Systemic Practice and Action Research

https://doi.org/10.1007/s11213-023-09647-x

RESEARCH

Diagnosing a Halal Certification System for Cosmetics: The

Viable System Model Approach

Khairul Akmaliah Adham1 · Nur Sa’adah Muhamad2 · Adlin Masood3 ·

Alina Abdul Rahim4

Accepted: 4 May 2023

© The Author(s), under exclusive licence to Springer Science+Business Media, LLC, part of Springer Nature 2023

Abstract
The global halal cosmetics industry is a lucrative market worth US$ 27.31 billion in 2021,
and its value is expected to grow to US$ 54 billion by 2027. However, the overall cos-
metics industry is monopolized by multinational companies, and many products have no
halal certification, an assurance system for certifying a particular product as permissible
and good for Muslims to use. Among Muslim consumers, the level of awareness about
halal cosmetics is low in comparison to their awareness of halal food. These low levels
of uptake by cosmetics manufacturers and consumer awareness must be addressed, espe-
cially since cosmetics are utilized in everyday Muslim life. In addressing these issues, a
comprehensive understanding is needed of the halal ecosystem for cosmetics. An initial
step in this direction would be to study the system of halal certification for cosmetics.
Utilizing the Viable System Model (VSM) as the framework, this study diagnosed the
halal certification system for cosmetics in Malaysia. This study gathered data from inter-
views with representatives from institutions and departments directly involved in the halal
certification system. The halal certification system for cosmetics in Malaysia was found
to already have established some elements of viability. However, there is neither a dedi-
cated policy for the development of halal cosmetics nor a comprehensive legal framework
governing the development of halal cosmetics and its usage. There are also some missing
links related to the monitoring function and among the operating units. This understanding
paves the way for developing a viable certification system for halal cosmetics in Malaysia
and worldwide.

Keywords  Halal cosmetics · Viable system model · VSM · Halal certification · Halal
assurance · JAKIM · Halal ecosystem · Malaysia

Nur Sa’adah Muhamad

nurs@ukm.edu.my
1
Islamic Finance and Wealth Management Institute [IFWMI], Faculty of Economics and
Muamalat, Universiti Sains Islam Malaysia, Nilai, Malaysia
2
Faculty of Economics and Management, Universiti Kebangsaan Malaysia, Bangi, Malaysia
3
Faculty of Economics and Muamalat, Universiti Sains Islam Malaysia, Nilai, Malaysia
4
Faculty of Science and Technology, Universiti Sains Islam Malaysia, Nilai, Malaysia

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Introduction

The global halal cosmetics industry is a lucrative market that was valued at US$ 27.31 bil-
lion in 2021. This figure is expected to grow to US$ 54 billion by 2027 (IMARC 2022).
Businesses are getting into high gear to serve the demands of this highly lucrative market.
Based on the perspective of Islamic law (Sharia), halal generally means permissible; into this
concept is integrated the virtue of toyyib, which means “good”. The concept is expressed as
the Islamic maxim halalan toyyiban (often simply called “halal”). The concept of halal cov-
ers all sectors of products and services for Muslim consumption and pervades the everyday
lives of practicing Muslims. In this regard, the halal requirements for the cosmetics industry
also encompass concerns for the safety, hygiene, and quality of the ingredients. These safety
and hygiene standards apply to all stages of the value chain of a cosmetics product, from its
ingredients to its processing and until it reaches the hands of the end consumers.
Cosmetics products are defined as any substances applied on any part of the human
body for the purpose of cleaning and conditioning one’s health and beauty (ASEAN 2014).
These products range from soap, skincare, makeup, perfume, and shampoo to toothpaste
but exclude orally consumed products, and they are utilized in everyday Muslim life. The
cosmetics industry in Malaysia, which consists of local and international brands, is a thriv-
ing and highly competitive market (Global Data 2020; Statista 2022).
In general, Malaysian halal assurance is currently considered a gold standard in the
industry (TMC Development 2020). However, the cosmetics industry is monopolized by
multinational companies, many of whose products lack halal certification. Among Mus-
lim consumers, the level of awareness about halal cosmetics is low in comparison to the
awareness of halal food (Mustafar et al. 2018). Some purchase decisions regarding cosmet-
ics products are driven by advertisements and consumers’ perceptions of the quality and
value of these products (Statista 2022). This consumption behaviour could be detrimental in
the context of developing countries due to the general lack of consumer protection against
issues arising from a lack of ethical labeling and fraudulent halal claims. Morever, the halal
certification system for cosmetics involves various ministries, departments, and agencies,
which assume co-responsibility for gauging the level of toyyib (goodness) and safety assur-
ances of cosmetics products (Standards Malaysia 2008, 2019b). The halal cosmetics value
chain also extends beyond the national borders and involves various global players.
Addressing these issues requires a comprehensive understanding of the halal ecosystem
for cosmetics. An initial step in this direction is to study the system of halal certification
for cosmetics. Due to the complexity of this system, analysis must be undertaken at the
systemic level. One of the frameworks that can facilitate a comprehensive evaluation of
a complex problem is the Viable System Model (VSM). The VSM framework enables the
identification of the required functions and linkages (Beer 1981, 1984; Iandolo et al. 2021)
and hence facilitates an understanding of the current state of affairs regarding the halal cer-
tification system for cosmetics. This understanding is fundamental to making recommenda-
tions to improve the current situation and to develop a viable halal cosmetics industry.
Utilizing the VSM framework, the halal certification system for cosmetics in Malaysia
was diagnosed in this study. To achieve this, the Malaysian halal certification system for
cosmetics administered by JAKIM was chosen as the system-in-focus. JAKIM, the abbre-
viation used for the Department of Islamic Development of Malaysia, is the federal author-

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ity of the Government of Malaysia tasked with administering the halal certification system
(JAKIM, 2022). The research questions that guided this study were as follows:

1. What are the policies that govern the certification system for halal cosmetics?
2. Who are the players involved in the halal certification system for cosmetics?
3. What are their roles and functions?
4. How and in what forms are they interlinked?

