Bangladesh needs a halal ecosystem, not just certification

At a Dhaka workshop on 18 July, the general manager of Bombay Sweets voiced a familiar frustration. His company had paid lakhs of taka in fees and endured multiple factory inspections. Yet, after all that, the halal certificate never came. The process, he suggested, had become an exercise in futility—costly, repetitive, and ultimately inconclusive.

As neither the Islamic Foundation nor the Bangladesh Standards and Testing Institution (BSTI) is recognised by the Saudi Accreditation Center, many local companies seeking to export to Saudi Arabia, including Bombay Sweets, have had to remove the halal logo from around 50 products. They are then forced to repackage those items at a cost of around Tk62 lakh. Some exporters say that even when foreign buyers are informed about the costs they must incur to comply with Bangladesh's certification requirements, the buyers often simply ask them to print the word "halal" on the packaging and move on.

This is a point policymakers ought to pay close attention to. If a certification system is easier for businesses to bypass than it is to comply with, it is not stringent. Rather, it is irrelevant. And irrelevance threatens the integrity of Bangladesh's halal certification process.

According to figures presented at a recent workshop sponsored by the Bangladesh Chamber of Industries and reported in The Business Standard, there is a significant disparity between the value of the global halal economy ($5.2 trillion) and the value of Bangladesh's halal exports ($850 million). In other words, Bangladesh's halal exports are little more than a rounding error compared to the size of the global halal economy.

Bangladesh has a diverse industrial base, including processed foods, pharmaceuticals, leather, garment manufacturing, and agricultural processing, as well as one of the largest Islamic banking systems in the world. While both figures cited above were estimates presented by speakers at the workshop rather than findings from audited reports, the difference in scale is well established.

The reasons Bangladesh is failing to capture a greater share of this market have been identified before. As we noted in these pages nearly four years ago, Mostafa Hossain and I argued that Bangladesh was missing this opportunity because it lacked the necessary institutional architecture.

The Islamic Foundation began offering halal certification services in 2011, but did so in a haphazard manner and without sufficient public awareness. BSTI was also tasked with providing certification services; however, the organisation lacks the scientific expertise needed to issue internationally credible certifications. Finally, the proposed interministerial body responsible for overseeing halal certification was never established.

All of these observations remain valid today with little modification, serving as an indictment of nearly four years of missed opportunities and providing grounds for scepticism as to whether creating yet another coordinating entity will solve the problem.

The impulse to create a single agency is partially justified, as it correctly identifies a problem caused by duplicative efforts and unclear lines of accountability resulting from multiple agencies issuing competing certifications. However, creating one more agency is unlikely to have any meaningful effect on increasing exports. What it will accomplish is the centralisation of a service that importers around the world do not recognise.

Certification versus recognition

The critical difference between obtaining a certificate and obtaining recognition lies in understanding what each represents. Obtaining a certificate involves completing a domestic administrative process. Obtaining recognition, by contrast, represents foreign regulatory approval of a country's certification system—an acknowledgement that the country's certification bodies are technically competent, independent, and trustworthy.

Domestic authorities can issue certificates. Foreign regulators determine whether those certificates meet their criteria for equivalence and are therefore accepted within their jurisdictions.

Each subsequent challenge stems directly from treating these two concepts as interchangeable. For example, when laboratory tests for contaminants cannot be conducted locally and must instead be carried out overseas, samples have to be sent abroad, causing delays and increasing costs, particularly for smaller exporters. Similarly, instead of issuing a single certificate for each business location or manufacturing plant, certificates are typically issued on a product-by-product basis. As a result, exporters with large numbers of SKUs face an untenable compliance burden relative to the actual level of risk. Finally, whenever inspections rely on personal discretion or face-to-face interactions, opportunities arise for unofficial payments.

Several small and medium-sized exporters have publicly complained about such practices. While I am unaware of any official response from either institution to these allegations, the broader policy implications matter more. Regardless of whether these allegations are substantiated, a well-designed certification system should not depend on the integrity of individual inspectors. Instead, it should minimise discretion through fixed fee schedules, digitally assigned inspection teams, legally prescribed processing timelines, appeal mechanisms independent of management control, and transparent reporting of processing times.

Certification is trade infrastructure

Bangladesh has mischaracterised the nature of halal certification by treating it primarily as an administrative function related to religion. In reality, certification is better understood as a form of trade infrastructure, akin to sanitary and phytosanitary compliance, accredited laboratories, and customs modernisation. Trade infrastructure requires personnel with specialised expertise—including food scientists, chemists, veterinarians, supply chain auditors, trade negotiators, and qualified Shariah scholars—working collaboratively rather than substituting for one another.

