1. Introduction

Small and medium scale entrepreneurs (SMEs) are defined as manufacturing enterprises or companies providing manufacturing related services with annual turnover not exceeding RM25 million and employ a staff of full-time employees not exceeding 150 (SME Corp, 2013). Ministry of International Trade and Industry (MITI) in the Third Industrial Master Plan (IMP3, 2006-2020) stated that Malaysia should take advantage of the current world economic development to become a regional food processing centre, especially for the Muslim market. According to the report, the growth areas identified are convenience food, functional foods, food ingredients and related support services. Thus one of the objectives of IMP3 is to develop the food industry towards making Malaysia a regional food production and distribution hub, with emphasis on Halal food.

According to the Malaysian Investment Development Authority (MIDA, 2010) the halal industry in Malaysia should provide tremendous opportunities for Malaysian manufacturers. It has been estimated that the potential value of the Halal food industry is between U.S. $600 billion and U.S.$2.1 trillion. Within this purview, the concept of halal food products is associated with high quality in terms of cleanliness, sanitation and compliance with the requirements of the religion. In Malaysia, Halal certification is an award given to companies that symbolizes the organizational management effort through planning and implementation to ensure that quality and Halal integrity is built into Halal food products and thus this recognition provides the confidence of Syariah permissibility for consumption among Muslim consumers. Within the commercial sphere, the single most significant contribution from the Halal certification of products has been the eradication of confusion and doubt among Muslim consumers on issues of consumable product selection.

In responding to the national aspiration of transforming Malaysia into the center or hub for the distribution of Halal food, inevitably, deliberations on strategy development and implementation for small and medium enterprise has to be performed from a framework underpinned by national policy. The growth imperative of SME’s cannot be over emphasized, and thus an organization, competent and entrusted by the relevant national authorities, has to be created, mobilized, and delegated with the duties and responsibilities of training and guiding SME’s to capitalize on the Halal transformation programs which could well serve the value enhancement of the nation’s interest (HKTDC Research, 2017).

The objective of this project is to assist small and medium entrepreneurs in Terengganu achieve product Halal certification from either the Department of Islamic Development Malaysia (JAKIM) or Department of State Islamic Religious (JAIN) or State Islamic Religious Council (MAIN). In addition, the project also aims to provide exposure and training so that small and medium entrepreneurs in the state are able to understand and appreciate the conditions and requirements of halal certification for food products.

2. Literature Review

Under the Trade Descriptions Order (2011), the use of the Halal description is voluntary, but however mandates specific conditions to manifest when food or goods are described as Halal to indicate Syariah permissibility for Muslim consumption. These specific conditions shall be characterized by or demonstrate that the food or goods shall be in compliance with Syariah law and not contain any part or matter of an animal or which has not been slaughtered in accordance to Syariah requirements; do not contain anything impure; shall not be intoxicating, poisonous, and hazardous to health; shall not contain any part of a human being or its derivative; shall not be prepared, processed or manufactured using equipment that is contaminated with impurities, and shall not in the course of preparing, processing or storing be in contact, mixed, or in close proximity to any food or goods deemed or suspected to be non-Halal.

The enforcement regarding the expression ‘Halal’ is also implemented under the Trade Descriptions Order (2011) for certification and marking of Halal. Under the order, only the Department of Islamic Development Malaysia (JAKIM) and the Islamic Religious Council (MAIN) in the respective states shall be appointed as the competent authorities to certify any food or goods or related services is Halal in accordance with the Trade Descriptions Order for the definition of Halal. Pursuant to these provisions, all food and goods shall not be described as Halal unless it is certified as Halal by the competent authority, and also marked with the logo issued by the above said authority.

According to the Food Safety and Quality Division of the Ministry of Health Malaysia, the certification scheme designated MeSTI (2012), ‘Safe Food Industry Responsibility’ is just rebranding to replace the SK1M (2010), ‘1Malaysia Food Safety Scheme’. The MeSTI certification scheme is a revision and improvement of the SK1M for food companies, and is expected to aid especially the Small and Medium Enterprises (SMEs) to comply with the requirements provided under the Food Hygiene Regulations (2009). With the MeSTI certification, the food operators are guided and compelled to develop and implement PJKM (2010), ‘Food Safety Assurance Program’ before being awarded certification. Under this PJKM, the entrepreneurs have to develop a system of planned and documented practices with control records. Among the key elements in the effective PJKM are premise control, operational controls and traceability.