Diagnostic Framework of the Study

The study’s diagnostic framework was developed based on the VSM framework and inte-
grated the principles of the halal cosmetics value chain and JAKIM’s halal certification
procedure (see Fig. 1). In this study, the VSM framework was utilized as a diagnostic tool
(diagnosis mode) to analyze the current workings of the halal cosmetic certification system.
The halal value chain model explains the flow of halal cosmetics products from manufactur-
ers to consumers in the system’s environment. The basics of the JAKIM’s halal certifica-
tion procedure include steps of an application by the manufacturer and then an audit and
approval by JAKIM. The halal certification procedure and halal value chain model explain
the implementation function in the halal certification system.

Halal Cosmetics Value Chain and the Halal Certification Procedure

In principle, the concept of halal covers the values and well-being of everyone in society.
From the Sharia perspective, the concept of halal covers ingredients and manufacturing pro-
cesses. The ingredients of a particular product are considered halal when they are free from
prohibited substances such as porcine and canine. When permissible animals are utilized as
ingredients, they must be slaughtered according to Islamic teachings. The definition of halal
also includes the toyyib aspect, which addresses concerns for the safety, hygiene, and quality
of the ingredients. Halal also covers aspects such as the processing of products and logistics,
from the raw materials used to the point at which products reach the end consumers. This
is basically referred to as the halal value chain. To obtain halal certification, the ingredients
and the value chain are audited by halal certification bodies.
In Malaysia, the halal cosmetics certification procedure implemented by JAKIM includes
applications from manufacturers with the audit and approval of ingredients by the National
Pharmaceutical Regulatory Agency (NPRA) and the Ministry of Health (MOH), and the
value chain activities audited by JAKIM. This procedure helps to protect cosmetics con-
sumers from using products that contain prohibited substances, not only those that are not
religiously permissible but also those that could potentially have acute or chronic hidden
side effects. These procedures are in place due to the historical character of the cosmetics
industry, which is the business of selling hope and fantasy via beauty and vanity products
that may have temporary or long-term benefits but also often come with negative side effects
due to the long-term use of chemicals that come into direct contact with the skin.

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Fig. 1  Integration of the basic VSM framework with the concept of halal cosmetics value chain and halal
certification procedure

Functions and Principles of the VSM Framework

Based on the VSM, a viable system is defined as a system that is capable of becoming inde-
pendent and self-sufficient in its environment (Beer 1981, 1984). The framework serves as
an explanatory model that can be used to diagnose an existing system (diagnosis mode) or

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as a normative model in support of the development or design of a new system or improve-

ments to an existing system (design mode) (Espejo and Gill 1997; Khairul Akmaliah et al.
2011, 2012, 2015, 2017, 2019).
In achieving viability, the system-in-focus (here, the halal cosmetics certification system)
should operate five main functions: policymaking (System 5), intelligence (System 4), con-
trol and monitoring (System 3 and 3*), coordination (System 2), and implementation (Sys-
tem 1), based on five basic principles of VSM, namely, complexity, variety, responsiveness,
recursiveness, and cohesion. Table 1 provides the functionality of each system in VSM.
These five functions are connected through the information flows between them, sup-
ported by the principles of cohesion and recursiveness. The basic functions and information
flows between the functions in the VSM framework are shown in Fig. 1. Having cohesive
functions and flows of information among the functions enable the system to manage the
complexity within its environment, measured in terms of the varieties within its internal and
external environment, and become responsive to its internal needs and external demands at
all levels of recursion. A system is constituted of subsystems, which in turn are comprised
of subsystems, referred to as levels of recursion. According to the VSM framework, all these
subsystems must be viable for the overall system to become viable (Espejo and Gill 1997).

Research Methodology

This study utilized the qualitative methodology with the data collected mainly through in-
depth interviews. This approach was chosen because a qualitative design allows an in-depth
exploration of the topic (Eisenhardt 1989; Merriam 2009; Merriam and Tisdell 2016; Yin
2015), which was the diagnosis of Malaysian halal certification system for cosmetics.
The study developed the interview protocols for the policymakers, managers, and con-
sumer groups associated with halal cosmetics products, which served as the instruments
for data collection. Twenty respondents were interviewed comprising representatives of
the relevant regulatory bodies, scientists, industry players, consumer advocate groups, and
consumers of halal cosmetics in Malaysia, as well as selected foreign certification bodies.

Table 1  The functionality of System Functionality

each system in the VSM
5 Policy Defines the purpose of the system and
addresses the strategic function of the
system
4 Intelligence Gathers information from the internal
and external environments and dissemi-
nates information about the system to
the environment
3 Control Conveys direction from the upper-level
system and allocates resources to the
implementation function
3* Monitoring Independent audit function for the
system
2 Coordination Facilitates work among the different
implementation units
1 Implementation Delivers the system’s products and in-
formation to the targeted customers and
gathers information about the customers

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During the analysis stage, the roles and functions of the various agencies involved were
analyzed and mapped onto the VSM framework. This iterative process continued until the
analysis was exhaustive in regard to their functions and inter-relationships. The analysis
generates an emergent framework illustrating the current state of affairs of the halal certifi-
cation system for cosmetics.

Findings—Development of the Halal Certification System for

Cosmetics

The halal certification system for cosmetics formally began in 2008 with the launch of stan-
dards for personal care and cosmetics; since then, this system has continually evolved. This
development has occurred within the broader Malaysian halal certification system, which
is comprised of certification for various products and services, including food and medical
devices. This development has been influenced by the changes that have taken effect at both
the local level and the international level.
The Malaysian halal certification system has developed over a period of 50 years,
marked by a number of milestones (see Fig. 2 for the summary of the development of the
halal cosmetics certification system in Malaysia). The first milestone involved the enact-
ment of the Trade Descriptions Act 1972 (TDA 1972), which drove the introduction of the
1975 regulations related to halal labeling, namely the Trade Descriptions (Use of Expres-
sion “Halal”) Order 1975 and the Trade Descriptions (Marking of Food) Order 1975. These
Orders provided specific laws against any false representation of the halal logo and public
halal assurance, which were extensions of the general protection against the misrepresen-
tation of any trade description stipulated in the TDA 1972. These laws were intended to
safeguard consumers from being deceived or confused by misleading or untruthful claims
from unscrupulous manufacturers or traders. The 1972 Act was later repealed in 2011 and
replaced by the Trade Descriptions Act 2011 (also known as TDA 2011), which continues
to be in operation to date.

