technopreneurs and capital market · 1.technopreneur –introduction entrepreneurship source: peter...

TECHNOPRENEURS AND CAPITAL MARKET

Prepared by:PROF. DR. FARIDAH HJ. HASSAN

Fazli Azwan Manaff Bin Md. Fajar

INQKA, UNIVERSITI TEKNOLOGI MARA/

VICE PRESIDENT WORLD ACADEMY OF ISLAMIC MANAGEMENT (WAIM)

[email protected] +60193200436

Indonesia Halal Lifestyle Center INHALIFE in collaboration with The Central Bank of Indonesia (Bank Indonesia) @ International Halal Lifestyle Conference and Business Forum held on November 13th and 14th, 2019.

OUTLINE

• Technopreneur – Introduction• Halal – Introduction• ASEAN Updates• ASEAN – USA – China War• Halal Industry• Halal – Challenges and Opportunities• Investing in Halal Businesses• Islamic Capital Market• Halal – Government’s Role• Conclusion

1.TECHNOPRENEUR – INTRODUCTION

ENTREPRENEURSHIP

Source: Peter F. Drucker, Innovation and Entrepreneurship

The practice of consistently converting good idea into profitable

commercial ventures.

TECHNOPRENEURSHIP

• The use of technology as an integral and key element in the transformation of goods and services.

• Technopreneurship is not just about technology alone; but is about how to manage that technology in order to achieve superior value for the customer (how to use technology [ICT] to improve value).

• Also known as cyberpreneurship or netpreneurship or technology entrepreneurship.

N E T W O R K C H A I N & T E C H N O P R E N E U R S

Source: Peter F. Drucker, Innovation and Entrepreneurship


• Technopreneur can be defined as “an entrepreneur with the skills and mindsets to deal with a knowledge economy”.

• Technopreneur: People who shift economic resources up the value chain.

• This value chain is customer focused, the focus is not in developing complex products or technology but on developing a product or service that offer higher value to the customer.

TECHNOPRENEUR

2. HALAL - INTRODUCTIONPRINCIPLES OF HALAL

1. All things created by Allah S.W.T are Halal, with fewexceptions.

2. To make Halal or haram is the right of Allah alone.

3. Prohibiting what is Halal and permitting what is haram issimilar to ascribing partners to Allah.

4. The basic reasons for the prohibition of things are due toimpurity and harmfulness.

5. What is Halal is sufficient and what is haram is superfluous.


PRINCIPLES OF HALAL (cont.)

6. Whatever is conducive to the haram is in itself is haram.

7. Falsely representing haram as Halal is prohibited.

8. Good intention do not make the haram acceptable. Islamdoes not endorse employing haram means to achievepraiseworthy ends.

9. Doubtful things should be avoided.

10.Haram things are prohibited to everyone alike.

11.Necessity dictates exception.


HALAL MARKET DRIVER

Source: International Trade Centre

T E C H N O P R E N E U R S & C A P I T A L M A R K E T

3. ASEAN UPDATESECONOMIC COMMUNITY BLUEPRINT 2025


Source: ASEAN Economic Community Blueprint 2025

The following interventions will be considered to promote deeper integration of the FAF sector in the region and the world through, among others: (i) enhancing trade facilitation and economic integration; (ii) strengthening cooperation and capacity for sustainable production; (iii) enhancing agricultural productivity; (iv) increasing investment in agricultural science and technology; and (v) ensuring the involvement of agricultural producers in globalisation process. Strategic measures include the following:

vii. Further enhance cooperation in production and promotion of Halal food and products; …

SURVEY REPORTSTATE OF SOUTHEAST ASIA: 2019

1. The ASEAN Studies Centre at ISEAS-Yusof Ishak Institute conducted the “State ofSoutheast Asia: 2019” online survey to seek the views of Southeast Asians onregional affairs.

2. The survey used the purposive sampling method, canvassing views from a total of1,008 Southeast Asians who are regional experts and stakeholders from the policy,research, business, civil society, and media communities.

