Prospect and Challenges in Halal Export (Food Business) in Victoria, Australia.
Preface
It's a pleasure to be here to talk about the dynamic prospects and challenges of Halal Trade in
Victoria Australia or more to say for trade between Australia and Malaysia. The free trade
agreement which began in January this year has energised the business communities of both
nations.
For your information the Australia Malaysia Business Council, this is an especially significant
moment. For the last 40 years the council has been doing its best to promote trade and
investment between Australia and Malaysia.
Also now in Melbourne we have the Malaysian Consulate office with Datuk Dr. Rameez the
Consulate General built strong relationships with the Malaysian Australia Business Council, and
that together they work as ambassadors to support stronger cultural links between Australia
and Malaysia.
I also understand that the Australia Malaysia Business Council Victoria works closely with
Austrade, our Department of Foreign Affairs and Trade, and the Malaysian Investment
Development Authority to develop (MIDA) to deliver programs and initiatives that focus on
Malaysia's pro-business infrastructure and opportunities for Victorian business.
Trade between Malaysia-Australia
I also like to bring your attention on MAFTA (Malaysian-Australian Free Trade Agreement) in
many respects is a culmination of that effort. By building on the existing ASEAN - a new wide
trade agreement, known as AANZFTA, which brings together the economies of South East Asia,
Australia and New Zealand, the Malaysian Australian Free Trade Agreement will expedite the
key trade and investment aims of the Council and the Australian Government.
The Malaysian Australian Free Trade Agreement eliminates virtually all tariffs on merchandise
trade between the two nations. This is no small thing when you consider that two-way
merchandise trade reached over A$17 billion in 2011-12
Overall Malaysia is a very significant trading and investment partner for Australia. In 2011- 12,
two-way services trade was almost A$3 billion; and two-way foreign direct investment was
about A$19 and a half billion. Malaysia is Australia's third- largest ASEAN partner and 10th
largest overall trading partner.
Australia and Malaysia enjoy strong people to people links. Over 135,000 Malaysian-born
people are living in Australia, and more than 21,000 students are enrolled in education
institutions in Australia. (out of this number there are 750 Malay families residing in Melbourne
and about 7,500 Malay students in Victoria.
The Free Trade Agreement was the first one signed by Malaysia where it received immediate
duty free access for all goods exported to Australia. For their part, Australian business now
enjoy duty free access for over 97% of all goods exported to Malaysia, rising to 99% in 2017.
Nobody can deny that Australia is a popular destination for Malaysian students, particularly in
higher education, and several Australian universities have established campuses in Malaysia.
Hence, MAFTA not only incorporates economic and technical co-operation initiatives covering
automotive, agriculture, tourism, clean coal technology and electronic commerce, but as well as
21 new Australian scholarships extended to Malaysian students.
Though some Australians are boycotting halal product and services, it will never deter any trade
activities between both countries. Still there are demand and prospects for Malaysian Halal as
there are many supermarkets, grocery stalls, hotels, restaurant, cafe around Victoria and other
provinces that serve and in-needs of Halal Food. As potential exporters or entrepreneurs, one
should not fear with their propaganda in facebook, blog or campaign. They are not anti-Muslim.
They are a just group of people aims to support Australia's economy by seeking Australian to
continue buying the mainstream local traditional products and /or using traditional national
services. To us, the Halal boycott is not a threat - it’s a competition and challenges. Meanings
the halal business owner in Australia must put extra effort to upgrade the quality of their
product/services and marketing strategy.
Why Am I Here?
Today I'd like to talk about some of the prospects and challenges for Halal Export in Victoria
Australia that exist for Malaysian business in Australia.
As I am in Food Industry for 20 years, part of my work I have to purchase for Halal products.
This is sad to report to you that there is a big disappointment that Halal Malaysian products is
very limited on our supermarket shelves. You find Chinese, Middle Eastern, Korean, African,
Indian, Thai, Indonesian even Burmese super mart but not Malaysian Supermarket. There is
great demand for Malaysian Food especially we have two Master Chef winners in the past are
from Malaysia representing Malaysian Kitchen.
I am here in Food Mission to Malaysia as part of my visit to promote halal food in Melbourne.
The objective of this mission is to build linkages between the Halal Malaysia food processing
sectors especially in areas such as manufacturing food and to share knowledge in exporting
food product to Australia.
How To Enter Australian’s Market?
There are number of important considerations for potential exporters who deciding on how to
enter in Australian market or when establishing a business in Australia. For your info, the
Australian government provides a wealth of information to allow exporters to export to
Australia. This information can be extract from http://www.austrade.gov.au/ and
http://www.daff.gov.au/.
It is important to consider the law and regulation if your Halal business is ready and to be sure
that you understand exactly what exporting entails before you start.
Exporting consumes time and money, and requires strong management commitment. In the
initial stages those in management are usually diverted from existing domestic business but for
many companies, this short term stress will provide longer term rewards.
To achieve success, you need to have a plan and remain in control of your halal business, and
not let the business control you. You must always asks yourself - what does it take to be ready
for Halal Export business?