Fig. 2  Development of halal cosmetics certification system in Malaysia

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By 2008, the first halal standards for cosmetics and personal care was introduced, namely
MS 2200-1: 2008 Islamic Consumer Goods: Cosmetics and Personal Care – General Guide-
lines. Later, in 2011, under the newly introduced Trade Descriptions Act 2011 (TDA 2011),
the Ministry of Domestic Trade and Consumer Affairs (KPDNHEP) was assigned as the
authority responsible for monitoring the correct usage or preventing abuse of the halal
label for the benefits of the consumers. The Ministry of Health (MOH) and JAKIM worked
together on the implementation of international standards including Good Manufacturing
Practice (GMP), and Hazard Analysis Critical Control Points (HACCP), to ensure the prin-
ciple of toyyib (“goodness”) was being observed. The Department of Veterinary Services
Malaysia (DVS), on the other hand, facilitated the halal-compliance slaughtering process.
TDA 2011, which was enforced by the KPDNHEP, finally gave JAKIM the civil legal
authority to monitor and conduct surveillance on the halal industry. This statute expressly
made it illegal for any person or organization to make false declaration or misrepresenta-
tion that a product is halal. Moreover, under this act, the right to issue a halal certificate in
Malaysia was given to JAKIM and the State Islamic Religious Department (JAIN), so the
government had assumed the full control of the certification process.
Later in 2019, a major milestone occurred when the Department of Standards Malaysia
(also known as Standards Malaysia or its abbreviation in Malay, JSM), published a new
Malaysian standard that focused solely on halal cosmetics (MS 2634: 2019 - Halal cosmet-
ics - General requirements (First Revision)). There were distinct differences between the
two Standards (2008 and 2019), including (a) the definition of personal care was merged
into cosmetics, (b) JAKIM or the state Islamic religious councils were stated as being halal-
competent authorities, (c) the definitions of shariah law, sertu, non-halal, manufacturing,
and handling were revised to embrace the new definitions in the new standards, (d) employ-
ers had to provide praying areas and allow Muslim personnel to perform their prayers during
working hours, and (e) the use of any appliances or brushes from non-halal animals was
forbidden in cosmetics production.
One of the prerequisites for companies applying for halal certification is to obtain a
product notification or registration of their cosmetics products from NPRA. This process is
usually handled by a regulatory affairs executive from the cosmetics company. The appoint-
ment of this executive is mandatory for companies seeking halal certification, regardless of
their sectors. The job scope of the regulatory affairs executive is to ensure that cosmetics
products are registered under the NPRA division of the MOH. The regulatory affairs execu-
tive is considered to be the person-in-charge for every ingredient used, the process flow, the
formulation of every cosmetics product, as well as the labeling of cosmetics products to
avoid any exaggerated claims made by the marketing team. The formulation of every new
product, an improved formulation of an existing product, and the marketing strategy to sell
the product must each be reviewed and approved by this executive to determine whether the
suggestions followed the necessary guidelines.
Moreover, from 2012, only imported products that had been certified by a Halal Certify-
ing Body (HCB) recognized by JAKIM could be sold in Malaysia. In 2011, JAKIM intro-
duced the Halal Assurance Management System (HAS) concept and the Guidelines for the
Halal Assurance System of Malaysia Halal Certification (HAS Guidelines 2011), an encom-
passing implementation system for halal compliance and certification. The responsibility for
ensuring halal compliance was shared among JAKIM and the industry players themselves,
whereby the latter were responsible for ensuring compliance with halal principles within

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their premises. In addition, these companies were required to employ a dedicated executive
and internal committee for managing halal assurance system (Mohd Amin et al. 2020). By
2017, with the strong support from various government agencies in Malaysia, JAKIM’s
halal certification program had evolved into an esteemed international referral agency for
the global halal market.

Analysis of the Halal Certification System for Cosmetics as the System-

in-Focus

Metasystems (System 5, System 4, System 3, System 3* and System 2)

The results of the analysis of halal cosmetics as the system-in-focus in 2022 are shown
in Fig. 3. Table 2 provides information on the agencies involved in the implementation
function. By 2022, the JAKIM’s halal certification for cosmetics involved many players;
an analysis of their roles and functions indicated that some elements in the system could
contribute to its viability, as outlined in the VSM framework. The overall halal certification
program run by JAKIM is operated under the Halal Industry Master Plan (HIMP), which
began with HIMP 1.0 in 2008. Later, HIMP 2.0 was launched at the end of 2018 and will
close in 2030. System 5 (Policymaking) for HIMP 2.0 is carried out by the Prime Minis-
ter’s Department (JPM), JAKIM, the State Mufti Offices (of JAIN), the Ministry of Trade
and Industry (MITI), and the HDC, which operates under MITI. The HIMP covers policy
development for the entire halal industry. There is no dedicated policy for halal cosmetics.
The HDC directs and supports the coordination of the implementation of action plans for the
halal ecosystem, gathers and shares industry intelligence about the global halal industry, and
facilitates the growth of the halal industry by promoting it. Specifically, the HDC advises
the government on the halal industry strategic direction for the HIMP 2.0 and is directly
involved as the MPIH Secretariat. In this regard, the HDC plays a role in policymaking,
intelligence, control, and coordination. Within the halal cosmetics system, the HDC is in
charge of the development of the halal ecosystem, while JAKIM is mainly responsible for
halal certification.
System 4 (Intelligence) is conducted by the HDC, the Economic Planning Unit (EPU),
JAKIM, and JAIN, each of which gathers information from its external environment related
to the halal industry and its practices. These agencies also disseminate information about
themselves to their stakeholders. Specifically, JAKIM collects information about foreign
halal certification bodies for the purpose of awarding them foreign halal certified body
(FHCB) status, if they meet the standard JAKIM criteria. By 2022, the implementation of
standards for halal cosmetics fall under the jurisdiction of JSM which operates under the
purview of MITI.
There is a formal control function (System 3) in which, under HIMP 2.0, the program
budget is allocated through the EPU and the Accountant General’s office, which operates
under the purview of the Ministry of Finance (MOF). Moreover, the Halal Regulatory
Department of JAKIM, JAIN, and the MPIH hold co-responsibility for the controlling func-
tion related to the entire halal certification system. The HDC plays a role in the control
and coordinating function by serving as a secretariat for the HIMP and MPIH. Monitoring
(System 3*) is performed by the Internal Audit Unit of JPM and JAKIM. JSM is a central

