Exports divert to the Halal market

13/11/2024 09:51

The implementation of recent free trade agreements (FTAs) has brought many tax incentives, reducing the procedure for exporting Vietnamese goods to the market of Muslim countries. With this advantage, exporters are changing direction, making good use of the opportunity to bring goods into this potential market.

Efforts to meet Halal standards

Successfully exporting to the market of Muslim countries (Halal) for many years, Ms. Cao Thi Kim Lan, Director of Binh Dinh Seafood Joint Stock Company, said that in recent years, the company's tuna exports to the EU have been affected by the IUU yellow card, so the unit has diversified the market.  redirecting exports to Halal markets, with orders increasing day by day. "Currently, our products have met the standards, achieved Halal certification and food hygiene and safety certification, and are being promoted for export to the Middle East market, especially the United Arab Emirates (UAE)," Ms. Lan shared.

According to Ms. Lan's experience, to enter the Halal market, Halal certification is required. Muslim countries account for one-third of the world's population. Muslims are willing to pay higher prices for green, clean, Halal-certified products. Businesses need to meet these criteria for sustainable exports.

In the past, Vietnamese products entering the Islamic market had to pay import taxes. Recently, free trade agreements (FTAs) have brought many tax incentives, reducing the procedure for exporting Halal-certified Vietnamese goods. Therefore, Vietnamese businesses need to take advantage of this opportunity.

Especially recently, during an official visit to the UAE, Prime Minister Pham Minh Chinh and senior UAE leaders witnessed the signing ceremony of the Vietnam-UAE Comprehensive Economic Partnership Agreement (CEPA) between Vietnam and the UAE. Thus, CEPA was signed after just over a year of negotiations. This is the first free trade agreement that Vietnam has signed with an Arab country, opening a new era in upgraded relations and increasingly entering the essence between Vietnam and the UAE in particular as well as Arab countries in general.

Notably, the two sides have agreed to make a strong commitment to trade liberalization with the UAE committing to eliminate roadmap tariffs on 99% of Vietnam's exports to the UAE. The agreement also includes many regulations to facilitate trade and investment, in line with current trends in digital transformation and green development.

With its strategic geographical location, logistics system, and modern seaport infrastructure, the UAE is an important gateway and can create favorable conditions for Vietnamese goods to access and expand to the Middle East, Africa and European markets. Moreover, the growing population, high income, rapid urbanization, increasing disposable income, and youth preference for seafood protein, online searches for seafood products that have increased in recent years are expected to boost seafood consumption in the region.

According to Ms. Kim Thu, a shrimp industry expert of the Vietnam Association of Seafood Exporters and Processors (VASEP), in the UAE market, Vietnamese shrimp must compete with shrimp from India, China, and Ecuador. In which, Indian shrimp accounts for nearly 60%-70% of the market share, Ecuador has only entered the market in recent years with a 15% market share, while Vietnamese shrimp only accounts for about 5%-7% of the market share. It is expected that with the newly signed CEPA Agreement, Vietnamese shrimp will enjoy the highest tax incentives as soon as possible, to be able to increase market share in this market.

Currently, tuna products imported into the UAE are subject to a 5% tariff. Therefore, businesses expect this market to expand more when the FTA between Vietnam and the UAE takes effect and brings the import tax on seafood into this country to 0%. This will increase the competitiveness of Vietnam's tuna products in this market.

Besides tariffs, the most difficult thing for businesses exporting to the UAE is the importer's requirements related to Halal certification. Accordingly, the product does not contain any ingredients prohibited under Islamic law; during the production stages, the product must not come into contact with any means and equipment from materials not allowed by Islamic law; At the same time, during that process, the product must not come into contact with any nutritious food from ingredients that are not accepted by Islamic law. This problem is being overcome by interested businesses.

Opportunities from the trillion-dollar market

As one of the units actively supporting businesses to access new markets, Mr. Dao Minh Chanh, Deputy Director of the Ho Chi Minh City Investment Promotion Center (ITPC), said that the Halal industry is growing strongly with more than 2 billion Muslims worldwide. The establishment of Halal standards from production to distribution is becoming an important trend, creating great opportunities for Vietnamese businesses. The size of the global Halal economy will reach more than 7,000 billion USD in 2024, expected to increase to about 10,000 billion USD by 2028. The total number of Muslims in 2024 is about 2.2 billion, and it is expected to reach 2.8 billion people (30% of the world's population) by 2030, doubling the population growth rate of other religions.

Accordingly, the Halal industry is forecast to continue to thrive in Asian, Middle East, and African markets. Halal trends in 2024 will contribute to reshaping the global Halal business environment, creating new opportunities but also requiring businesses to quickly adapt to the new context.

With the trend of building a Halal value chain, the Halal market is shifting from a mindset that only cares about Halal products to building an entire Halal supply chain.

For sustainable exports, the establishment of Halal standards needs to be focused. Accordingly, businesses and manufacturers need to come up with specific criteria in the Halal production process including factors such as the number of complaints, Halal incidents, frequency of inspections, percentage of employees trained in Halal maturity level, Halal beliefs, etc  Halal reputation index, operating license and Halal rating.

Businesses and suppliers also need to build a reputable Halal brand on the basis of product quality and the quality of the entire Halal business value chain, build a realistic roadmap to implement the Halal value chain and review the progress.

Mr. Firdauz Bin Othman, Consul General of Malaysia in Ho Chi Minh City, said that currently, Halal standards have been accepted on a global scale, especially food hygiene and safety. This has contributed positively to the development and increased demand for Halal products. Particularly, the Halal food segment is growing at a very fast pace, which is forecast to reach a value of about 4.5 trillion USD by 2030. This market is growing due to the growth of the global Muslim population as well as the demand for Halal-certified products. This has brought great opportunities for many countries, including Vietnam, to proactively access the Halal market.

Source: logistics.gov.vn