KUALA LUMPUR, April 1 — Malaysia’s halal industry stands to gain from the government’s introduction of the controversial goods and services tax (GST), which has also been certified as “halal” by the National Fatwa Council, Datuk Seri Najib Razak said today.

The prime minister added that local companies will benefit from having their costs cut as many of the food items used in the industry will be exempt from the consumption tax, which came into force today.

“GST has been certified as halal,” he said in his speech while opening the World Halal Summit here.

“Our GST will exempt many goods and services, such as water and basic foodstuffs. This is good news for the halal industry, since most of the ingredients — fish, meat, poultry, vegetables and the like — will incur zero GST,” he added.

The prime minister also assured delegates attending the summit that there would be no GST on goods and services exported.

“Malaysian firms will benefit from a lower cost of doing business by recovering any input taxes,” he said.

He said Malaysia’s halal certification and logo are now universally recognised and accepted.

The prime minister assured delegates attending the World Halal Summit that there would be no GST on goods and services exported. — Picture by Shaun Tan

In his speech, Najib pointed out that the world halal economy is estimated to be worth US$2.3 trillion (RM8.5 trillion) and pushed for investors to take up stakes in the industry.

He added that growth is assured as the global Muslim population is expected to rise from its present 23 per cent of the world’s total population to 26 per cent by 2030.

“The commercial revenue, employment opportunities and global connectivity of the ummah through participation in the halal industry contribute significantly to the economies of many Muslim nations,” Najib said.

The World Halal Summit at the Kuala Lumpur Convention Centre is a six-day-long conference on Islamic practices for the halal industry.

Among the attendees today were Turkey’s Minister of Customs and Trade Nurettin Cankili, the UAE’s Minister of Environment and Water Dr Rashid Ahmed Mohamed Fahad and Thailand’s Deputy Minister of Commerce Apiradi Tantraporn.

Detractors argue that the GST is “regressive” and that the broad-based consumption tax takes a larger percentage of income from those in the low-income groups rather than from high-income earners.

Economists, however, view the GST favourably, saying that it is necessary to broaden the tax base, but cautioned the government to cut wastage and leakages at the same time to improve the country’s finances.