PIF sets up company to make Saudi a global hub for halal

October 24, 2022, 9:59 AM

Halal sweets for sale at Trafalgar Square's 'Eid in the Square' festival in London. Muslims spent $1.27 trillion on halal food in 2021

Sovereign wealth fund launches Halal Products Development Company
Business will invest in sectors including food, cosmetics and pharma
Saudi Arabia is the world’s second-biggest market for halal goods

Saudi Arabia’s Public Investment Fund is launching a new business, the Halal Products Development Company (HPDC), to support the production of halal goods in the kingdom.

The PIF company, unveiled today, aims to make Saudi Arabia a major exporter of halal products including food, cosmetics and pharmaceuticals. It also plans to drive innovation and efficiency in the local industry.

HPDC will seek to build on the kingdom’s position in the Islamic world to promote Saudi Arabia as a halal hub. At present, it is the second-biggest market for halal products behind Malaysia.

According to a PIF statement, the company will enable local players – small and medium-sized enterprises in particular – to grow and expand internationally. HPDC also “aims to promote investment and economic opportunities for the industry by introducing various services, including specialised advisory”.

The world’s 1.9 billion Muslims spent the equivalent of $2 trillion on the so-called “halal economy” in 2021, according to the latest State of the Global Islamic Economy Report. This bucks the global trend for reduced consumer spending.

In sectors that cater to Islamic rules on ethical consumption – food, pharmaceuticals, cosmetics, fashion, travel and media/recreation – spending was up 8.9 year-on-year from 2020. Halal food accounted for $1.27 trillion of the total.

Global Muslim expenditure is forecast to grow by 9.1 percent this year. These figures exclude Islamic finance assets, which were valued at $3.6 trillion in 2021.

The report, by research consultancy DinarStandard, identified three key drivers for the rise in spending: a large and growing Muslim population; a greater urge to adhere to Islamic ethical values relating to consumption; and a growing number of national strategies dedicated to halal product and service development.

The 2022 report ranks 81 countries in its Global Islamic Economy Indicator. All the Gulf countries are in the top 15.

The top four positions remained unchanged from last year, with Malaysia at No 1, followed by Saudi Arabia, the UAE and Indonesia.

Of the remaining GCC countries, Bahrain ranked sixth, Kuwait was eighth, Oman 11th and Qatar 12th. New entrants to the top 15 included the UK at No 13 and Kazakhstan one place below.

The PIF said the launch of HPDC aligned with its strategy to improve the trade balance, localise and develop industry, and contribute to the diversification of the Saudi economy and the growth of non-oil GDP.

Since 2017, the sovereign wealth fund has established 57 companies. By the end of 2021, it had created, directly and indirectly, more than 500,000 jobs.