BMCC - F&B Sector Report 2018/2019

BRITISH MALAYSIAN CHAMBER OF COMMERCE Malaysian Industry Report 2018 / 2019

FOOD & BEVERAGE

ABOUT THE BRITISH MALAYSIAN CHAMBER OF COMMERCE

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stablished in 1963, the British Malaysian Chamber of Commerce (BMCC) has been driven by the sole ordinance of advancing bilateral trade relations between the United Kingdom and Malaysia. Over the past five decades, the BMCC has been a catalyst in providing Malaysian-based businesses with networking and exposure, knowledge exchange and bilateral trading support services. Today, the BMCC has firmly rooted itself as one of Southeast Asia’s most prolific Chambers.

The BMCC is appointed by the UK’s Department for International Trade (DIT) to become their service delivery partner for British SME’s seeking to export or establish a presence in Malaysia. Embodied by dedicated sector specialists, the BMCC TRADE TEAM provide a range of customised services from market intelligence, business matching and event management to sourcing assistance of UK goods and services.

The BMCC TRADE TEAM works with UK exporters focusing primarily on SMEs in offering bilateral trade assistance, serving principally as a one-stop platform providing a soft landing for UK firms in Malaysia through market research and knowledge exchange, legal and regulatory systems guidance, connecting clients or distributors, and risk management.

In Partnership With

This report serves as a preliminary introduction that highlights key features and factors relevant to the Professional Services sector in Malaysia.

Information included in this report is the original work and property of the British Malaysian Chamber of Commerce (BMCC) and its department the Trade Team and is subject to copyright. No illustrations, photographs, graphics or text included in this report should be copied, reproduced or shared without prior written consent of its owner.

Whereas every effort has been made to ensure that the information given in this document is accurate, the British Malaysian Chamber of Commerce nor its Departments (Trade Team) accept liability for any errors, omissions or misleading statements, and no warranty is given or responsibility accepted as to the standing of any individual, firm, company or other organisation mentioned. © British Malaysian Chamber of Commerce Berhad 2018

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UNDERSTANDING MALAYSIA’S FOOD & BEVERAGE SECTOR Located in Southeast Asia, Malaysia is a federal constitutional monarchy consisting of two regions, Peninsular and East (Borneo) Malaysia, seperated by the South China Sea. Malaysia is known to be one of the most diversely congenial polyethnic and mutlti-cultural countries in the world.

Population: 32 Million Ethnicities: Malay, Chinese, Indian Currency: Malaysian Ringgit (MYR) Ease of Doing Business: Rank 24 Average GDP Growth: 5 - 5.5% F&B Industry Revenue in 2017: MYR 92.8 million

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Malaysian Food and Beverage (F&B) sector reflects its diverse multi-cultural population. The Government’s continuous efforts to increase food production and liberalise trade have meant that most Malaysians today have access to a wide selection of local and imported F&B products.

In the recent national Budget for 2018 tabled by Malaysia’s Prime Minister, the F&B sector was considered as one of the “winning sectors” that is expected to benefit from Budget 2018 as the reduction in personal income tax and special payment to civil servants will increase household disposable income.

In the process, the F&B sector has developed into one of the significant contributors to the Malaysian economy with revenues amounting to US$34m in 2018 and an annual growth rate of 7.6%. The rise of private consumption and lifestyle changes are expected to become major drivers for the F&B sector in Malaysia.

Considering the overall growth of the sector, the future of Malaysia’s F&B sector is promising. Malaysia is certainly an attractive destination for UK companies seeking to expand their F&B business in the Asian region.

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1. FOOD RETAIL

Malaysia has a large and growing food retail market which comprises of small-scale retailers, large-scale retailers, convenience stores and petrol marts. Small-scale retailers include provision and local sundry shops while largescale retailers include supermarkets and department stores with a supermarket within their premise.

There is a rising emergence of large-scale retailers in Malaysia. Large-scale retailers, especially those located in main metropolitan areas in Malaysia, would generally have a wider range of F&B products including those that are imported. Most high-end food retailers are situated in the metropolitan areas, carrying large quantities of imported food products to appeal to the middle-to-high income population and the growing expatriate community.

The online grocery market is still relatively new in the Malaysian market and it may take some time for it to completely develop. Yet, there are a number of food retailers that offer in-house grocery delivery services such as Tesco, Jaya Grocer and SAM’s Groceria.

