Southeast Asia is currently exhibiting signs indicative of an impending consumer boom. The region has seen a steady rise in incomes, partly attributed to increased foreign investment as global corporations aim to reorganize their supply chains. Notably, the population in this area is not only increasingly affluent but also significantly younger, with a median age of approximately 30.4 years. This figure is notably lower compared to that of the U.S., Europe, or China.
A unique characteristic of this rapidly growing demographic is that approximately 40% of Southeast Asia’s population, about 281 million people, are Muslims. This segment is evolving into a critical consumer group, prompting both regional businesses and established multinationals to become more attuned to their preferences.
The Muslim consumer market in Southeast Asia extends across Singapore, Brunei, the Philippines, and Thailand. However, its largest concentrations are found in Malaysia, where about 64% of the population is Muslim, and Indonesia, which is home to nearly 242 million Muslims, more than any other nation, as per 2023 census data.
The middle class within the Muslim community has been expanding steadily, as noted by Afra Alatas, a research officer studying Muslim societies in Southeast Asia at the ISEAS–Yusof Ishak Institute in Singapore. Afra emphasizes that as this consumer group becomes wealthier, especially within the middle class, there is a growing aspiration for a more ‘Islamic’ lifestyle.
This desire is evident in the increasing demand for goods and services that are halal, meaning permissible under Islamic law. This demand has led to a surge in companies offering halal-certified non-food goods such as cosmetics, “modest fashion” that adheres to Islamic values of modesty while remaining stylish, and tourism packages.
Globally, Muslim consumers spent $2.29 trillion on halal goods and services in 2022, marking a 41% increase from $1.62 trillion in 2012, according to research by Salaam Gateway, an organization based in Dubai that monitors the global Islamic economy. This total is expected to rise to $3.1 trillion by 2027, underscoring the importance of this market for companies worldwide.
Cédomir Nestorovic, a professor at the ESSEC Business School in Singapore specializing in Islamic business and management, highlights that the Muslim population is experiencing the fastest growth when compared to other religious groups. World Bank data corroborates this, indicating that many Muslim-majority countries have transitioned from low-income to middle-income status, including Indonesia and Malaysia. Nestorovic points out that demographics favor Muslim populations.
A notable success story within this market is Wardah, an Indonesian brand producing halal cosmetics and personal care products. While many non-Muslims are familiar with halal as it pertains to food, the principles also extend to beauty products. Wardah meticulously adheres to these standards, avoiding any ingredients considered haram, such as alcohol in perfumes or collagen derived from pigs in facial products.
Wardah was established in 1995, experiencing significant growth beginning around 2005, according to Sari Chairunnisa, Deputy CEO and Vice President of Research and Development at Paragon Technology and Innovation, Wardah’s parent company. The early stages of the company were challenging, primarily due to regional consumers having limited disposable income and lacking awareness of halal products. Furthermore, Wardah needed time to perfect their product quality, including durable and long-lasting lipsticks and foundation.
Though Wardah remains privately held and does not publicly disclose its revenue, the company claims to command approximately 30% of Indonesia’s beauty market, which encompasses personal care and cosmetics. The brand extends its offerings to Malaysia and Brunei as well.
Wardah is not alone in its success among Muslim consumers in Indonesia. Buttonscarves, a “modest fashion” company founded in 2016, has expanded to include physical stores throughout Indonesia and Malaysia, along with an online presence serving Southeast Asia and beyond. CEO Linda Anggrea identified a gap in the market for “contemporary Muslim women’s fashion,” aiming to meet these needs while also instilling confidence in her customers. Buttonscarves, starting with a focus on scarves, now offers a broader range of clothing and accessories as the flagship brand within the Modinity Group, with reported revenues of $80 million to $100 million for 2024.
The rise of the Muslim consumer demographic in Southeast Asia is driven not only by increasing incomes but also by advancements in technology and supportive government initiatives. The widespread use of smartphones has transformed the consumer landscape, enabling Muslim entrepreneurs to promote halal products and allowing companies to leverage social media influencers for marketing.