In my previous work with Mustafa Raza Rabbani and Daouia Chebab on the integration of Islamic finance and the halal industry, including the economic benefits of such integration, I argued that although halal production and Islamic finance evolved separately, they have always exhibited strong complementarities.

Furthermore, while integration offers considerable economic benefits for producers, financiers, regulators, and certification bodies, Bangladesh's failure to bring these stakeholders into a coherent ecosystem has imposed significant costs. One reason is that most Islamic banks in Bangladesh do not extend financing to certified suppliers.

As a result, although Islamic banks account for a substantial share of the country's banking deposits, only a small proportion of these funds is directed towards financing certified suppliers with reliable, internationally compliant supply chains—for example, slaughterhouses that meet international standards and refrigerated transport capable of maintaining compliance throughout the distribution process.

What a strategy would actually contain

A credible national halal economy strategy should focus on five key priorities.

First, Bangladesh should establish a unified national digital platform for halal product registration and certification. This would not create a monopoly; rather, it would provide a single national standard that multiple accredited certification bodies could use. The entire application process should be digitised to improve efficiency, transparency, and traceability.

Second, success should be measured by international recognition rather than simply by the number of certificates issued. The government should identify priority export markets, align national standards with those of the Standards and Metrology Institute for Islamic Countries (SMIIC), negotiate mutual recognition agreements, and maintain an up-to-date list of countries that accept Bangladeshi halal certifications.

Third, responsibilities should be distributed among existing institutions rather than assigned to a new bureaucracy. The Ministry of Commerce should coordinate strategy and international negotiations; BSTI should oversee technical standards; the Islamic Foundation should develop Shariah standards in consultation with independent experts; the Bangladesh Accreditation Board should accredit laboratories and certification bodies; the Export Promotion Bureau should promote halal products abroad; and BIDA and BEZA should support the development of halal-compliant industrial zones.

Fourth, the strategy should make halal certification affordable for small businesses. This can be achieved by encouraging facility-level certification where appropriate, introducing flat certification fees, offering discounts for eligible SMEs, and establishing shared laboratory facilities to reduce compliance costs.

Finally, Islamic finance should be directed towards productive investment rather than consumption. Financing should support working capital, upgrades to meet halal compliance requirements, export activities, and the development of stronger halal supply chains.

The strategy should also set out a clear implementation timeline. Within 12 months, Bangladesh should develop a national strategy, designate the lead coordinating body, launch the digital portal, establish transparent fee schedules and processing timelines, and begin negotiations with international accreditation and regulatory bodies on mutual recognition. Within three years, the country should accredit domestic laboratories so testing can be conducted locally, train auditors, secure recognition of Bangladeshi certifications in priority export markets, and establish dedicated financing mechanisms for businesses. Within five years, it should develop halal industry clusters in key sectors and expand into modest fashion, cosmetics, pharmaceuticals, and tourism. Regularly published performance reports would allow problems to be identified early so that corrective action can be taken.

Two warnings are worth bearing in mind. First, halal policy should focus on industries where Bangladesh already has the capabilities to compete in high-value markets, rather than attempting to create new markets by using religion as a branding tool. Second, the halal economy is not just for Muslims. Muslim and non-Muslim Bangladeshi entrepreneurs and investors alike should be encouraged to participate, just as they do in countries such as Thailand and Singapore, whose halal certifications Bangladeshi exporters are currently obliged to obtain.

Bangladesh does not need another seminar explaining the size of the global halal market. It needs a system in which a producer in Gazipur can obtain a single internationally credible certification, complete the necessary testing within Bangladesh, finance upgrades through an Islamic bank that understands the sector, and export to Riyadh without having to repeat the entire certification process under a Thai certificate.

Creating a single coordinating body could help achieve that objective. But the ultimate goal is not institutional consolidation for its own sake. It is to build a trusted, internationally recognised halal ecosystem—supported by sound trade policy, investment in laboratories, internationally recognised certification, and a financial sector that finances productive halal enterprises. Without those foundations, another agency will accomplish little. We outlined many of these recommendations in 2022. Hopefully, we will not still be outlining them in 2030.

Sketch: TBS

M Kabir Hassan is Professor of Finance and the Moffett Chair at LSU-New Orleans, US. He is a Senior Fulbright Scholar. He is the 2016 IsDB Prize winner in Islamic Banking and Finance, a member of the AAOIFI Ethics and Governance Board, and Chairman of its Education Board.

Disclaimer: The views and opinions expressed in this article are those of the author and do not necessarily reflect the opinions and views of The Business Standard.