3. As such, the results of this survey are not meant to be representative. Rather, it aimsto present a general view of prevailing attitudes among those in a position to informor influence policy on regional political, economic and social issues and concerns.


Source: ASEAN Focus, Issue 1/2019



Perception of One Belt One Road (OBOR)



Which country/regional organisation has the most influence economically in Southeast Asia?



Which country/regional organisation has

the most influence politically and strategically in

Southeast Asia?



Trust rankings of the major powers in Southeast Asia

4. ASEAN – USA – CHINA WAR



Manufacturers are switching production and imports away from US and/or China to avoid tariffs

Maritime and shipping

LNG

Electronic integrated circuits

Chemical products

Machine parts and components

Solar panels

Steel and aluminium

MALAYSIA INDONESIA

WinnerLoser



ASEAN’s Trade with China and the USas Share to Total Trade in 2017 (in %)


Industries Most Likely Affected from a US-China Trade War

Palm oil and exports

Possible gain in chemical & LED products exports to the US

Solar panel exports ( 30% tariff)

Machine parts and components sold from China to the US

Electronics (China is a large trading partner on electronics)

Base metals and articles

Local steel industry (diverted steel exports from other countries)

MALAYSIA INDONESIA

Gain

Loss

Mixed


5. HALAL INDUSTRYCOUNTRIES BEST-POSITIONED TO CAPITALIZE ON THE ISLAMIC ECONOMY

Source: State of the Global Islamic Economy Report 2018 - 2019


0 20 40 60 80 100 120 140

1 Malaysia

2 UAE

3 Bahrain

4 Saudi Arabia

5 Oman

6 Jordan

6 Qatar

6 Pakistan

9 Kuwait

10 Indonesia

HALAL EXPORTS (IN BILLIONS OF DOLLARS)

Source: DinarStandard, ITC Trade Map data, Halal Industry Development Corp.



GROWTH OF THE HALAL ECONOMY(IN TRILLIONS OF DOLLARS)

Source: State of the Global Islamic Economy Report 2018 - 2019

IMPORTANCE OF HALAL INDUSTRY TO THE MUSLIM WORLD


01 Obligation

02Market Potential

03 People Welfare

04Economic Welfare

05Domestic Demand

Obligation to God and Religion

More than 80% gap between demand and production of global Halal products

The Halal industry provides broader job opportunities and increase the safety of products

Halal gives added value, promotes trade and investment

Muslims nation are net importer of various products, including Halal products

WHAT INDUSTRY INVOLVE HALAL?


MALAYSIATRADITIONAL EMERGING

• Processed food and beverages

• Organic and non-organic ingredients

• Logistics services

• Cosmetics, personal care and healthcare products

• Tourism services

• Modest Fashion


CORE HALAL SECTORS AND EMERGING PRODUCTS SEGMENTS

Food & Beverages

Oils & Fats

Organic Foods

Substitute ingredients

Effective microbes

Nano enable packaging

Cosmetic & Personal Care

Plant based products

Male grooming

On-demand consumer services

Substitute ingredients

Healthcare & Pharmaceutical

Medical tourism services

Preventive medicine e.g. vaccines

Nano based drug delivery system

Nano encapsulated drugs and therapeutics

Nanotechnology chips implants, tubes for synthetic neurons

GLOBAL HALAL INDUSTRY LANDSCAPE


2 BILLION IN YEAR 2020

INTEGRITY IN HALAL SUPPLY CHAIN


HALAL SUPPLY CHAIN

Application of syariah principles to the entire supply chain from sourcing, manufacturing, transportation, warehousing, ports, freight

handling right up to consumer consumption.

HALAL INTERGRITY

Involves religious belief that cannot be compromise at any stage and consumers are

highly demanding in terms of quality and assurance when it comes to Halal products.