There are also third party grocery delivery services such as Happy Fresh, Red Tick and Honestbee. Generally, these services are used by the urban population in Malaysia.

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The leading food retailers in Malaysia targeting the mass market:

Giant (GCH Retail Sdn Bhd) Giant is one of the largest players of the retail industry in Malaysia. It currently has over 85 branches spread throughout the country +60(0)3 5544 8648 | www.giant.com.my

Cold Storage (GCH Retail Sdn Bhd) Cold Storage is a subsidiary of Dairy Farm International of Hong Kong. It operates 17 Cold Storage Supermarkets Malaysia +60(0)3 5544 8648 | www.coldstorage.com.my

Tesco Tesco operates 46 outlets in Malaysia with the Tesco Hypermarkets and Tesco Extra Store format, which is similar to a Convenience Store +60(0)3 6287 6000 | www.tesco.com.my

Jaya Grocer Since their first store at Jaya 33 in Petaling Jaya, Jaya Grocer has become one of Malaysia’s widest-range supermarkets for imported products on shelf, fresh produce and groceries. +60(0)3 7734 3244 | www.jayagrocer.com.my

AEON Big Formerly known as Carrefour, Aeon Big was acquired by the Japanese company Aeon. It has 27 Hypermarkets across major cities in Malaysia +60(0)3 5631 2000 | www.aeonbig.com.my

Jason’s Food Hall (GCH Retail Sdn Bhd) Located at Bangsar Shopping Centre, Jason’s is a premium delicatessen and supermarket offering gourmet groceries and fine wines from overseas +60(0)3-2094 2900 | www.jasonsfoodhall.com.my

Mydin Mydin is a Malaysian chain of hypermarket, supermarket & emporiums. It is notable for bringing local & overseas products at affordable prices +60(0)1300 30 8786 | www.mydin.com.my

Village Grocer Village Grocer is a premium supermarket chain, rooting from a small, family-run sundry shop in Gombak that started in the 1950s +60(0)3-2094 2900 | www.jasonsfoodhall.com.my

Lulu Hypermarket Lulu Hypermarket is the largest Middle Eastern chain and retail venture in Asia with 121 outlets in the Gulf Cooperation Council (GCC) countries +60(0)3 2078 1173 | www.ekprima.my (Malaysia partner)

Ben’s Independent Grocer (B.I.G) B.I.G is a premium grocery store offering a wide range of international F&B products and an in-store restaurant +60(0)3 6205 2036 | www.big.com.my

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2. FOOD SERVICE Malaysia has earned itself a reputation of becoming a food lover’s haven in the Asian region due to its wide variety of local and international cuisines.

The Malaysian foodservice subsectors include full-service restaurants, fast food restaurants, hotels, cafes and bars.

Since over 60% of the Malaysian population are Muslims, all food and ingredients used in the foodservice sector must be certified Halal by the Department of Islamic Development (JAKIM).

The implementation of the 6% Goods and Service Tax (GST) in 2015 has had a negative impact on consumer spending. Despite the increased cost living, the rapid growth of fine-dining restaurants, international chain restaurants, and cafes over the years suggests that Malaysians are still willing to spend on dining out.

Recent reports have found that Malaysians spend most of their disposable income (31.2%) dining out. Rapid urbanisation and modernisation has also transformed the eating habits of Malaysians.

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3. FOOD PROCESSING Malaysia’s food processing sector is growing at about 5% annually. The food processing sector consists of not only domestic players and foreign companies.

The sector is pre-dominantly Malaysian owned but the Government has introduced several incentives that are beneficial for international companies seeking to enter the market.

By year 2020, the sector is expected to further expand towards making Malaysia as the preferred market for food production and distribution with a focus on Halal foods.

International companies have been leveraging on Malaysia’s comprehensive Halal ecosystem by making Malaysia as their export base for Halal foods to capture the growing global Halal market and Muslim population.

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4. THE HALAL F&B SECTOR Malaysia’s Halal F&B sector is considered as one of the most important sectors for its Muslim-majority population.

Halal-certification gives Muslims the assurance that a company’s product can be lawfully consumed in Islam. In order to obtain a Halal-certification, the Halal requirements must be complied throughout the supply chain process from the abattoir to the point-ofsale.

The Department of Islamic Development (JAKIM) is Malaysia’s Halal certifying body. Given the success of the Halal F&B sector in Malaysia, the Government is keen to further develop the country as the leader of the global Halal sector by year 2020.

