Islamic Standards & Certifications

Transcription

1. Islamic Standards & Certifications Definition Islamic Standards & Certifications encompass all of the guideline policies, procedures and best practices governing trade and consumption across the entire Islamic Economy159. By definition, Islamic Standards & Certifications cover all offline and Digital Islamic Economy areas. Current trends around Islamic Standards & Certifications The Islamic Economy collectively has a very large number and variety of standards and certifications. This is mainly due to the absence of a single international regulatory framework and centralized body leading to discrepancies in accreditation and certification. With more than 300 Halal certification bodies across 48 countries for consumer products and various schools of thought guiding Islamic Finance standards, confusion amongst consumers and authorities has increased160. Standardization bodies do exist but the adherence to their standards varies from country to country. This illustrates the wide spectrum and variety across the Muslim community as to what is perceived to be permissible as ‘Halal’ and what is acceptable in terms of adequate quality. Islamic Standards & Certifications analysis by vertical and key area (2014) Verticals & Areas Halal Food Halal Travel Islamic Finance Islamic Media Modest Fashion Islamic Art & Design Islamic Economy Education Smart Mosques Challenges International regulatory framework and centralized body +300 Halal certification agencies worldwide 30% are legal entities An International Halal Council is working towards a single standard Definition Standards for corporate governance Infrastructure, skills and expertise Most clearly defined vertical but varies by country (e.g. SASO in KSA, British Halal Council in UK, Muslim Consumer Group in US and Canada) No official Halal Travel accreditation or certification body (CrescentRating only provides a rating system which is used as an indicator for Halal Travel) No central global authority – ISFB, ACCA, CIMA, AAOIFI are international and trying to accommodate all schools Absence of any accreditation or certification body 5 thought schools (4 Sunni, 1 Shia) No unifying definition across the schools No clear agreed definition No official centralized authority or body Schools of thought vary by region between UK, GCC & SEA No clear definition. Players within the Islamic Economy are still trying to understand the basic market. Dubai aims to have Islamic initiatives fully articulated No clear definition There is currently no standardized curation board that can value and assess Islamic art (in terms of permissibility and quality) No clear definition No international centralized authority – however there are 4 main certification bodies: CISI, CIMA, IIBI and AAOIFI Religious authorities regulate mosques (with loose control) in OIC. Non-OIC countries’ local councils have the final say on mosque matters No clear definition No detailed definition or signs on mosques regarding code of conduct. It is considered as understood amongst Muslims Islamic standards for corporate governance within the Islamic Economy do not exist (with the exception of some financial services and Halal Food standards & customs authorities). This limits the development of the Islamic Economy going forward Lack of transparency across the supply chain. Few companies found engaged in F2F Halal Food tracking Lack of talent & entrepreneurship. No good recruiting agencies (e.g. Yahoo! struggles to find an agency that understands the industry, skills) Huge shortage in financially qualified Islamic scholars who can best examine & certify Islamic Finance products Source: Deloitte research and analysis Originally published in Deloitte: The Digital Islamic Services landscape Dubai can create an ecosystem by providing the resources, facilities and support needed Lack of large commercial stores & brands Lack of understanding on how to address Muslim consumers There are a lack of institutions that support religiously inclined art No centralized outlet or platform to advertise There are 750 Islamic Financial Education & Human Knowledge Service Providers (IFEKSP) globally, but +20% focus in Islamic Finance Governance of mosques usually limited to content of Friday prayers Mosque ICT infrastructure needed to enable better monitoring, administration, management and control of mosques
2. Key challenges In the analysis of the standards and certifications , many key challenges have also been identified which need to be addressed: Consumer products: The main challenge of the Halal Food and consumer products market is the fact that there are currently no global standards for Halal Food or an international regulatory framework for the Halal market. As per research conducted by the International Halal Integrity Alliance, there were 300 Halal certification agencies worldwide in 2011, of which only 30 percent were legal entities161. The need for international standardization is required given the number of high profile global cases of meat integrity issues (e.g., horse meat and pork traces in the global meat production chain) or other fraud Halal labelling cases globally. The definition and certification of many other consumer products such as pharmaceuticals, fashion and cosmetics have so far also been neglected. Competition over cooperation: There is limited cooperation between various certification bodies around the world. Initiatives are arising, but are more stand-alone and competitive rather than inclusive and cooperative. Without closer cooperation, international standardization and certification cannot truly take place. Islamic Finance: Islamic banking is dependent on varied interpretations of Sharia as well as local laws over the absence of an authoritative centralized body to frame rules. For instance, AAOIFI has 41 accounting guidelines for Islamic financial institutions