Heavy Import Reliance Challenges Cost Competitiveness in Global Halal Market

Malaysia’s skincare manufacturing sector continues to face a significant raw materials challenge despite holding a powerful advantage through its globally recognized halal certification system.

The country remains a substantial importer of ingredients beyond the commodity compounds it primarily produces, such as locally manufactured glycerine, fatty acids, pectins, SLES, and abundant coconut oil. More complex ingredients must be sourced from overseas. 

Chris Chuah, general manager of Dermascience, an OEM and private label facial and body care manufacturer from Kajang in the Kuala Lumpur suburbs, explained that Malaysia’s reliance on imports makes raw materials more expensive and leaves companies vulnerable to price fluctuations in overseas markets. 

Limited Local Ingredients Production

Chuah noted that Malaysia is not as advanced as countries in Europe and Korea, though its role in the skin care supply chain has been growing from a very low base. She observed that one or two major supplier players now have their own plants producing ingredients for cosmetic products, such as IOI Oleochemical with their production lines and expanding product range. However, when discussing advanced ingredients in Malaysia, the capabilities remain very basic, with approximately 90 percent of ingredients coming from overseas. 

Her company’s strategy this year focuses on exporting those foreign ingredients back home in the form of finished products by opening new markets and emphasizing the company’s halal status.

Halal Certification Advantage Remains Underutilized

Malaysia’s halal certification should logically have encouraged more ingredients manufacturers to establish operations there and capitalize on the JAKIM logo, which is globally recognized far beyond any other halal authority. 

The country has been strengthening its position in Muslim-friendly cosmetics and skin care manufacturing, with numerous halal-focused brands entering the market. However, these companies must still look overseas for their supplies.

Zaza Zainal, founder of Orgga Malaysia, an organic halal skin care manufacturer in Negeri Sembilan, confirmed that almost all ingredients come from overseas, which ensures quality assurance but comes at higher costs.

Regional Competition Intensifies

Malaysia still has considerable ground to cover before competing with its neighbors, regardless of international demand for products carrying its halal certification. Chua suggested that Indonesia will have a better chance than Malaysia to become a serious player, while Thailand is also growing stronger. 

Despite these challenges, Malaysian manufacturers continue leveraging their halal advantage. Chua stated they are playing their part by using halal certification to gain advantage in Muslim markets, with plans to explore Indonesia and the Middle East.

Original Article:

KED Global. (2025, October 2). K-beauty brands jump into halal cosmetics to woo Muslim customers. KED Global. Retrieved from https://www.kedglobal.com/beauty-cosmetics/newsView/ked202204210006