For startups, the rise of the halal market provides ample opportunities in the e-commerce, fintech, transportation, and travel sectors
It is hard to deny the great potential offered by the halal market, particularly in the Southeast Asian region where 42 per cent of the total population are Muslims, according to data by the Oxford Islamic Studies.
As the region’s digital industry grows, so are the opportunities for tech entrepreneurs to tap into the ever growing halal market. But what is the situation is like on the ground? What have been done, and what are the opportunities that are available to explore?
We have compiled an overview of halal tech industry in Southeast Asia —from the market potential, the startups working in the sector, to what businesses need to keep in mind when reaching out to the halal market.
Check out the following list:
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Travel
One example of Asia-based travel tech startup for Muslims is travel and lifestyle platform Have Halal, Will Travel (HHWT), which published a report on what it defined as modern Muslim travellers (MMT) in late August.
The report surveyed a total of 1,708 Muslim travellers from Malaysia, Indonesia and Singapore to understand their travel planning process, airline and hotel purchase process, spending habits, and the digital platforms that they are using.
It revealed that Islamic teachings determined travellers lifestyle choices, as detailed in the following graphic:
Image Credit: HHWT’s Modern Muslim Traveller report
In general, the report describes the three main characteristics of an MMT: Young, affluent, and experience-driven.
It revealed that 90 per cent of the travellers are female, with the majority (39 per cent) are aged between 25 and 29 years old. It is closely followed by travellers aged 30 to 35 years old (32 per cent).
In terms of economic level, 70 per cent of the travellers are described as “comfortably middle class” and “earning their own income” with 84 per cent of them being single or married with no children.
The report also revealed that 37.5 per cent of them earn more than US$1,000 per month. Travelling also has an important place in the respondents’ heart, with 90 per cent of them claiming to travel at least once a year and 87 per cent claiming to do it at least twice a year.
“In general, the MMT’s approach to travel is quite different compared to the previous generation. Travel is now a more personal and purposeful activity to the MMT. This group values authentic local experiences, has a strong desire to immerse in the local culture, and try local halal food when they travel,” the company explained in a press statement.
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It is also revealed that across all three countries, MMTS consistently chose independent travel over packaged tours. The numbers stated that 84.3 per cent would plan their own itinerary “all the time and frequently.”
Travellers’ total travel decision journey takes six months from inspiration, planning, transaction, and another planning before they finally leave to travel. These travellers also use word-of-mouth and travel publications as reference for their planning.
So where do these MMTs go to travel? The report revealed Japan, South Korea, and the UK as the most popular destinations.
In the travel tech sector, apart from HWHT, an example of Southeast Asian startups tapping into the halal market is Tripfez, which has raised a US$750,000 of seed funding led by Gobi Partners and Intres Capital (AXIATA Group) in May 2016.
The company implements a certification process called “Salam Standard” to help ensure that hotels and service providers in their platform are sharia-compliant and is able to cater to the needs’ of Muslim travellers.
E-commerce
The rise of the halal market has led to global brands such as Nike to release products that cater to the needs of the market, such as a sports hijab for female Muslim athletes, which was announced in March and set to be available for sale in 2018.
In the e-commerce sector, Southeast Asia is home to several online marketplaces that focus on products such as halal food or modest fashion.
Jakarta-based Muslimarket is one of those companies. It raised an undisclosed Series A funding round in April that reportedly put the company’s valuation to US$10 million.
The company has also mentioned plans to expand its business to the UK, Turkey, and South Africa.
For fashion, Indonesia also has HijUP and Hijabenka, a modest fashion arm of fashion e-commerce platform Berrybenka.
In Singapore, Dato Dr Grace Kong, Senior Financial Services Director of insurance giant Prudential, and Dato Dr Sheikh Muszaphar Shukor Al Masrie bin Sheikh Mustapha, the first Malaysian astronaut, launched online marketplace Aladdin Street with the goal of establishing Singapore as a hub for “everything halal.”
Logistics services are a crucial supporting element of the e-commerce industry. The Penang State Government in Malaysia has established a halal industry hub in the country, and the establishment also includes the set up of Penang Port as a halal-certified logistics hub, completed with its halal-certified warehouses and cold chain facilities.
The port connects northern Malaysia to an area dubbed as the Indonesia-Malaysia-Thailand Growth-Triangle (IMT-GT) areas.
Fintech
While the global market has seen the rise of Islamic crowdfunding site such as US-based LaunchGood, Southeast Asia is home to several crowfunding platforms that are targetting the Muslim community.
Erly Witoyo is a partner and co-founder of Southeast Asian crowdfunding sites KapitalBoost, EthisCrowd, and gostartem. In his guest post, he explained about how these sites have the potential to tap into funding for small and medium enterprises (SMEs), which is often neglected by traditional Islamic financial institutions.
“The focus on reducing risk means lending to SMEs, which may not have fixed collateral and long operating history, is not a priority,” he wrote.
Other companies that are working in the intersection of fintech and the sharia economy is Malaysia-based finance company Farringdon Group, which produces Algebra, service that the company claimed as Asia’s first sharia-compliant robo advisor.
The service was launched in late July.
Farringdon Group CEO Stuart Yeomans told e27 that the service is open to investors from all over the region.
“I want to get to the stage where a Bangladeshi construction worker in Malaysia can invest US$10 into this … It is going to take years but I want to make this into a one-stop solution for investment, from US$10 to US$1 million,” he said.
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Transportation
In the Indonesian ride-hailing sector, standing up against the domination of Go-Jek and Grab is sharia-based ride-hailing startup Ojesy.
What sets Ojesy apart is the fact that apart from Jakarta and Bandung, the startup chooses to focus on tier-two cities in expanding their operation.
Ojesy was initially launched as women-only motorbike taxi service, and the startup only hires women as their drivers.
In a recent interview with DailySocial, CEO Reza Zaimir revealed that the company is now focussing on providing pick-up service for school children.
He explained that parents feel “more secure and comfortable” having their children being picked up by female drivers from school.
The Ojesy site
Beware of “halal-washing”
What are the most important factors that startups need to keep in mind when providing services that cater to the Muslim audience?
As suggested in the HHWT report, compliance to Islamic teachings plays a key role as it helps to build trust between brands and its targeted audience.
A great example of what businesses should not do is the recent controversy surrounding Indonesia-based AyoPoligami, a dating app that aims to facilitate users in their search for a potential partner for a polygamous marriage.
Despite promising a sharia-compliance dating experience, the mobile app sparked anger from the public as it promotes a practice that is seen as degrading for women, particularly after reports of sexual harassment incidents on the platform began to surface.
Last weekend, The Jakarta Post reported that founder of Islamic matchmaking site nikahsirri.com was arrested for allegedly running a prostitution ring under the disguise of a dating site. Apart from offering to facilitate unregistered marriage, the site also set up an auction system that offers what they claimed as virgin boys and girls to the highest bidder.
In the context of environmentalism, we have seen several cases where companies “greenwash” their business practice to appeal for the eco-minded audience, without any real effort to ensure that their business practice is in-line with environmentally friendly practices.
In reaching out to the halal market, startups also need to keep in mind to ensure that the halal elements in their business goes beyond marketing and advertising strategy.
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Image Credit: ferli / 123RF Stock Photo
The post A blessed opportunity: Your guide in understanding SEA’s rising halal tech industry appeared first on e27.