Halal Park 2.0: organising halal production and supply networks

The halal parks that have been developed over the years were just a dedicated halal zone for halal industry & services, supported by halal certification (bodies), and government incentives. We would like to call this model Halal Park 1.0. However, these halal parks did not provide significant synergy advantages for industries operating in these halal parks, did not deliver ground breaking innovations, and did not create new global halal brands.

Halal Parks 1.0 were not designed as halal eco-systems, providing insufficient halal synergy advantages for industries. Instead, halal parks need to be designed as halal clusters in order to provide a superior halal eco-system (brand). A halal cluster is a spatial clustering of halal production chains in an industrial park or economic zone, whereby a significant part of the supply chain is geographically positioned in the halal park. 

 

Hence, we propose the halal ecosystem of a halal park extends beyond the physical boundaries of the halal park itself, orchestrated by a halal cluster organisation. The halal cluster organisation ensures the development of the cluster itself and connecting to other clusters within and outside the country. The goal of halal park 2.0 is to generate synergy advantages for industries located in these halal parks and create sustainable clusters. Halal synergy advantages are realized through (horizontal and vertical) collaboration. Vertical collaboration allows for effective halal supply chain assurance, standardisation of halal assets in a halal supply chain, and supply chain optimisation. Horizontal collaboration allows for sharing of information, pooling of resources and bundling of halal volumes.

 

As halal is moving from a product approach (focus on product ingredients and production process) towards a supply chain approach (halal is addressed from source to point of consumer purchase, similar to food and product safety), halal supply chain management and technology is an integral part of the halal park to support industries in creating end-to-end halal supply chains by design. Availability of halal logistics services are hereby important, beyond traditional halal storage and transport.

 

‘We made from water every living thing’ (Quran 21:30). Sustainability of the halal park and their supply chains is an important factor in living in balance with nature (mizan).  Halal parks require applying high sustainability standards to energy, water, and waste. Halal parks provide an opportunity for linking halal supply chain to other ecological fitting halal supply chains and clusters.

 

Finally, Islamic finance plays a critical role in supporting halal production and supply networks in realising a true halal value chain. Full range of Islamic banking services are needed including sukuk. Islamic philanthropy has also a place in the halal park 2.0 through the waqf institution. In grooming SMEs and micro SMEs the waqf instrument plays in fact an essential role in providing high quality facilities, vocational and technical training, as well as coaching of the entrepreneur.

 

In summary the conventional halal park needs to be upgraded from halal park 1.0 to halal park 2.0.

 

Policy recommendations

Halal parks should be based on a solid halal cluster design, requiring close control from government to ensure C4 (correct-consistent-complete-clear) halal eco-systems are built that are sustainable and contribute to creating halal production assets and supply networks for OIC countries. 

 

A halal park standard should be developed by OIC countries, that better guides halal parks in establishing a C4 halal eco-system, and requires the certification of the industrial developer that want to establish and manage a halal park based on the halal park 2.0 principles.

 

Halal parks should collaborate with other halal parks within the country and with other countries to create synergy advantages. In 2019 a ‘Halal Cluster Network’ was established, which is championed by the halal park Modern Halal Valley in Indonesia, that provides this halal cluster network.

 

Further academic research is needed in halal park and halal clusters for both OIC and non-OIC countries.

For the full academic paper, please download for free from Islam and Civilisational Renewal.