To have a successful export Halal business to Australia, you must able to produce a product
which is in demand in Australia markets, as well as the necessary commitment, resources, skills
and information to support sustained exporting activities over the longer term. Here I like to
share with you the key signs of business are well on its way to being export ready to Australia:
1. Significant management time and strong management commitment. Developing an
Australia business is no different to starting and building your domestic business; in fact,
you can expect it to consume more management time than developing business at home.
2. Exporting requires substantial commitment from management across the business, not just
from the CEO or sales manager.
3. Strength in the domestic market or solid domestic sales form the basis of a good exporting
business. A successful domestic business gives Australian buyers confidence in you as a
supplier and that your business processes are in place and well tested.
4. A strong cash flow and the working capital in developing your export markets. The
Exporters needs strong financial resources to expand overseas to cover the costs of product
modifications, travel and marketing, and the additional costs you might face.
5. Have a right people in place or additional staff to run the export side of your business, and
conduct export planning.
6. You have export knowledge and skills and willing to learn about a wide range of issues such
as how Australia markets operate, export documentation and foreign currency
management.
7. Integrates an export strategy with your Halal’s business plan. Make sure all staff in your
company involved in achieving the Halal export results and has a sense of engagement with
it. This export strategy helps you manage the market sectors you have identified as core
business. Focusing your resources enables you to provide quality responses and service to
your new export customers and will avoid any conflicts between your domestic and
international activities.
8. Conduct a halal market research. It should not be an academic exercise of assembled facts
and figures. Good Halal market research entails finding out what actually drives a market
(including import duties, regulations, distribution channels, market size and growth,
competition, demographics and local production) – and how to get the best out of it. The
most valuable element of market research is information about ‘halal market feel’ and
“how do I get it?” and “what your competitors are doing?” and potential obstacles to halal
market entry.
9. Planning your business trip overseas and see for yourself which market offers the best
opportunities and where to focus your efforts. Determining where and when to visit. A
rules to comply in export business - you should always visit before entering into any
agreements with prospective agents, distributors or other business partners that could
influence your future dealings in that market. In planning your visit take note of holidays
and religious festivals that occur at the time of your planned visit. Have all your paperwork
in order and a checklist of things to prepare before you go.
10. Leave the most prospective until last – when you are better prepared to handle enquiries
and evaluate the fit with what you want to do. Don’t take on more than one or two markets
to start with. Concentrate your effort to have a much better chance of success Plan your
trip at least six weeks in advance. Anticipate that you will be asked about price, volumes
and/or capacity and delivery times.
11. One of the best investments you can make in a successful trip is ensuring your program is
planned and arranged with Malaysian Consulate in Melbourne. This will help you see the
right agents and customers who will be briefed and screened for interest and suitability.
12. Talk with shipping agents in Australia about delivery times and costs, as well as constructing
an export price. Rehearse a series of possible scenarios (given prospective workloads) with
your production team before you leave. This will help you negotiate price and delivery with
more certainty. Do some background reading.
13. If your interest in only in Victoria - First impressions are critical. If you have never visited
Victoria Australia before and don’t know much about it, go on the Internet and read from a
range of sources. Find out something about the country and its way of life. Reflect on how
you would view someone visiting Malaysia to do business with you, who has no idea of life
in Australia.
14. Follow-up. Time and again highly prospective business meetings come to nothing without
appropriate follow up. Make sure, within 48 hours of each appointment, you send an email
thanking your contact for meeting with you, providing follow up information and noting if
necessary that you will get back to them within a specific time period on further particular
requests. This will leave a good impression and demonstrate that you are someone with
whom business can be reliably done.
Tip for new or potential Exporters to Australia.
1. To do “Checklist” - I suggest you keep this list to ensure you achieve all you can.
First steps – check your passport. Make sure it has at least six months’ validity before any
trip. Discuss the timing of your visit with Consul General of Malaysia. Ensure your visit
program can be arranged in that time. Check your visas. Visas can often take 2-3 weeks to
arrange – particularly if you require more than one, and you need to send your passport
away to Australian Embassy. Book your flights and hotels. Look for hotels with good
business centres and in-room Internet access. Check your vaccinations are up-to-date and
arrange your travel insurance.
2. Review your in-market strategy:
In preparing for halal export to Australia you must have developed a general halal export
strategy inclusive of marketing strategy. Review this and perhaps add to it further for this
particular market. Review your unique selling proposition, quality and hygienic product and
appealing selling message that sets your product or service apart from its competitors.
3. Don’t be rushed into an agreement
When prospective agents/distributors see your company can offer a market advantage,
they may try to rush you into signing an agreement and lock you into an arrangement. Be
very careful. Agreements are hard to modify and costly to break.
Managing Halal Challenges and Risks in Halal Exporting
Managing Halal Export challenges Halal exporting means more opportunities, but also entails
greater challenges Although the environment for Australian trade has changed substantially
over the years, the challenges that halal exporters face when selling their products and services
in Australia remain essentially the same.