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Fig. 3  Diagnosis of Halal Certification System for Cosmetics, based on the VSM Framework
Notes: Information on the roles and functions of the agencies and units was gathered from interviews and
their respective websites (Appendix 1).

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monitoring unit within this halal certification system for halal cosmetics through the estab-
lishment of standards that must be followed in the operations of the halal certification sys-
tem. According to the Standards Act 2011, JSM is responsible for providing accreditation to
assessment bodies, including JAKIM.
The coordination function (System 2) was conducted mainly by the Malaysian Halal
Council (MHC) (or Majlis Halal Malaysia (MHM)), which was formed by the Malaysian
government in 2016 under the direct purview of the Prime Minister’s Department. At that
time, the council members included representatives appointed by the King of Malaysia
and stakeholders from the Federal and State Governments. The MHC was chaired by the
Deputy Prime Minister, while the Director General of JAKIM served as the council secre-
tary. JAKIM, JSM, and the HDC had been appointed as the joint secretariat members of
MHC. Later, in 2019, the MHC was rebranded as the Malaysian Halal Industry Develop-
ment Council (Majlis Pembangunan Industri Halal Malaysia, or MPIH) with the main task
of planning for the overall development of the halal industry.
The coordination function must interlink and communicate with System 3, which is
control. The MPIH is comprised of various government agencies and departments such as
JAKIM, JSM, the HDC, and the Ministry of Health; as well as selected industries such as
the agro-based industry, domestic trade affairs, and education. It coordinates activities to
develop the Malaysian halal industry in a more integrated and holistic manner. In System 3
(Control), MPIH has good working relations with JAKIM because the former consolidates,
reconciles, and resolves issues concerning JAKIM, JSM, and the HDC.

Implementation (System 1)

System 1 (Implementation) is comprised of eight subsystems: (1) Standards; (2) Research

and Development; (3) Training; (4) Halal Certification; (5) Business Development; (6)
Halal Industry Promotion; (7) Enforcement; and (8) Legal and Regulatory (see Fig.  3;
Table  2 for descriptions). Each subsystem has its own management and operating units,
with one exception which is still underdeveloped, as indicated by the question mark over the
function of the legal and regulatory framework. In Subsystem 1, the function is the develop-
ment of standards for halal cosmetics. The organizations involved in the Industry Standards
Committee of the Malaysian Standards for halal cosmetics in 2019 include JAKIM, JSM,
the Halal Industry Development Corporation (HIDC), the Ministry of Health (MOH), the
Department of Veterinary Services (DVS), the Federation of Malaysian Manufacturers, the
Ministry of Domestic Trade and Consumer Affairs (KPDNHEP), the Ministry of Interna-
tional Trade and Industry (MITI), the Malaysian Agricultural Research and Development
Institute (MARDI), the Muslim Consumers’ Association of Malaysia (PPIM) and few other
relevant organizations (MS 2634:2019, p. 5).
For Subsystem 2, a specific unit within JAKIM is in charge of R&D and it performs the
tasks of gathering information from the external environment and disseminating informa-
tion from JAKIM into the system’s environment. The respective operating units for Subsys-
tem 2 include innovation and professional development; the Malaysia Halal Analysis Centre
(MyHAC), a specific unit within JAKIM that provides lab services for manufacturers apply-
ing for halal certification; Universiti Putra Malaysia (UPM); and Universiti Sains Islam
Malaysia (USIM). JAKIM is also committed to knowledge extension about halal matters
through its publication of a specialized halal peer-reviewed journal.

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Table 2  List of subsystems and their corresponding operating units in System 1 and the specific environments
associated with them
SYSTEM 1: IMPLEMENTATION FUNCTION ENVIRONMENT
Subsystems Function of Management Unit Operating Units Specific
Subsystem Environment
1 Development of • Developers • Unit of JSM • Manufacturers
Standard of Standard for • Unit of JAKIM
Cosmetics
2 Research and • Halal Management • myHAC • Manufacturers
development Division, JAKIM • Research
• JAIN • State Halal Certification and industry
Unit communities
• Higher learning • UPM, USIM, other
institutions universities.
3 Training • Halal Management • Unit of Halal Manage- • Manufacturers
Division, JAKIM ment Division
• HDC • HDC Training Center
• Halal Training Pro- • IHRAM
viders, Universities • INHART
4 Halal • Halal Management • All units of Halal Man- • Manufacturers
certification Division, JAKIM agement Division
• State Halal Certifi- • All units of State Halal
cation Unit, JAIN Certification Unit
• NPRA • Center of compliance
and quality control
• JSM • Halal team, Standardiza-
tion department
• DOC • Halal analysis division
5 Halal business • MITI • MATRADE • Manufacturers
development • HDC • Logistic
• KUSKOP • SME Corp companies
• MARA • BPU
• BNM • AIBIM
6 Halal industry • Halal Management • Corporate communica- • Manufacturers
promotion Division, JAKIM tion unit, JAKIM • Logistic
• Operation sector (advo- companies
cating, publishing, and • Consumers
broadcasting units)
• MITI • MATRADE
• HDC
• KKMM • MCMC
7 Halal audit and • Halal Management • Monitoring and enforce- • Manufacturers
enforcement Division, JAKIM ment unit • Wholesalers
• JAIN • State enforcement unit • Logistics
• KPDNHEP • Enforcement division companies
• Retailers/Agents/
• DOC • Halal analysis division Distributors
• DOF • Enforcement and legisla- • Consumers
tion unit • Consumer groups
• DVS • Veterinary enforcement
division
• MAQIS • Inspection and enforce-
ment division
• Local Municipality • Enforcement department
Councils (PBT)