FACTORS INFLUENCING DEMAND FOR HALAL PRODUCTS AND SERVICES


INCREASING TRENDS IN HALAL CERTIFICATION


Increase food safety concern

Growing household income

Increase awareness on products / services status

HALAL ECOSYSTEM IN MALAYSIA

Source: MIDA, Malaysia Investment Performance Report

1. Malaysia is endowed with a comprehensive Halal ecosystem to support the growthof an integrated Halal supply chain.

2. Malaysia's Halal industry provides immense opportunities for food processingindustry players, due to its strong value propositions.

3. The country’s Halal certification is well-accepted internationally, boosting Muslimconsumer confidence, and indicating that certified products have passed safety,quality, and legal requirements based on Good Manufacturing Practice (GMP) andHazard Analysis and Critical Control Points (HACCP).

4. Potential investors are encouraged to leverage on this comprehensive Halalecosystem, particularly in the food industry.


Source: MITI Report 2015


HALAL ECOSYSTEM IN MALAYSIA

6.HALAL CHALLENGES AND OPPORTUNITIESISSUES IN HALAL INDUSTRY

1. Halal concept is simple. However, the industry is becomingmore complex and sometimes confusing.

2. Due to breath-taking technological development today andthe diversification of sources acquired globally for consumerproducts processing and production, numerous number ofprocessed products are available in the market.

3. It is very challenging and increasingly difficult for Muslims toensure the Halal status of products in the market.

4. This trend has raised concerns among Muslim consumersregarding new processed food and consumer products.


KEY CHALLENGES IN GLOBAL MUSLIM (HALAL) BUSINESS MARKET


AWARENESS INTEGRITY

Awareness on Halal concept and business

Protecting Halal integrity throughout supply chain

Protecting Halal Integrity Throughout Supply Chain


Towards zero contamination with non-halal materials / ingredients along the Halal supply chain

Protecting Halal Integrity Throughout Supply Chain


1. Relatively low per capita trade-ablefood consumption - future demandpotential is strong.

2. Per-capita chicken meat consumptionin Indonesia is projected to increase1.3 million MT / year

3. Rising disposable income withincrease in Halal awareness - TradedHalal products, especially meat andfood products will also increaseexponentially

Source: Halal Industry Development Corporation (HDC)


OPPORTUNITY: EMERGING HALAL MARKETS

South East Asia

1. Muslim community in China is growingwith majority living in NorthwestChina such as Xinjiang, Ningxia, Gansuand Qinghai.

2. The growing community is expected toboost Halal food sales in the longterm.

3. The Halal market growth is estimatedat 10% per annum.

Source: Halal Industry Development Corporation (HDC)


OPPORTUNITY: EMERGING HALAL MARKETS

China

OPPORTUNITY: POTENTIAL OPPORTUNITIES FROM BELT AND ROAD INITIATIVE (OBOR)


1. The Belt and Road strategywas introduced by the ChinaGovernment to promotebilateral and multilateraltrade and investmentcooperation.

2. Through OBOR, industryplayers can capitalize on theMuslim market which is noteasily accessible before this

7 . I N V E S T I N G I N H A L A L B U S I N E S S E SINVESTMENT SPACE


Embrace Halal as a value proposition

World Market World Market

Existing market space NEW market space

KEY BUSINESS ACTIVITIES WITHIN A HALAL PRODUCTS SUPPLY CHAIN


• Breeders and tissue cultures

• Animal feeds • Fertilizers • Pesticides, herbicides

& fungicides • Hormones &

medicaments

• Livestock rearing• Fruits, vegetables,

tubers & spices• Other commodities

• Abattoirs• Manufacturing plants• Warehousing,

collection and distribution centres

• Repackaging services • Cold room services

• Supermarkets & groceries

• Wholesalers & retailers

• E-commerce

• Restaurants • Food trucks • Kiosks

Source: https://www.sc.com.my/


8. ISLAMIC CAPITAL MARKET

1. ICM refers to a market where the capital market transactions,operations and activities are carried out in ways that conformwith Shariah principles and requirements.