The initial step in managing halal export challenges is an obvious one – but one which
sometimes needs to be spelled out: first you have to identify the source of any challenges, and
then you have to manage and lower those challenge to a minimum.
Choosing the right partners and the right professional advisers is a major step in mitigating risk
and challenges. Your bankers, lawyers, insurers and accountants should also be able to give you
knowledgeable advice about the risks you may face in Australian market.
Types of challenges in in Halal export trade
1) Legal Systems
Doing business in Australia can involve different challenges especially in Legality. There are
major differences in Malaysia law and the Australia law especially in halal business. You
need to understand what these differences are and how they could affect your ability to
successfully export your products. It is important not to assume that legal processes will be
the same as in Malaysia, particularly when entering into contractual arrangements.
You must take into consideration that a legal issues can create problems for halal exporters.
Such as the differences between domestic legal systems – for example, common law
systems as compared to civil law systems.
You must understand the differences in contract law between both countries to ensure the
documents signed are binding and enforceable.
You must question of which laws will apply in disputes, especially in Patent registration and
other Intellectual Property issues and product liability laws and any implied consumer
warranties.
For exporters of services, occupational health and safety and employment laws may apply
Access to courts and dispute resolution mechanisms. Some countries may not permit local
litigation or place restrictions on the types of claims which can be made. Also take note of
Taxation and revenue laws and the Negligence and misrepresentation laws of Australia.
2) Quarantine compliance risk
Australia has strict quarantine requirements. Before exporting, you need to be aware of
what is and what is not allowed under the relevant quarantine laws of your export
destination.
There may also be export restrictions on certain goods and services and you need to ensure
that any proposed exports are permitted under the laws. Failure to do so can result in
forfeiture or destruction of goods, fines and restrictions on the exporter.
3) Exchange rate risk
Exchange rate risk can occur because of fluctuations in the value of a currency.
Unfortunately, many exporters had their profit margins eroded or have even lost money
due to exchange rate fluctuations. There are a number of ways in which you can protect
yourself against this risk, including quoting your prices in Australian dollars (but many
customers do not like this and you may adversely affect the number of new customers you
attract) or hedging against currency fluctuations. (but many Muslim do not like this as is it a
non-syariah compliance financial instruments)
4) Non-payment risk
The risk of not being paid for your goods or services is a very serious one for exporters,
regardless of the country you are trading with. In order to mitigate this risk, the payment
option you choose should match the level of the risk.
To protect yourself against payment default it is prudent, at least initially, to use payment
methods which provide you with some security such as pre-payment or an Irrevocable
Letter of Credit – even for customers in wealthy markets such as Australia. (Your bank will
be able to provide advice on various payment options.) There are a number of relatively
simple things you can do to lower the risk of not being paid. For example, be careful about
offering credit terms to customers, and look into getting credit insurance.
5) Take out credit insurance
Credit insurance offers protection against a wide range of both commercial and country
risk. Most credit insurance covers the risks of trading on short credit terms – up to six
months. Credit insurance content is typically supplemented by extensive support services
including access to commercial and political information from overseas credit rating
agencies and embassies.
6) Managing your export risks
Managing export risks is a process of thinking systematically about all possible undesirable
outcomes before they happen and then setting up procedures that will either avoid or
minimise these risks, or help you to cope with their impact.
Since there is NO Islamic scholar has come out with technique in preventing losses in Halal
exporting, I always abide by the 6-basic conventional rules in managing the risk
management process in managing my Halal businesses:
Establish the context of the risks
Identify the risks
Assess probability and possible consequences of the risks
Develop strategies to mitigate these risks
Monitor and review the outcomes
Communicate and consult with all parties involved.
New Prospect in Halal Business in Victoria, Australia
1. Halal food for Muslim patients in hospital
2. Halal food for airline passengers
3. HALAL FOOD for restaurant, hotel, café, super mart, grocery shop and community
center. (Including vacancy for chef or cooks expert in cooking malaysian dishes and
procurement staff in-charge of ordering halal ingredient)
4. Interest to import product from Malaysia by other ethnic groups such as Arabs, African,
Vietnamese and Indonesian entrepreneurs/companies in Victoria, Australia.
5. In the pipeline – Purchasing of land in Melbourne to built Malay Mosque and Halal trade
(super mart and café) facilities by MECCA (Malay Education & Cultural Centre of
Australia ). The construction of the building (mosque and trade center) will be
sponsored by King of Brunei. After completed will sell/display a varieties of malay foods
to resident of Victoria, Australia.
6. On-going Halal Street Fair and Satay Festival in Victoria, Australia.
7. Displaying and Selling of Malaysian Halal Food at Community café such as MiHub
Community Café.
We are inviting all Malaysian be it entrepreneur or exporters or researcher or anyone to visit
our community café and halal companies located in Victoria either for holiday and business
procurement.
Thank You.
NORA SIMKIN
Presenting on behalf of MECCA
EDUCATION & CULTURAL CENTRE OF AUSTRALIA INC.