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Table 2  (continued)

SYSTEM 1: IMPLEMENTATION FUNCTION ENVIRONMENT

Subsystems Function of Management Unit Operating Units Specific
Subsystem Environment
8 Legal and regu- • KPDNHEP • Enforcement division • Manufacturers
latory function • Wholesalers
• Logistics
companies
• Retailers
• Consumers
• Consumer groups

Subsystem 3, which performs the function of training include units in JAKIM, the HDC,
and several other halal training providers, including units operating in higher learning insti-
tutions, of which all are authorized by JAKIM. There are also dedicated units for adminis-
tering halal certification within JAKIM, JAIN, the NPRA, and JSM (Subsystem 4). These
operating units deal directly with halal certification applicants. In this sense, the operating
units of Subsystem 4 (Halal Certification) collect data in the form of information from man-
ufacturers intending to obtain the halal certification pertaining to their products, who must
provide a list of the ingredients used and a company profile. Concurrently, JAKIM furnishes
information on their website as well as via their physical offices in Putrajaya about the
requirements for local and international manufacturers who want to obtain JAKIM’s halal
certification. JAKIM also conducts halal conventions and training for foreign halal certifica-
tion bodies. For halal certification, under its own halal management unit, JAKIM provides
lists of halal circulars, which refer to, for example, halal certification, halal standards, and
amendments to regulations.
Subsystem 5 performs the function of business development, which supports the growth
of businesses in the halal industry. This function is performed by units of MITI, the People’s
Trust Council (MARA), the Ministry of Agriculture and Food Industries (MAFI), and the
Central Bank of Malaysia (BNM). Under MITI, three agencies are responsible for support-
ing business development in halal cosmetics: the Malaysia External Trade Development
Corporation (MATRADE), SME Corporation Malaysia (SME Corp), and HDC. MATRADE
is actively involved in engaging manufacturers that produce halal certified products to
network with international partners. For example, MATRADE provides opportunities for
entrepreneurs to join their delegations to trade events and business matching programs.
SME Corp, which operates under the Ministry of Entrepreneur Development and Coopera-
tives (KUSKOP), helps to formulate overall policies and strategies for SMEs in Malaysia. It
also assumes the role of a central coordinating agency that works with the related Ministries
and Agencies to support the implementation of SME development programs in the country.
Although the role of the HDC is focused more on the industry level, it also facilitates growth
of businesses. For example, the HDC provides opportunities for micro, small and medium-
sized producers of halal products to market their products and boost their sales through
initiating collaborations with hypermarkets and online platforms. In support of Malaysia
becoming a global halal hub, the HDC has also created “Halal Parks”, designated business
areas equipped with benefits and incentives for manufacturers and investors to relocate there
in order to operate and grow their businesses. The ultimate aim is to increase the number and
volume of halal products for local sales and export purposes.

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Meanwhile, MARA, a social organization mandated to support the development of entre-

preneurs in Malaysia, offers a comprehensive support for SMEs and entrepreneurs through
its advisory services and development programs to promote their growth. In the case of
halal cosmetics, it provides comprehensive support to Muslim business start-ups and firm
development for entrepreneurs (Nur Sa’adah and Khairul Akmaliah 2013; Khairul Akma-
liah et al. 2019). With the support and guidance of MARA, many halal cosmetics compa-
nies have grown from idea generation to successful businesses. Specifically at the district
level, MAFI, through its Department of Agriculture (DOA) branches that were set up in
districts across Malaysia, provides support for the development of local business communi-
ties. This includes supplying agricultural equipment for companies producing ingredients
for cosmetics products and serving as technical advisories to them. Halal principles encom-
pass the financing aspect of business, so a viable system requires a full-fledged support for
the Islamic financing system. The Islamic financing system is comprised of BNM as the
controlling/monitoring body; banks that offer Islamic banking services; and other elements
in its ecosystem, including the Association of Islamic Banking and Financial Institutions
Malaysia (AIBIM). The latter is an Islamic banking association in Malaysia that promotes
Islamic banking and practices, as well as providing advice to its members about Islamic
banking and finance at the domestic and international level. Together, these institutions
promote the use of Islamic banking facilities and instruments by businesses.
Subsystem 6 is the function responsible for halal industry promotion. In Malaysia, this
function is led by MITI and operated by its agencies MATRADE and the HDC. One sig-
nificant promotion vehicle is the Malaysia International Halal Showcase (MIHAS), an
international trade fair that focuses on showcasing and promoting local and international
halal products (i.e., foods, cosmetics, pharmaceuticals, fashion, and others) to international
traders and visitors. This exhibition is held annually in Kuala Lumpur, attracting local and
international visitors. MIHAS is hosted by MITI and organized by MATRADE, in collabo-
ration with the HDC and JAKIM. As a trade promotion agency, MATRADE provides halal
industry promotion through business matching between local businesses and international
agents/buyers or suppliers. In addition, MATRADE facilitates business growth by attract-
ing investors to invest in local businesses. The HDC also plays a part in industry promo-
tion by using “Halal Malaysia” as a brand in both the domestic and international markets.
Through the establishment of its Halal Parks, the HDC promotes halal industry growth by
opening up opportunities for businesses to operate and manufacture halal products, as well
as attracting investors to invest in these businesses. As part of promoting the halal indus-
try, JAKIM, under its own halal management unit, disseminates information to the general
public to create greater awareness of the halal concept and industries, through TV programs
and awareness seminars.
For Subsystem 7 (Enforcement), KPDNHEP and JAKIM share the responsibility as the
agencies tasked with enforcing the laws related to industrial practices of halal. KPDNHEP
is the main enforcer of the Trade Descriptions Act 2011, while JAKIM is responsible for
conducting halal audits, which are a part of the enforcement mechanism that ensures indus-
try’s practices conform to the rules of halal. Finally, Subsystem 8 refers to the Legal and
Regulatory subsystem, with the TDA 2011 being the main legal provision that expressly
deals with halal matters. However, there is still room for improvement in this subsystem,
as indicated by the question mark in this function in Fig. 3. For instance, it is unclear how
other related laws that also provide consumer protection are being enforced, such as the