2. What does this mean?• Prohibition of payment or receipt of riba (interest)• Prohibition of underlying contract with elements of gharar

(ambiguity)• Prohibition of maisir (gambling) activities• Prohibition of the production and sale of goods and services

that are prohibited in Islam


ISLAMIC CAPITAL MARKETS LEADING INDUSTRY GROWTH

1. Islamic capital markets consisting of Islamic bonds, orsukuk, and Islamic funds outgrew Islamic financialinstitutions.

2. Sukuk grew by a CAGR of 9% to US$426 billion in totalsukuk outstanding as of 2018, amounting to 17% of totalindustry assets.

3. Malaysia remains the largest sukuk market.

4. Saudi Arabia is increasingly competing in terms of sukukissuance –issued a record US$ 26 billion in 2018.

Source: Islamic Finance Development Report 2018



ISLAMIC FINANCE ECOSYSTEM


DEVELOPMENT OF ISLAMIC FINANCE MARKETS


Islamic Finance Assets Growth



Islamic Banking Assets Growth



Takaful Assets Growth



Other Islamic Financial Institutions Assets Growth



Sukuk Assets Growth



Islamic Funds Assets Growth



ISLAMIC FINANCE GOVERNANCE PERFORMANCE




MALAYSIA CAPITAL MARKET INSTITUTIONAL FRAMEWORK

SECURITIES COMMISSION

• Established on 1 March 1993 under the Securities. Commission Act 1993

• Regulate and promote the development of the capital market.

• Reports to the Minister of Finance.

• Capital Markets and Services Act 2007.

MINISTER OF FINANCE

SECURITIESCOMMISSION

Listed CompaniesStockbrokersAsset Managers, Unit Trusts Management Companies

Investment Banks

EXCHANGE

BNM(Central Bank)



Securities Commission Malaysia as the Main Regulator for the Capital Market

Licensing and supervising all licensed persons

1

3

4

5 6

Supervising exchanges, clearing houses and central depositories

2

Development of the capital market

Regulating all matters relating to fund management activities

Regulating all matters relating to securities and futures contracts

Regulating the take-overs and mergers of companies



MALAYSIA ISLAMIC CAPITAL MARKET (ICM)

1. Has evolved into an efficient conduit for mobilisation of funds for Malaysian andforeign corporatesa. long term fund raising and investment; enhances depth & resilience of

Malaysian Islamic financial system and overall financial system.b. 68% of outstanding corporate bonds are structured using Shariah principles –

information as of H1 2011.c. 89% of companies on the stock exchange are Shariah compliant.

2. Malaysian ICM products are accepted by both Islamic and non-Islamic local investorsas well as investors across various jurisdictionsa. Conventional investors regard ICM products as a new asset class.b. Emergence of new demand from the Middle East, South-East Asia, South Asia

and North Africa.



3. Malaysia is regarded as a centre for Islamic finance:a. About two thirds of sukuk globally originates from Malaysia.b. Islamic unit trust is the fastest growing segment of the Islamic capital

market.c. Leading international fund management companies establishing

operations in Malaysia.4. Issuance of sukuk is not confined to Islamic institutions:

a. Multilateral institutions such as World Bank and IFC have issued sukuk.b. Non-Islamic institutions have issued sukuk.c. Non-Muslim majority countries have shown interest to issue sukuk.

5. Local and foreign financial institutions are now actively intermediating andstructuring ICM products:a. Sukukb. Islamic structured productsc. Islamic exchange traded fundsd. Islamic real estate investment trusts



MALAYSIAN ICM SHARIAH COMPLIANT PRODUCTS AND SERVICES

PRODUCTS

• Shariah-compliant stocks • Islamic unit trusts• Islamic REITs• Sukuk• Islamic ETFs• Islamic Structured Products• Islamic Venture Capital/Private Equity• Islamic alternative fund• Islamic gold ETF• Shariah-compliant derivative

SERVICES

• Islamic stockbroking• Islamic fund management• Islamic equity indices• Commodity trading platform (to facilitate IFIs

liquidity management under tawarruqarrangement)