Statistical estimates have shown over 90% of food manufacturers in Malaysia are small and medium enterprise (Dzuljastri, 2018). Ironically, despite the presence of many Muslim entrepreneurs, evidence still point to the fact that a majority of their products are lacking the recognition of being Halal certified from JAKIM. In responding to the transformation programs to create a global Halal hub in Malaysia, there is an urgent need to improve the operating standards of small and medium enterprises so that products emanating from these enterprises will feature elements pertaining to quality and Halal integrity. In an earlier study by Zanariah and Abdullah (2009) indications were evident that 70% of the respondents as food entrepreneurs were keen to achieve Halal certification but have very little or no knowledge on the method of application. Thus, as a measure to correct the disparity stemming from knowledge uncertainty among entrepreneurs, training and hands-on guidance and information dissemination on pertinent Halal certification issues should be organized and provided by a competent and entrusted body.

3. Methodology

Universiti Sultan Zainal Abidin (UniSZA) collaborated with Terengganu Entrepreneur Development Foundation (YPU) to identify registered companies which were potentially certifiable but require specific guidance to achieve Halal certification of their products. After being identified and shortlisted, these entrepreneurs were contacted by research assistants and engaged in a brief impersonal dialogue session for information sharing to determine the entrepreneurs’ interest to pursue Halal certification of their products. Criteria that were established to screen entrepreneur’s suitability and subsequently selected to embark on the Halal certification program include:

a. Possession of an operating premise license from the Local Authority (PBT) such as the District Council, Municipal Council and City Council

b. Being actively involved with food processing

c. Separation or clear demarcation of domicile functions/ activities from food premises. No linkages shall be evident between the production premises and the building structure categorized as personal residence.

d. Products are currently in the trade outlets, in the market, but are not Halal certified.

e. Food premises not processing or storing non-Halal food or ingredients.

Entrepreneurs will be taught and guided through training on the requirements for Halal certification. The training sessions include:

a. The basic course on Halal food

b. Halal food production practices

c. Workshop on Halal certification

d. Good Manufacturing Practices (GMP) course for food processing

e. GMP manual preparation workshop

f. Workshop on on-line Halal certification application

Auditing of production premises will be conducted by the research assistants. During the audit process visuals from photo shoot of production premises shall be used for the purpose of reporting recommendations for improvement. Documentation activities to support the audit shall include:

a. Filling of the Safe Food Industry Responsibility (MeSTI) forms. (Appendix 3-(checklist).

b. Filling manually Food Safety Assurance Program (PJKM) documents for the purpose of exemplifying the filling of the general PJKM records.

c. FoSIM form filling information (MoH premises registration) and MeSTI by premise manager. (Appendix 1).

d. Submission of document checklist required for Halal and MeSTI certification.

Research assistants have to prepare a report delineating recommendations for improvement and examples of PJKM (2010) quality manual and distributed to entrepreneurs as a reference document. Entrepreneurs shall refer to the PJKM manual and recommendations report for corrective action and improvement. PJKM manual shall be used as daily and monthly records of food premises to ensure quality of food produced. Implementation trial period for PJKM quality manual was set for a month to assess the level of entrepreneur’s understanding in handling the records and implementation modules. After a month, the entrepreneurs were contacted to identify their willingness to apply for the Halal certificates and MeSTI. An extended period will be provided to entrepreneurs who are not fully in compliance to continue making the necessary improvements and corrective actions.

A second audit was carried out when the entrepreneur is deemed to be in compliance with Halal standard requirements. This auditing was performed by a team of experienced lecturers and officers in the food industry, and assisted by a team of research assistants. During the audit, MeSTI Form Appendix 3 (checklist) is filled once again to ensure that food premises fully meet the certification requirements. First, PJKM records are checked to ensure entrepreneurs have completed the records properly. Second, the report provided additional suggestions for improvement if there are still things to be rectified. Filling the on-line application e-Halal, FoSIM (2009) and MeSTI were carried out when the second audit is satisfactory. A Follow-up audit is conducted if this second audit observes non-satisfactory conditions. Next, Halal and MeSTI applications and supporting documents was sent to the Council of Islamic Religion and Malay Customs Terengganu (MAIDAM) and Terengganu State Health Department (JKNT). With all documents submitted, the auditing process and Halal certification shall be work in process pending further action by MAIDAM and JKNT.