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Consumer Protection Act 1999. It is argued that a more comprehensive legal framework is
needed that integrates the piecemeal laws to provide powerful and cohesive protection for
consumers, who could be harmed by any malpractice of players within the halal industry.
Based on the VSM framework, to support system viability, the operating units must be
interlinked. For example, the Subsystem 4 (Halal Certification) operating units are linked to
those of Subsystem 7 (Enforcement). This means that JAKIM was responsible for granting
halal certification whereas KPDNHEP, which was responsible for upholding the TDA 2011,
would confiscate products displaying fake halal logos. Subsystem 3 (Training) seems to
have a direct connection with Subsystem 5 (Business Development). For example, MARA’s
comprehensive business development service includes advice for attending any professional
halal training offered by recognized bodies. Subsystem 3 (Training) has a direct connection
with Subsystem 4 (Halal Certification) because JAKIM is the main authority that gives the
authorization for training providers who provide training programs on halal. JAKIM con-
sistently monitors these training providers to ensure the quality of the programs. Subsystem
4 (Halal Certification) is also seen to have a connection with Subsystem 6 (Halal Industry
Promotion), whereby the HDC helps to promote companies that have received halal certifi-
cation. These interlinkages are shown in Fig. 3. Certain operating units within a particular
subsystem are also connected, for example, in Subsystem 6 (Halal Industry Promotion),
JAKIM works together with the Malaysian Communication and Multimedia Commission
(MCMC) to disseminate information about halal products to the general public.
However, certain operating units in Subsystem 5 (Business Development) were found
to operate in silos and not be interlinked to other units, such as halal certification. Figure 3
shows Subsystem 8 with question marks, which indicates areas that require attention in
ensuring the viability of the system. Some issues with the link between Subsystem 4 (Halal
Certification) and Subsystem 5 (Business Development) might limit company development.
Moreover, Subsystem 4 (Halal Certification) is normally blamed by manufacturers for the
late issuance of halal certification, although the fault may lie elsewhere, such as with related
ministries or the NPRA. The issue might arise from the lack of proper documentation of the
companies themselves when applying for halal certification. This problem was reported by
one JAKIM executive:

Most of the SMEs do not understand the concept of halal. Many are ignorant about
the scientific aspects of their ingredients. Many didn’t know about the toyyib aspect of
halal and many do not have proper documentation for their ingredients. Some of them
open their factories in buildings which do not have a Certificate of Fitness (CF). So
they need to settle that issue first with the city council. Some of these things require
time to be resolved and this is not the duty of JAKIM. All these delay the process of
getting certification by JAKIM.

This shows that although information flow may occur between these operating units, there is
a need to improve the availability and usability of the information in different departments.
This availability and usability must address end customers as well as manufacturers.
Subsystem 7 (Enforcement) is comprised of KPDNHEP and the Local Municipality
Councils (abbreviated in Malay as PBT), as well as the MOH and Department of Chemistry
(DOC), who conduct analyses of products. Other enforcement bodies are the Department of
Veterinary Services (DVS), the Department of Fisheries (DF), and the Malaysia Quarantine

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Systemic Practice and Action Research

Inspection Service (MAQIS), who are responsible for conducting inspections of imported
consignments labeled with the halal logo. There are linkages between certain operating
units, for example, the JAKIM’s halal certification unit is linked to the MOH enforcement
unit. However, the enforcement duties are confined to the existing legal and regulatory
framework, which is currently fragmentary. Given the absence of a comprehensive legal
and regulatory framework, the role of enforcement is fairly limited. Although communica-
tions exist between Subsystem 7 and other subsystems, such as Subsystem 8 (Legal and
Regulatory), the linkage is weak at best. Often, there is confusion over the jurisdiction of the
enforcement authorities, mainly due to multiple bodies being responsible for this function
(such as JAKIM, KPDNHEP, MOH, the local PBTs, and other agencies) and the fragmented
nature of the available laws and regulations governing the halal industry in Malaysia.
In regard to the link between the operating units and the monitoring function, there is a
missing management and operation function in the Legal and Regulatory (Subsystem 8),
hence the other missing link is between this function and the monitoring function. Within
the implementation function, the internal monitoring of JAKIM units is conducted by the
internal audit unit of JAKIM. However, the internal audit unit of JAKIM focuses on audit-
ing units and departments within JAKIM, so it does not cover the monitoring of exter-
nal agencies. Exceptions are found in the training of halal executives, whereby JAKIM
only allows certain agencies to conduct professional halal executive training (for example,
USIM, UPM, and the International Islamic University Malaysia (IIUM)) and these agencies
are continuously monitored by JAKIM in regard to the content and the speakers’ qualifica-
tions. However, there could be a missing link between the JAKIM monitoring system and
certain external parties related to other functions. Moreover, while all the other government
agencies in the operating units have their own internal audit function, the outcome of these
audits might not be reported in the halal certification system. This lack of relationship is
denoted by the question marks from the operating unit to the monitoring function shown
in Fig. 3. In addition, the audit function needs to be backed up by experts with extensive
technical knowledge. In Malaysia, such a function exists within the food industry in the
form of the national Food Safety Committee, which is comprised of 12 governmental sub-
groups with various forms of expertise. However, no such committee exists for the cosmet-
ics industry to date.