Malaysia is well-positioned to achieve this because of its globally recognized Halal certification standards and increasing recognition of its Halal F&B products.

The global Halal market is currently valued at US$2.3 trillion with the Halal F&B sector being the core component. This represents new implications to all players in the F&B industry.

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REGULATORY ENVINRONMENT DOCUMENTS REQUIRED BY THE ROYAL MALAYSIAN CUSTOMS DEPARTMENT Custom Entry Form Evidence of right to make entry (e.g. bill of landing) Commercial Invoice (or pro-forma invoice if a commercial invoice can’t be produced) Packing List Other: certificate of origin, analysis, etc.

HALAL CERTIFICATION PROCESS Application for the Halal Certificate should be submitted to the ‘Halal Division’ at JAKIM via an online application. Alternatively, UK companies can apply for a Halal Certification through UK Halal-certification bodies that are recognised by JAKIM which are the Halal Food Authority and The Muslim Food Board.

EXPORTING ANIMAL PRODUCTS (including dairy products) TO MALAYSIA All meat and dairy processing establishments must register with the Department of Veterinary Service (DVS) before exporting to Malaysia. This registration is done for the purpose of traceability.

Registration could not be done online as the application form has to be completed and addressed to the DVS office in Malaysia. The application form can be submitted by meat and dairy importers in Malaysia.

Once documents are received, DVS officers will carry out document checking and register the establishment. DVS has the right to reject or detain any consignment when deemed required.

APPLY HERE:

www.dvs.gov.my/index.php/pages/view/359

ALCOHOLIC BEVERAGES Malaysia permits the selling of alcohol to non-Muslims although Malaysia is a Muslim majority country. It was reported that Kuala Lumpur has the highest level of alcohol consumption in Malaysia, followed by states of Sarawak and Sabah.

In the global arena, Malaysia was the 10th largest population of alcohol users with an annual spending of RM 2 billion on alcoholic beverages. Alcoholic beverages are considered expensive in Malaysia due to the high Excise Tax at 15% and it is expected to increase at an additional 10%.

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KEY STAKEHOLDERS Organisation

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Overview

Contact

Ministry of Health Malaysia (MOH) Food Safety and Quality Division (FSQD) FSQD implements an active food safety program which includes routine compliance, sampling, food premises inspection, food import control activity and licensing of specified food substances

+60(0)3 8883 3888 www.moh.gov.my

Royal Malaysian Customs Department (RMC) Collect revenue and provide trade facilitation through enforcement of and compliance with applicable law to spur economic growth, maintain national security and public welfare

+60(0)3 8882 2100 www.customs.gov. my

Department of Islamic Development Malaysia (JAKIM) Serve as the central agency in the planning and development of Islamic Affairs Community. The Halal Division is responsible for releasing Halal certification

+60(0)3 8886 4000 www.islam.gov.my

Department of Veterinary Services (DVS) Consignment of all imported meat products, dairy products, pork products are subject to veterinary inspection (documents checking) by authorized officer(s) of DVS.

+60(0)3-8870 2000, www.dvs.gov.my

Malaysian Investment Development Authority (MIDA) Assists companies which intend to invest in the manufacturing and services sectors, as well as facilitates the implementation of their projects. Relevant department: Food and Sustainable Resources

+60(0)3-2267 3633 www.mida.gov.my

Ministry of Agriculture (MOA) Spearhead the transformation process within the agriculture sector via a planned, integrated and holistic approach

+60(0)3 8870 1000 www.moa.gov.my

Federal Agriculture & Marketing Authority Malaysia (FAMA) FAMA’s responsibility is to improve the marketing of agro food products such as vegetables, fruits and agro-based industry products

+60(0)3 6126 2020 www.fama.gov.my

MARKET ENTRY Points of Entry (POE) in Malaysia: Central city: headquarters in Klang Valley (Kuala Lumpur and parts of the state of Selangor) Second tier cities: Penang, Ipoh, Melaka and Johor Bahru Duty Free islands: Langkawi, Tioman and Labuan

Non-exhaustive list of potential importers to entering Malaysian market: Local importers and F&B distributors Food retailers Hoteliers, restaurateurs and resorts

CONTACT US For any inquiries please contact the BMCC Trade Team: Tel: +60(0)3 2163 1784 / 1786 Email: info@bmcc.org.my Web: www.bmcc.org.my

E04C0, 4th Floor East Block Wisma Selangor Dredging 142-B Jalan Ampang 50450 Kuala Lumpur

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