Lakhasly

The global halal market size is expected to reach USD9.71 trillion by 2025. Economic
development of leading Islamic countries such as Indonesia, Malaysia, India, Pakistan, Nigeria, and Iran is expected to boost the global halal products market the coming years
(Reuter, Jan 10, 2019). In Malaysia halal industry has achieved successfully a steady pace
of development. According to Shawahid (2015), Malaysia has become a destination for
foreign investors to expand its businesses. The positive development has become a
platform for SMEs to contribute to the great role in improving the country’s economy.
Therefore, Small and Medium Enterprises (SMEs) in Malaysia are expected to contribute
more than 40% to the gross domestic product (GDP) of the country by 2020. Thus,
SMEs are urged to get a certified halal certification to seize lucrative opportunities in
the global halal sector. To ensure that the process of the whole production is halal, halal
SMEs entrepreneurs are suggested to apply the Halal Standards in the sales production
process. However, there is still a gap in applying Islamic financial management in the
business activities such as financing and investing activities which involve prohibited
elements such as usury (riba), uncertainty (gharar) and gambling (maysir).
Malaysia has been established the Halal Standards (HS) set based on good quality
value, safe, and trust as a precondition to achieve HS in implementing strategies for the
development of the industry. Hence, the authority body is responsible to conduct halal
certification and auditing processes is Jabatan Kemajuan Islam Malaysia ( JAKIM). The
HS is also capable in enhancing good governance in several sectors, business activities,
halal supply chain, and halal experts. The terms used in HS are crucial in promoting
Malaysia as a global halal hub centre. The development of halal industry can also
contribute to good business environment such as a business-friendly ecosystem and
network collaboration between related government and private agencies. Therefore, to
achieve a holistic view of the HS, there is a need to integrate halal industry with Islamic
finance. The HS is highly compliance with Maqasid Syariah to achieve the well-being of
the preparation of halal products.
Malaysia has the edge in the development of the Halal industry as it is a modern
Islamic country with an open economy and a well developed physical and institutional
infrastructure, capable of supporting initiatives and programmes to develop and
promote the industry. With this become problems of the study to assess SMEs
entrepreneurs sensitivity on Islamic financial management in halal industry activities. The objective of the study is to examine the relationship between knowledge,
acceptance and application of Islamic finance in halal operation among SMEs halal
entrepreneur in Peninsular of Malaysia.