned economic benefit and built high recognition of their name values, brand images, product and service qualities and local halal certification. The remarkable benefits resulted from the industry attracted the interest of many countries and companies. The current top halal exporters and pioneers are trying to further their markets with further research and improvement on their products and services. The current top exporters are the top animal raw meat and live stock exporters that hinted at the potential of halal meat manufacturing facility as an impelling force for maximizing the benefit towards a global manufacturer. With the current remarkable benefit of the current top halal exporters and potentials derived from halal animal meat, this study suggested halal animal meat manufacturing facility as a cornerstone for development of halal manufacturing industry.

Korean government is keen on halal industry and started to make several efforts to promote the industry. However, it is a clear fact that there are several limitations to develop the industry due to small Muslim population and lack of infrastructure and researches on halal. Halal manufacturing process requires Muslims’ involvement in whole processes with Islamic regulation, which requisites experts and considerable number of Muslim manpower. It is only recently that Korean government ventured into the halal industry, while other halal exporting countries and pioneers are focusing on improvement of their current high status to higher level. Lack of understanding in halal and Islam and publics’ Islamophobic views give another barrier to the development of the industry in Korea. In fact, there was publics’ opposition and negative views on halal and Islam on the government’s halal food cluster establishment plan that has to be deferred indefinitely. The current nominal recognition of KMF halal, a major halal certification authority in Korea, is the other barrier that needs to be overcome. It is clearly low in price and shorter period to obtain KMF halal certification for Korean manufactured products compared to obtaining foreign countries’ halal certification. However, the current recognition of local halal certification gives concerns to applicants due to its low competitiveness in global halal market.

Throughout the analysis on the viability of halal animal meat facility, it was identified that despite challenges, benefits generated from the industry are considerable that all stakeholders can benefit from the industry and further give positive impacts in economic sub-sectors. To accomplish the success in halal manufacturing industry, strong government support, more investments, promotion to increase the current nominal recognition of KMF halal and overcoming Islamophobic views of public are absolutely necessary. The current good reputation of Korean products, advanced technology and hallyu (Korean wave) with governments’ interest and efforts towards halal manufacturing industry can boost the development of the industry in global market with an establishment of halal animal meat manufacturing facility as a cornerstone.

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¹ Records of hoehoe (Muslims) in Joseon Wangjo Sillok (the Annals of the Joseon Dynasty) in 4th April of the 9th year of King Sejong as: “Since the hoehoe has worn different costume (with clothing and headgear), people watch them as not belonging to our people and avoid marrying them. Having become this kingdom’s subject, our way of clothing must be followed in order to remove difference of the hoehoe. This would naturally lead to intermarriage. Furthermore, the hoehoe should be forbidden to do their way of ‘rites’ during Great Assembly of the Court.” (Translated by Kim Han, I. S. (2016) in his thesis)