4. Research Findings

The project to facilitate JAKIM Halal certification for food industry participants has been in operations, testimony pointing to the effective performance and eventual success in achievement of prescribed objectives are affirmatively indicated. During the aforementioned duration, a total of 65 food manufacturing premises located within the state of Terengganu were successfully audited, as an initial stage pre-audit assessment exercise (Table 1). These audits were performed in accordance to a planned schedule ascribed to a few phases comprising of organizational groups respectively. Audits were conducted by a group of research assistants who were qualified graduates in the field of Food Technology from UniSZA.

Table 1. List of companies undergoing initial stage pre-audit assessment exercise and region

In phase 1, a total of 21 individual organizational premises within the Kuala Terengganu region were audited between 29^th November 2011 and 6^th December 2011. Emulating and enhancing the rates at which audits were performed in phase 1, 16 other companies within phase 2 located at Kuala Terengganu, Marang, Dungun, and Hulu Terengganu were audited within a 5-day duration, initiated on 8^th January 2012. Only 3 companies were audited in phase 3 over a 2 day’s duration, 14^th February 2012 and 19^th February 2012, due to the availability of a sparingly cumulative pool of companies requiring similar services and exacerbated further by their distant outskirt locations away from Kuala Terengganu, especially at Dungun and Kemaman. Phase 4 audits were carried out for 10 manufacturing premises located separately over Besut and Setiu between 29^th April 2012 and 9^th May 2012. One discerning feature of the audit performed in this phase as compared to the earlier phases was the criterion imposed on companies which qualified them to be audited. The factor taken into consideration was the organization’s possession of a valid premises registration license issued by the local town council of the company’s residence. Companies constituting the final phase for auditing, during phase 5, were evidently those who were not earlier audited among the previous phases by virtue of the constrains of scheduling and available time in conducting the overall audit exercise. The 5^th phase comprised of 15 different manufacturing premises spread over regions at Kuala Terengganu, Marang, Dungun, Besut and Setiu, with audits carried out between 15^th October 2012 and 12^th December 2012.

Subsequent to the preliminary pre-audit process, a second audit was carried out on a total of 14 premises located within the Terengganu state. The selection criteria for organizations eligible for this compliance assessment were based on their level of conformance to warrant their foray into meeting Halal certification requirements. To account for their improvement initiatives adopted, emphasis pertaining to refurbishments carried out in fulfilling Halal requirements and evidence of adequate documentation updates and maintenance were matters for consideration. Owing to the rigorous nature of the second audit, the research assistants, qualified food technology graduates from UniSZA, had this time around reined in the services of experienced lecturers from their faculty to assist them in performing a meticulous and more exacting plant audit exercise.

Total of seven food manufacturers have been awarded JAKIM Halal certificates as shown in Table 2 from 2012 to 2015, while from 2016 to 12^th April 2019 (Table 3) after verification have done, seven food manufacturers still valid for their Halal certificates.

Table 2. Organizations/Companies which have been successfully approved to be awarded Halal certificates from JAKIM (2012 – 2015)

Table 3. Verification of the organizations/companies which have been successfully approved Halal certificates from JAKIM (2016 – 2019)

Halal certification application status is work-in-process for some food manufacturers, pending JAKIM’s further action with respect to the Halal certification audit process. In addition, the auditing is continued from time to time based on requirements. Monitoring is also ongoing for the food manufacturers with the potential to obtain the Halal certification.

Table 4 outlines a list of organizations whose have been awarded certificates for compliance with MeSTI requirements.

Table 4. Organizations which have been successfully obtained MeSTI certification

MeSTI (2012), means ‘Safe Food Industry Responsibility' signifies organizational responsibilities pertaining to food safety, a rebranding scheme to replace the existing ‘1Malaysia Food Safety Scheme’ (SK1M, 2010). MeSTI is a food safety program by the Ministry of Health with the objective to put in place a system for the maintenance of food hygiene and process control which includes food safety assurance and food traceability.

Other than certification activities related to Halal and MeSTI, the entrepreneur’s voluntary participation under the auspices of this project resulted in benefits derived from gainful acquisition of experience and knowledge through training programs and direct involvement with matters pertaining to the prescribed terms and conditions in lieu of Halal certification requirements. Under the patronage of this Halal Food industry certification project, measures taken to complement the Halal certification process included the implementation of various activities planned, which was deemed to confer greater insights and comprehension to the participating entrepreneur on the various needs of the Halal certification. In this respect elements pertaining to good hygiene practices and food safety were emphasized as inevitably the entrepreneur’s prime responsibility whose obligation has to be imperatively fulfilled.