According to Buttonscarves CEO Anggrea, perceptions of modest fashion have shifted positively over the past decade, aided by social media influencers showcasing that wearing a hijab can be stylish. She notes that, for observant Muslim women, it is possible to be both fashionable and compliant with religious practices.
Government policies further support the growth of the halal economy. Like Middle Eastern governments, countries like Indonesia and Malaysia have introduced policies encouraging halal economy compliance and sharia or Islamic law adherence by businesses. An impending regulation in Indonesia will require all cosmetics sold in the country to be halal-certified starting October of the following year, benefiting companies like Wardah that are already compliant and trusted.
The consumer banking sector has also adapted to serve the Muslim community more effectively, with Islamic finance becoming prominent in Southeast Asia, particularly in Malaysia. The Malaysian government began promoting Islamic finance as an alternative post the Asian Financial Crisis of the late 1990s. Interest in this sector grew post the 2008 Global Financial Crisis as Islamic banks refrained from participating in activities like trading junk bonds, which were blamed for destabilizing the financial system.
Islamic banking requires adherence to sharia-compliant principles, avoiding investments in companies producing harmful products, and steering clear of interest payments. Maybank, Malaysia’s largest bank, hosts the Asia-Pacific region’s largest Islamic financial operation, with Islamic banking contributing 28% to the group’s pretax profits. In 2023, Maybank Group reported revenues of $14.2 billion, ranking it 17th in the Fortune Southeast Asia 500.
Dato Muzaffar Hisham, who oversees Maybank’s Islamic finance operations, explains that sharia-compliant alternatives like murabaha, where a bank customer sells an asset to the bank at a marked-up price, replace traditional interest payments. Islamic finance in Southeast Asia amounted to $859 billion in 2023, an increase from $754 billion in 2020, as per a study by the Islamic Corporation for the Development of the Private Sector and the London Stock Exchange Group. The global Islamic finance market was valued at approximately $4.9 trillion in 2023.
Beyond finance, multinational companies have long targeted Muslim consumers, particularly within the food and beverage industry. Brands such as McDonald’s and KFC introduce special offers during Ramadan, including pre- and post-fasting meals, alongside guaranteeing halal certification. Likewise, beauty and fashion giants like L’Oréal and H&M cater to the Muslim market through halal cosmetics and modest apparel. Travel platforms also offer packages ensuring halal compliance in lodging and dining to attract values-driven consumers.
However, Muslim consumers have demonstrated their influence by withholding spending over political issues. The ongoing Gaza conflict demonstrated this power as activists called for boycotts related to perceived injustices against Palestinians. Unilever’s Indonesia unit reported an 18% revenue drop in its third quarter of the previous year due to consumers engaging in politically motivated campaigns. Berjaya Food, which franchises Starbucks in Malaysia, also suffered declines from boycotts sparked by Starbucks’ legal actions against a union for posting pro-Palestinian statements on social media. Despite reassurances from Berjaya’s owner Vincent Tan, revenue for the franchise fell considerably, from 1 billion ringgit in the prior year to 676 million ringgit.
Publicis Indonesia’s Nilakshi Medhi emphasizes that authenticity is vital when catering to the Muslim market. This creates opportunities for companies like Wardah and Buttonscarves, with Buttonscarves CEO Anggrea describing the aspirational customer as a Muslim woman seeking high-quality, fashionable scarves. Meanwhile, Wardah’s Sari Chairunnisa envisions halal products gaining global mainstream recognition due to their emphasis on sustainability and resource responsibility.
Sari expects that, much like Japanese “ikigai,” halal will find appeal beyond Islamic communities. The notion of halal is becoming associated with sustainable production, suggesting broader acceptance may be on the horizon. This evolution is driven by the increasing number of Muslim consumers seeking halal products and rising global awareness.