• Corporate finance and advisory• Islamic Stock Selling and Buying (ISSB)

platform



GUIDING PRINCIPLES FOR SHARIAH-COMPLIANT SECURITIES

Classified as Shariah-compliant if the company is not significantly involved in thefollowing activities:

1. Financial services based on riba (interest)2. Gambling3. Manufacture or sale of non-halal products/services4. Conventional insurance5. Entertainment6. Manufacture or sale of tobacco-based products or related products7. Conventional stockbroking or share trading8. Other activities deemed non-permissible



ISLAMIC FUND MANAGEMENT COMPANIES

1. Islamic fund management companies are allowed have 100% foreignownership.

2. Islamic funds are permitted to invest 100% of assets abroad.

3. 10-year stamp duty exemption and tax incentives on wide range of Islamicinvestment instruments.

4. Income tax exemption on all Islamic fund management activity fees

5. One-stop center at the Securities Commission (SC) for all fund managementqueries.



INTERNATIONALIZATION OF ICM

1. Malaysia is committed to working closely with other centres to create international linkagesand broaden markets for ICM products and services, creating opportunities and stimulatecross border investment flows.

2. So far, SC has signed MRAs and MoUs with :a. MRA with DFSA - both corporations will work closely to distribute Prudential-managed

Shariah funds in Malaysia and the Dubaib. MRA with HKSFC - to facilitate greater cross-border marketing and distribution of Islamic

fundsc. Bilateral MoU with Luxembourg on information exchanged. Letters of Exchange with CBRC and MoU with CSRS of China – Malaysia recognised as an

approved investment destination

3. SC has also established International Advisory Council to provide strategic guidance andinternational perspectives.

8. HALAL – GOVERNMENT’S ROLE

6 WAYS GOVERNMENTS CAN ENCOURAGE ENTREPRENEURSHIP

6 WAYS

POLICY

GROWTH

SECTORS

DELEGATE

NEEDS

FORMATION

Source: First White Paper, The Small Enterprise Association of Australia and New Zealand (SEAANZ)

HOW CAN GOVERNMENT SUPPORT THE TECHNOPRENEURS?


CAPITAL EXPOSURE

Source: https://www.cradle.com.my


CRADLE BUZZ

• Cradle Buzz brings together entrepreneurs and investors across ASEAN in single venue to highlight and discuss issues that concern growing a business in the region

• Cradle Buzz aims to give the ASEAN entrepreneurs and investor better clarity and understanding of what makes ASEAN start-up landscape tick and how they can take advantage of the abundant business in the region.

GOVERNMENT SUPPORT TO THE TECHNOPRENEURS

Source: http://www.hdcglobal.com/


HALAL BUSINESS TRANSFORMATION (HBT) PROGRAMME

• The HBT programme is a capacity-building initiative introduced by HDC to facilitate development of Malaysian companies especially SMEs, in becoming global players in the Halal industry.

• HBT’s objective is to enhance the business performance and growth of Halal companies by helping to produce high quality and innovative Halal products and services for the world. It envisages that a targeted company will grow from a small enterprise equipped with capabilities to comply with Halal requirements in the Halal incubation stage and will subsequently transform into an international exporter upon completion of the programme.


Source: https://www.mtdc.com.my


HALAL TECHNOLOGY DEVELOPMENT FUND

• Halal Fund 1: partial grant dedicated to grow an SME from small to medium-sized company with the application of technology in Halal related products / services for local market.

• Halal Fund 2: partial grant dedicated to grow an SME from medium to large-sized company with the application of technology in Halal products or services for export market.



EXPORT CREDIT REFINANCING-i

• Export Credit Refinancing-i (ECR-i) provides an alternative short-term pre- and post-shipment financing to direct / indirect exporters to promote exports of manufactured products, agriculture products and primary commodities that are ‘Halal’, via the provision of Shariah compliant financing facilities.

