Regulatory Issues in Halal Certification of Cosmetic Products Produced by Original Equipment Manufacturers (OEM) in Malaysia

Adopting the Original Equipment Manufacturers (OEM) scheme permits the brand owner to produce products without a manufacturing facility, thereby reducing costs and increasing efficiency. The scheme enables the brand owner to focus on branding, raw material costs, waste reduction, and market expansion. Despite many advantages of the halal OEM scheme, its growth, particularly in halal cosmetics, is slower than that of those without halal certification. This slow growth is due to the stringent requirements of halal certification introduced by the Department of Islamic Development Malaysia (JAKIM) and State Islamic Religious Departments (JAIN). To be accredited with halal certification, the cosmetic companies must comply with the Malaysian Halal Certification Procedure Manual 2020 (MPPHM) and the Malaysian Halal Management System 2020 (MHMS). The requirements present serious challenges to OEM companies in maintaining halal certification for their products. This study examines the regulatory requirements for halal-certified OEMs in the cosmetics industry and the issues surrounding the OEM halal certification scheme in Malaysia. Data were collected through a desktop review and semi-structured interviews with halal cosmetic manufacturers, JAKIM, State Islamic Religious Departments (JAIN) officers, and industry experts. The study discovers several regulatory issues, including non-uniform OEM contracts, ambiguous halal status of cosmetic applicators, and inconsistent halal certification procedures across JAIN. The study suggests that regulatory intervention in halal OEM practices is necessary to support the growth of the halal cosmetics sector.