Activities subsumed under the project grant for the Halal certification of the Terengganu food industry were designed not only to enhance the competency of entrepreneurs in their quest for Halal integrity and quality recognition. On the contrary, the project also provided the opportunity operating window for the enhancement of the auditing team’s competency. In their endeavour to ascend the pertinent learning curve, various activities were identified in which the UniSZA’s auditing team could participate as means to elevate their proficiency. This is aimed at improving the service quality by achieving greater effectiveness in performing their duties and responsibilities to entrepreneurs. The benefits derived from participation at seminars, trade exhibitions and workshops conducted by community partners and government development agencies were appealing, considering the extensive networking and relationship building capacities, as well as the knowledge acquisition and interactive information sharing platform available. These opportunities were also deemed invaluable to potentially facilitate the momentum or progress of the on-going project which invariably needs the close cooperation and support from external partners.

5. Inference and Comments

The short listing exercise carried out by YPU resulted in 86 companies being selected with the potential to be awarded the Halal certificate. However, from this potential pool, 25 companies were unable to be audited by the UniSZA auditing team. Various arising circumstances negated the current inclusion of these companies for auditing. Constraining factors and conditions which contributed to audit process deferment or cancellation included:

1) Breakdown in communications due to change in contact telephone numbers and coupled to inaccessibility of company premises in the absence of available contact numbers, thus disabling information sharing to facilitate further course of action.

2) Company no longer in operations from a winding up process due to inability to raise the much needed working capital; inadequate raw materials owing to difficulties in meeting procurement needs; limits in market capacity building; and poor management practices.

3) Company premises located on land not eligible to apply for premise registration license from the local town council, which is a principal requirement for Halal certification. Relocation to an approved commercial site shall be the recourse. However, related decisions are longer term in its implications and impact.

4) High capital investment for premises refurbishing and modification activities, which presents before the entrepreneur difficulties and constrains in decision making pertaining to risk factors and issues of viability. An array of these overarching conditions can be observed by peering into the traditional fish sausage (keropok lekor) industry, which requires significant financial resource just to address issues of compliance with the Halal standard.

6. Conclusions

This endeavour arises from the collaboration between UniSZA and YPU with the objective of providing the necessary guidance to facilitate and provide entrepreneurs operating food processing and services establishments throughout Terengganu with the required knowledge and skills so as to enable them to pursue the objectives of Halal certification. UniSZA provided the competent personnel for auditing and training purposes while YPU was host and provided the inventory of entrepreneurs to participate in this project. Under the sponsorship of the project grant designated for Halal certification of the food industry throughout Terengganu.

The primary scope of this project was designed to initially conduct a preliminary assessment of the operating premises so as to determine the quality disparity gaps evidently prevalent among the related industry players and as inputs to create a plan and framework of action as an industry improvement initiative. Moving forward, success at this stage will inevitably create the path towards total compliance to Halal standard and thus eligibility to be awarded with the Halal Certificate. To this end, various activities organized and performed by the UniSZA audit team included plant operations audit, training programs tailored with hands-on approach for knowledge and skills enhancement among entrepreneurs, and auditors’ knowledge and skill enhancement programs for greater effectiveness.

The results attained throughout the project duration was affirmatively encouraging ranging from the number of audits performed and entrepreneurs’ participation in the organized programs to the unprecedented number of companies qualified to receive the Halal certificates within the specified duration. Data acquired from the analysis of the food companies throughout Terengganu provided the information on the economic well-being of the industry whereby suitable corrective actions could be instituted to ameliorate and overcome the prevailing shortcomings experienced by the industry players. A clear point in perspective is that industry players for the very first time could appreciate the simplicity unravel from the complexities involved in meeting regulatory requirements. What was needed are just the hands-on guidance from the service providers and the unrelenting will of the entrepreneurs.

ACKNOWLEDGEMENTS

This project was supported by Ministry of Education and Economic Planning Unit (EPU) under Knowledge Transfer Program (KTP) through grant UniSZA/KPT/11 (05). Special thanks to Terengganu Entrepreneur Development Foundation (YPU) Thanks also to Council of Islamic Religion and Malay Customs Terengganu (MAIDAM) and Terengganu State Health Department (JKNT) for their commitment and cooperation that make this project possible.