IMPORT FINANCING-i

• The purpose of Import Financing-i is to finance imports of “strategic goods” consisting of Halal capital goods, raw materials and related goods for the development, upgrading expansion of infrastructure facilities or other expenses related to client’s business activities which will ultimately reduce dependency on imports and also for government initiatives projects.

TRUST RECEIPT-i

• Trust Receipt-i is a trade finance facility that finance imports and bridge the working capital requirement of a merchant through extension of credit period under:a. Documentary Credit-i termsb. Inward Documentary for Collection-i

• It covers until receipt of sales proceed and shall be granted for Halal purposes.


Source: Export-Import Bank of Malaysia Berhad (EXIM Bank)


SKIM JAMINAN PINJAMAN PERNIAGAAN (SJPP)

• Based on Malaysia Budget 2020 that just announced in October 2019: together with Entrepreneur Development Ministry to focus on advocacy and awareness for Halal certification and Halal product development

• Fund to support SMEs with priority given to producers of halal products and manufacturers with high local content.


Source: Export-Import Bank of Malaysia Berhad (EXIM Bank)



WORLD HALAL CONFERENCE (WHC)

• As become an established part of the calendar in Malaysia.

• It is one of Government's strategies to make Malaysia as a global halal hub.

• WHC brings together Head of Governments, academia and captains of industry to explore and deliberate on challenges relating to the development of Halal Economy.

Source: https://whc.hdcglobal.com/2019/



MALAYSIA INTERNATIONAL HALAL SHOWCASE (MIHAS)

• MIHAS is an annual 4-day trade exhibition held in Kuala Lumpur, Malaysia.

• MIHAS 2019: Around 30,000 trader and leader visitors flocking, it had resulted in total immediate and negotiated trade value of over RM1.6 billion (USD 380 Million).

• Today, MIHAS is the premier event that is not limited to the ASEAN region alone but is also supported internationally by the enthusiastic participation of International Pavilions from countries across the globe.

Source: https://mihas.com.my/



THE WORLD HALAL SUMMIT

• Halal event that sheds the light on significant issues in halal sector by bringing together prominent experts from all over the world.

• With the participation of international academicians and fiqh experts, the summit aims to raise awareness about Halal by hosting conferences where halal-related topics in finance, tourism, food, medicine, pharmacy, cosmetics, textile, modest fashion and other sectors are discussed at.

Source: https://www.worldhalalsummit.com


GOVERNMENT SUPPORT TO THE TECHNOPRENEURSHALAL INGREDIENTS SUB-SECTOR

• Halal Ingredients Asia (HLIA) 2015 was the first global Halal ingredients event that brought together Halal ingredients professionals and industry players from around the world in an effort to accelerate and enhance development of the Halal ingredients industry. It also caters to the growing demand for production of Halal end-products.

• HLIA 2015 was organised in September 2015 and was the first international event with special focus on Halal ingredients in F&B, cosmetics and personal care products. It attracted a participation of 2,170 conference delegates and trade visitors from 19 countries.

HALAL HEALTHCARE SUB-SECTOR

• Halal initiative in the healthcare industry is reflected in the programme which highlights the Halal ecosystem established within the Malaysian healthcare sector. It was launched on 27 October 2015 in Kuala Lumpur.

• Organised by HDC, the programme featured Halal in a healthcare industry forum, with topics on the regulator’s experience in developing an equitable Halal pharmaceutical industry, as well as the ever-controversial issue of mismatch in expectations between the industry and the general public for Halal vaccines. Source: MITI Report 2018

9. CONCLUSION

1. 2 billion Muslim population. Supply for Halal food and non-foodproducts is not enough to cater the demand.

2. Halal industry is one of the fastest growing markets in the world

3. Challenge is to develop a more robust and efficient global supplychain benefitting the world.

4. R & D and application of new methods for Halal analysis andauthentication is much needed to uphold the credibility of Halalcertification programs

5. Hence, opportunities are enormous.

T E C H N O P R E N E U R S & C A P I T A L M A R K E T

Thank you!Any questions?

technopreneurs and capital market · 1.technopreneur –introduction entrepreneurship source: peter...

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