Environments of the System

The halal cosmetics system’s environment consists of the general and particular environ-
ments. The particular environments comprised of manufacturers, logistics and other ser-
vice providers, wholesalers, retailers or agents, end consumers, and consumer groups; these
groups exist at the local and international levels. Based on the interviews conducted for this
study, consumers generally lack awareness of halal cosmetics or the need for it, as related
by one consumer:

When I am buying cosmetics, I seldom check for its halal status. These are things that
you do not eat. They are not for consumption. So I just buy them based on their fit with
my skin. I am loyal to this brand, so I have used them for a long time.

One consumer commented:

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 Systemic Practice and Action Research

Previously, when I was buying regular personal care products in Malaysia, I seldom
check their halal status. I have used these products since I was a kid. But when I
studied in the UK, I become aware of products which are vegan and vegetarian. Since
then, I will specifically select vegan and vegetarian status products. In any case, I will
buy brands which I am familiar with. My purchase decisions for skincare, however,
are sometimes influenced by rave reviews from social media, particularly for Korean
and Japanese skincare products.

One consumer reported her concerns for halal status:

Previously, I seldom checked for halal status. But now I am more aware about halal,
I purposely look for products with the halal logo. I have switched my usual brand to
the ones that have the halal logo.

One respondent from a prominent consumer group association described the lack of knowl-
edge among consumers:

As a consumer association group, we help consumers who come to us with their com-
plaints. Once we have received the complaints, we conduct scientific analysis and
generate the results for further action. Our analysis involves chemical and all that,
and those things are very hard for the consumer to understand. When we did a survey,
we found that a lot of the capsules including those for use on the hair and face were
found to have porcine elements. So these things were not halal. Halal also constitutes
cleanliness and hygiene. A lot of consumers do not understand these aspects of fiqh
related to halal.

However, she admitted that the association’s role as a consumer group has been weakening
in the recent years due to their lack of resources.
Some of the operating units are connected to their environment, including manufacturers
and OEMs, retailers, wholesalers, consumers, and consumer advocate groups. For example,
manufacturers are able to access information from JAKIM via its website, while the certi-
fication units at the state level provide consistent advice to potential companies. There are
also good connections between the operating units of MITI, MARA, MAFI, and the ele-
ments of their environment in terms of having direct communications and providing good
support for the development of companies involved in halal cosmetics. However, certain
units lack the connection to the environment when information dissemination and collection
functions are absent. There is also a lack of dissemination of information at the metasystem
level, as indicated by the dashed lines between the system and subsystems with the environ-
ments in Fig. 3. These structural issues need to be tackled.
Generally, the manufacturers of cosmetics include large manufacturing firms, SMEs, and
OEMs. The manufacturers could be fully-fledged manufacturers and brand owners, or they
might outsource some of their value chain activities to OEMs or other companies. Fully-
fledged manufacturers and brand owners create branding for their products, while OEMs are
contract manufacturers that provide manufacturing outsourcing for halal-ready ingredients
or halal-ready products, which are to be marketed by their business customers. OEMs can
also be brand owners of products that are made using their own labels.

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Systemic Practice and Action Research

In the normal value chain of cosmetic products, products can be passed on to consum-
ers through two main channels: retailers and agents. Retailers include supermarkets, chain
stores or pharmacies, personal care outlets, or other form of retailer shops including online
shops. Agents are appointed by manufacturer or brand owner companies, and they work
based on commission. The use of agents is adopted either as the typical agent-based busi-
ness model or as a first step before the company can penetrate the major retailers. The use of
agents is popular amongst SMEs, while bigger players generally use retailers as their chan-
nels. Generally, an SME’s agents play a significant role in its products’ marketing and sales.
In some companies, brand owners also heavily market their own brands.
In ensuring viability, the operating units in the system must interlink with the groups in
the environment. Within the halal cosmetics industry, for instance, Subsystem 5 (Business
Development) provides information to manufacturers via operating units like MATRADE,
SME Corp, and a dedicated MARA Entrepreneur Development unit. Meanwhile, manufac-
turers, retailers, and wholesalers can access information from the website of the operating
units in Subsystem 4 (Halal Certification). It is mandatory for manufacturers to provide
information to halal certification operating units during the halal certification process and
the validity period of the halal certification. Documentation must also be updated continu-
ously to meet the JAKIM requirements for audit compliance.
Being the central body, JAKIM is involved in most functions in these systems at the
operations (System 1) and meta-level management (Systems 5, 4, and 3) levels. The roles of
JAKIM are supported by other government bodies.

Conclusions and Implications

The study found that in the context of halal cosmetics in Malaysia, some elements of the
viability of the existing halal cosmetics certification system are apparent. However, there
are still some missing functions and weak linkages that must be addressed before the sys-
tem can be considered viable. The functions include a fully operable legal and regulatory
framework, together with the missing links related to the monitoring function. Moreover,
halal cosmetics production operates under the overall HIMP, but there is no dedicated policy
supporting the development of the halal cosmetics industry in Malaysia. As the industry is
growing, a dedicated development policy for halal cosmetics is urgently needed. In regard
to the implementation function, there are also several missing links between the operating
units, particularly those related to enforcement and consumer groups. This lack of links may
have led to the low level of awareness among producers and consumers.
The value chain for halal cosmetics is complex and involves long processes. Regular
consumers are not able to “see” the entire value chain, as some players, elements and ingre-
dients are hidden from public view. This situation is exacerbated by the general consumer’s
lack of scientific knowledge about the ingredients in cosmetics and the lack of understand-
ing of the aspects of fiqh (technical understanding of halal and haram). Furthermore, there
is a lack of comprehensive consumer protection laws related to halal matters, as well as a
weakening of the voices of consumer advocates and associations. With greater awareness
of all these aspects, consumers would naturally pay more attention to the halal status of the
products and services that they consume, and they would become better educated about
protecting their rights as consumers.

