Halal Cluster Network: Connecting regional halal clusters

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As the corona tornado is further destroying economies for more than a year, it is important to focus now already on how to rebuild our economies after the corona tornado has died out. Over the past years I have been working on designing and implementing halal clusters but also an initiative to connecting halal clusters together. The case study I am sharing with you might be one of the possible strategies for initiating successful regional collaboration.

The halal industry is a fast-growing industry. With Asia the largest halal market due to its size of Muslim population. Asia has a well-developed agriculture sector, a leading producer of various agriculture commodities. This is an excellent foundation for creating halal production clusters, leveraging these agriculture products for halal food, cosmetics, pharmaceuticals, etc. The advantage of bringing physically together industries and their supply chains, is that supply chain costs are reduced and synergies can be harvested. Synergies are obtained through collaboration within supply chains but also collaboration between different supply chains. Close vicinity of companies leads to innovation and creation of new companies and brands.

In Indonesia, I am the project director of Modern Halal Valley, a 500 hectares halal industrial and logistics cluster. Modern Halal Valley is located on Java Island, 1 hour drive from Jakarta. It provides halal industries an advanced halal eco-system, a location for SMEs, large and multinational companies, logistics service providers, Islamic banking & finance, and trade and commercial companies. It is also home to halal laboratories, research and education.

Modern Halal Valley has established a halal cluster network to link other local, regional, and international halal clusters together in a halal cluster network. The halal cluster network adds value to its partner through:

• Synergy advantages through collaboration

• Effective halal assurance based  on the international halal supply chain management standard (OIC/SMIIC 17:2020)

• Creating a green lane for halal imports, exports and domestic  distribution in partner countries

• Joint promotion of halal clusters and international halal trade
   between halal clusters

• Access to a sourcing network for halal raw materials, ingredients, and additives

• Access to export markets of intermediate and final products

• Knowledge sharing, joint industry projects, and research  and development

We have established various agreements with halal clusters in Asia and beyond to connecting halal clusters together. Next to the private sector, local and national governments are important partners in facilitating the development of green lanes, halal cluster policies and incentives, and supporting R&D.

As I have been working on halal clusters, also other agriculture or industrial clusters can be connected within a region, to create new economic corridors that bring greater economic benefits, foreign direct investments, and sustainability advantages as compared to a single country can achieve on its own. Working together with neighbouring countries can leverage availability of natural resources,manpower and specialised skills, government incentives, market access, and many more. With an increasing pressure on the environmental impact of supply chains, or carbon footprint, regional supply chain networks will become more important than global supply chain. What are important success factors for connecting regional cluster?

First, instead of focusing on economies of scale and economies of scope, we need to focus on what I call ‘economies of chains’. We have to build clusters based on linking supply chains to other ecological fitting supply chains, clusters, and cluster networks that increases the business value chain significantly.

Second, clusters need to be designed as complete eco-systems, with supply chain participants (such as suppliers, customers, trade) but also supporting industry. Education and research are hereby an important cornerstone of any cluster and cluster network. Universities not only supply manpower needed but also support in research and innovations in clusters, 

Third, public-private partnerships are effective instruments to ensure industry-friendly policies, incentives for investments in clusters, and aligning regional policies and regulations.

Professor Dr. Marco Tieman” heading_tag=”h3″ alignment=”left” sub_heading_style=”font-style:italic;” margin_design_tab_text=””]

Professor Dr. Marco Tieman
CEO LBB International

Prof. Dr. Marco Tieman is the CEO of LBB International, a supply chain strategy consultancy and research firm. He is a professor with Help University and a research fellow with the Universiti Malaya Halal Research Centre in Malaysia, conducting research in halal supply chain management and reputation management.

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