that have been made mandatory in Bahrain, Qatar, Syria and Sudan but are merely considered advisable in nations such as Malaysia, Saudi Arabia and the United Arab Emirates162. In Malaysia there is a national Sharia council that sets rules for Islamic financial institutions, but Malaysian interpretation of Sharia is considered to be more liberal than the views of Saudi scholars, making it difficult to reach consensus on deals between the two nations163. Lack of definition: There is also no definition or standards for activities related to Modest Fashion, Islamic Art & Design and Islamic Media. Media depends on the level of censorship of each country. Islamic Economy Education is underdeveloped and overshadowed by Islamic Finance Education. The Halal Travel industry is currently more related to family-friendly tourism and does not offer clear standards that could be expected by the Muslim community. Lack of infrastructure, skills and expertise: Expertise in Halal markets is very limited and is not adequately supported by the education system — there is a lack of Halal market education programs. In non-Muslim countries, many Halal meat certifying bodies are not following proper Halal processed food requirements164. There is generally among Muslim and non-Muslim countries a lack of testing capacities (e.g., testing methods and laboratories, lack of accredited Halal testing laboratories) that limits the transparency and traceability of products across the value chain (e.g., from farm to consumers, integrated logistics chain) required by the Muslim consumers165. Key developments As such, there have recently been many announcements from various OIC countries to lead the development of global standards for Sharia-compliant products and services. Currently, Malaysia is considered as the global center for Sharia-complaint certification and is very advanced in terms of accreditation and certification processes with advanced infrastructure across many verticals (e.g., financial services, food, cosmetics). However, Dubai (in the UAE) has recently announced its ambition to become the capital of the Global Islamic Economy and is working on developing globally accepted Sharia-compliant standards across various Islamic Economy sectors and functions166. The implementation of these unified global standards will be supported by a comprehensive infrastructure such as an international accreditation center, Halal clusters situated in designated ‘free zones’, as well as Sharia-compliant corporate governance certification centers167. Originally published in Deloitte: The Digital Islamic Services landscape
3. Elsewhere , India has also recently initiated a certification process, specifically for Sharia-compliant hospitals in order to attract medical tourists from neighboring Muslim countries168. Some recent initiatives by major bodies are steering the industry towards a possibly better alignment but are mainly focused on Halal Food and Islamic Finance. Key organizations include the Standards and Metrology Institute for Islamic Countries (SMIIC), the Emirates Standardization and Metrology Authority (ESMA), Malaysia Department of Standards (MDOS) and the International Halal Integrity Alliance (IHIA). SMIIC has been mandated by the OIC to introduce a Halal standard that would be acceptable to all Muslims. It developed one universal Halal standard called, “OIC-SMIIC Halal standards” for Halal manufacturing units, certification bodies and accreditation agencies169. ESMA aims to be the global authority for the certification of Halal products. To this end, they are currently formulating a comprehensive framework of standards and regulations that will not only cover food but will also regulate cosmetics and personal care products as well as textile and leather products across their supply chain170. MDOS has created the highest standard for Halal Food, in line with ISO-compliant standards for good manufacturing and hygiene practice171. The largest and most obvious need is for online platforms which can be used to facilitate accreditation, certification and verification processes. Originally published in Deloitte: The Digital Islamic Services landscape IHIA aims to provide standardized accreditation/ certification process knowledge and training to various people172. In addition, the Dubai government has also planned to establish an Islamic corporate governance center that will develop standards for corporate governance based on Islamic values, guiding companies in both financial and non-financial activities173. The standards will not be compulsory for firms but the center will issue Shariacompliance certificates to companies meeting them. Significant investment is also expected on Halal-friendly transport and warehousing services to ensure the integrity of the value chain. The emergence of Halal production and distribution dedicated zones (e.g., Malaysia, Dubai) will also reinforce this174. Digital market analysis From a digital perspective, the Islamic standards and regulations market is untapped, with very few online players. The largest and most obvious need is for online platforms which can be used to facilitate accreditation, certification and verification processes. Given the confusion around Sharia-compliant standards and the lack of online information, the development of a regional and global accreditation and certification guide or platform for Islamic Economy professionals is a key need and gap which also needs to be addressed. From a public service value point, the creation of a global portal of information on Islamic standards and a consumer online feedback reporting mechanism can also support the enforcement and integrity of Sharia-compliant standards. Currently, the focus is on the implementation of technology ensuring Halal-compliant food preservation and packaging technologies. The use of technology for Halal traceability is limited.