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 Systemic Practice and Action Research

Similarly, manufacturers too are lacking the scientific knowledge about the ingredients in
cosmetics and the technical knowledge of halal and haram. Due to this issue, there is a low
level of readiness among businesses to embrace the halal certification system, particularly
amongst SMEs. At the system level, a comprehensive definition and scope of the toyyib
parameters in the ingredients of cosmetics products is yet to exist. All these issues pose as
challenges and threats to both consumers and providers. A viable halal cosmetics industry
requires the products and the entire value chain to be halal. To achieve this objective, all
stakeholders (e.g., industry players, policymakers, and consumers) must be knowledgeable
about the scientific and technical aspects of halal. Some limitations in the system must be
overcome through the integration of laws and orders by the government.
The findings of this analysis justifies the need for developing a viable certification sys-
tem for halal cosmetics. Such a system requires a dedicated policy and units of policy-
making, intelligence, control, coordination, and implementation functions. Moreover, the
missing function of the legal and regulatory framework and the related missing links must
be addressed. All these can be expected to support the further development and viability of
the industry, which must not only adhere to global business requirements but also fulfill the
religious obligations associated with halal product consumption among Muslim consumers.
In reflection, the main strength of VSM lies in the robustness of the concepts and prin-
ciples that are embedded within it. The model could accommodate analyses at various level
of recursion, and researchers may also opt to study the system comprehensively or select a
certain function of focus. The use of VSM however requires intensive analyses, thus most
ideally conducted by the research team who possesses the expertise in the application of
VSM, in the qualitative methodology, on the subject matter as well as on the system-in-
focus. Only then, researchers are able to make sense of the data and information and finally
to draw an accurate conclusion of the diagnosis.

Appendix A

List of acronyms and abbreviations used in this research paper

AIBIM Association of Islamic Banking and Financial Institutions Malaysia
BPU Entrepreneurship Development Unit (Bahagian Pembangunan Usahawan)
CAP Customer Association Penang
DOA Department of Agriculture
DOC Department of Chemistry
DVS Department of Veterinary Services
EPU Economic Planning Unit
GMP Good Manufacturing Practices
HACCP Hazard Analysis and Critical Control Point
HAS Halal Assurance System
HCB Halal Certifying Bodies
HDC Halal Development Corporation
HIDC Halal Industry Development Corporation
HIMP Halal Industry Master Plan
IHRAM Institute of Halal Research and Management
IIUM International Islamic University Malaysia

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Systemic Practice and Action Research

INHART International Institute for Halal Research and Training

ISO International Standard Operation
JAIN State Religious Department (Jabatan Agama Islam Negeri)
JAIS Selangor Islamic Religious Department (Jabatan Agama Islam Selangor)
JAKIM Department of Islamic Development of Malaysia (Jabatan Kemajuan Islam Malaysia)
JPA Public Service Department (Jabatan Perkhidmatan Awam)
JPM Prime Minister’s Department (Jabatan Perdana Menteri)
JSM Department of Standards Malaysia (Jabatan Standards Malaysia)
KKMM Ministry of Communications and Multimedia (Kementerian Komunikasi dan
Multimedia)
KPDNHEP Ministry of Domestic Trade and Consumer Affairs (Kementerian Perdagangan Dalam
Negeri dan Hal Ehwal Pengguna Malaysia)
KUSKOP Ministry of Entrepreneur Development and Cooperatives (Kementerian Pembangu-
nan Usahawan dan Koperasi)
MAFI Ministry of Agriculture and Food Industries
MAIN State Islamic Religious Council (Majlis Agama Islam Negeri)
MAQIS Malaysia Quarantine Inspection Services
MARA People’s Trust Council (Majlis Amanah Rakyat)
MATRADE Malaysia External Trade Development Corporation
MCMC Malaysian Communications and Multimedia Commission
MHM Majlis Halal Malaysia
MIHAS Malaysia International Halal Showcase
MITI Ministry of Trade and Industry
MOA Ministry of Agriculture
MOF Ministry of Finance
MOH Ministry of Health
MPIH Malaysia Halal Council
MS Malaysia Standards
myHAC JAKIM Malaysia Halal Analysis Centre
NAP National Agricultural Policy
NPCB National Pharmaceutical Control Bureau
NPRA National Pharmaceutical Regulatory Agency
OEM Original Equipment Manufacturer
PBT Local Municipality Councils (Pihak Berkuasa Tempatan)
PPIM Muslim Consumer’s Association (Persatuan Pengguna Islam Malaysia)
SIRIM Standard and Industrial Research Institute of Malaysia
SME Small and Medium-sized Enterprise
SME Corp SME Corporation Malaysia
TDA Trade Descriptions Act 1972 (then repealed and replaced by Trade Descriptions Act
2011)
UPM Universiti Putra Malaysia
USIM Universiti Sains Islam Malaysia
UTM Universiti Teknologi Malaysia
VSM Viable System Model

Acknowledgements This study was funded by the Ministry of Higher Education (MOHE) of Malaysia
under the Fundamental Research Grant Scheme (FRGS/1/2019/SS01/USIM/02/4), is funded by FRGS Grant
USIM/FRGS/FEM/055002/51719, titled, “Developing a Viable Framework for Governance of Unsubstanti-
ated Claims in Halal Cosmetics”.

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 Systemic Practice and Action Research

Authors’ contributions  All authors, Khairul Akmaliah Adham, Nur Sa’adah Muhamad, Adlin Masood and
Alina Abdul Rahim wrote the main manuscript text, prepared Figs. 1, 2 and 3 and reviewed the manuscript.

Funding  The study was funded by the Ministry of Higher Education Malaysia’s FRGS Grant FRGS/1/2019/
SS01/USIM/02/4, titled, “Developing a Viable Framework for Governance of Unsubstantiated Claims in
Halal Cosmetics”.

Data Availability  The datasets generated during and/or analysed during the current study are available from
the corresponding author on reasonable request.

Declarations

Ethical approval  Not applicable.

Informed consent All participants interviewed in this study have given prior informed consent. Personal
names are not mentioned in this study to maintain the privacy of the participants.

Competing interests  The authors have no financial or non-financial conflicts of interest to declare.

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