4. Islamic Standards & Certifications: Digital Services categories Digital Services in the Islamic Standards & Certifications vertical consist of Business-to-Consumer (B2C) and Business-to-Business (B2B) services. Business-to-Consumer (B2C) services Online business directory: Central repository providing information on Halal business including accreditation, certifications and peer-to-peer rating system. CrescentRating.com is an example of a multi-service offering that has pioneered accreditation services in the Halal Travel vertical. Information portal on Islamic standards: Online certification and accreditation information portal designed to explain to the customer the main standards and to help them decide which Islamic standard is best suited to their personal beliefs. Matchmaking forums: Online platform for professionals to enhance networking and partnership between Islamic businesses according to relevant requirements. There are not many services provided in this category at an overall Islamic Economy level. Verticals may have their own specific networks, but nothing spanning the entire Islamic Economy. Location services: GPS location of relevant nearby registered companies sorted by relevant accreditation and certification. Certification systems: Platform helping professionals to apply for relevant certifications through an online application form. Examples include FoodReg and HalalVerified.com. Digital marketing awareness: Digital marketing campaign designed to promote Halal certification and awareness of Islamic standards. There are many digital marketing providers that can be used to provide this service. The Muslim Ad Network can be used specifically for any kind of Islam or Halal business or economy marketing. Islamic business advisory services: Online advisory services providing insight on a wide range of activities in order to help companies become Sharia-compliant and apply to obtain the relevant certifications required. Examples include the Global Support Halal Centre in Malaysia and Halal-Accreditation.com, an international organization which provides consultancy and training solutions for the development of Halal Accreditation Schemes for Accreditation Bodies/Councils, Halal Advisory & Consultancy Services and Halal R&D. Consumer rights and feedback: Online platform gathering feedback and consumer insights on Halal businesses, providing information to consumers, answering questions, gathering remarks. A few governments in the MENA region offer consumer protection apps such as Saudi Arabia and Oman. These apps can be expanded for the above purposes as well. Accreditation/certification guide: Global website providing information on recognized Halal certification and accreditation bodies, application advice, and comparison of certifications. Examples include Halal-Accreditation. com. Organizations such as SMIIC, ESMA and IHIA also have their own websites, which can be used to obtain information on accreditations and certifications. Business-to-Business (B2B) services Islamic web domain approver: Management of a unified Islamic Internet domain designed to enhance online visibility and recognition of Islamic businesses. Currently there are no websites which have the domain name “.Islam” or “.Halal”. Such domain names can be used as a means to certify or qualify businesses as “Halal” as well as to make them easily identifiable to Muslim consumers as trustworthy businesses. Originally published in Deloitte: The Digital Islamic Services landscape
5. Mini-case study : HalalVerified.com Digital Services offered: • Certification systems • Verification systems • Information portal on Islamic standards Service description: Launched at the end of 2013, HalalVerified.com is the world's first global online certification and verification system, created by JAKIM (Malaysia’s Department of Islamic Development) in collaboration with DagangHalal (DHB, one of the world’s largest online Halal market places). have been certified as Halal by JAKIM. The HVE system also applies self-learning technology to recommend the best alternative products to users based on their behavior and preferences. Eventually, the website aims to enable the public to access the most accurate information of Halal products worldwide. The Halal Verified Engine (HVE) certification system enables applicant companies and suppliers to apply online to obtain Halal certification for its products and services. Using Microsoft cloud technology, the Halal certificate application and renewal process is simplified from months to just a few clicks, by allowing applicants to search, view, and download genuine Halal certification of products and ingredients in the supply chain (instead of manually contacting product and ingredient manufacturers to physically verify the authenticity of its Halal certificates). The service was reportedly developed at a cost of around US $1 million and has proved to be quite successful, with more than 260 companies registered at the beginning of 2014. The website reportedly aims to increase its registered base to 10,000 applicant companies within the next one to two years. The system is based on an extensive database of 73 international certification bodies across +30 countries that are recognized by JAKIM. It includes over 100,000 ingredients, products and services from the food and beverage (F&B), logistics, pharmaceuticals and cosmetics sectors. To maintain trust in the Halal certificates issued online, several security measures are built in to prevent forgery. This includes two-level password safeguards for certificates, a secure watermark for applicant companies and a QR code checker to verify validity of the Halal certificate file. The website also enables Muslim consumers to access the HVE database to verify the Halal status of products and ingredients, without having to contact the manufacturer. The website acts as an information center for users, with product lists, services and Halal certification bodies that Originally published in Deloitte: The Digital Islamic Services landscape Revenue model: Fees are charged for successful Halal certifications. Applicant companies need to purchase credits to download Halal certificates. Each certificate requires one credit to download. Credits are sold in tiered packages (e.g., US $232 for 100 credits, US $35 for 10 credits).
6. Digital makeup Online business directory Central repository providing information on Halal business including accreditation , certifications and peer-to-peer rating system Accreditation / certification guide Information portal on Islamic standards Global website providing information on recognized Halal certification and accreditation bodies, application advice, comparison of certifications (e.g. HalalAccreditation.com) Online certification and accreditation information portal designed to explain to the customer the main standards and to help them decide which Islamic standard is best suited to their personal beliefs Islamic business advisory services Digital marketing awareness Online advisory services providing insight on a wide range of activities in order to help companies become Sharia-compliant and apply to obtain the relevant certifications required (e.g. Global Support Halal Centre in Malaysia) Digital marketing campaign designed to promote Halal certification and awareness of Islamic standards Standards & Certification ? Certification systems Consumer rights & feedback Platform helping professionals to apply for relevant certifications through an online application form (e.g. FoodReg) Online platform gathering feedback and consumer insights on Halal businesses, providing information to consumers, answering questions, gathering remarks Location services Islamic web domain approver GPS location of relevant nearby registered companies sorted by relevant accreditation and certification Management of a unified Islamic Internet domain designed to enhance online visibility and recognition of Halal businesses Matchmaking forums Online platform for professionals to enhance networking and partnership between Halal businesses according to relevant requirements Business-to-Business (B2B) Digital Services Business-to-Consumer (B2C) Digital Services Originally published in Deloitte: The Digital Islamic Services landscape