Halal Industry in Indonesia

Between 12 and 14 August 2011, The Indonesia Halal Business and Food Expo (IHBF Expo) was held in Jakarta under the theme of “Halal Values ​​In All Aspects of Business”.

Halal is an Arabic word meaning lawful. It refers to things or actions permitted by Shariah law without punishment imposed on the doer. In regard to dietary laws, Halal defines acceptable food, slaughtering procedures, and how Muslims get the money they use to purchase food.

The event which was held during the fasting month Ramadhan highlighted several key aspects in regard to the development of Halal business and food production in Indonesia.

First, increased demand for Halal services and products not only has come from Muslims but also non-Muslims. The certification of Halal food which requires the products to meet health safety standards favours many non-Muslims. Shariah financial services which provide more flexible access to small business holders compared to conventional financial services also benefit those who are non-Muslims.

Second, whilst the progress of Indonesia’s Shariah financial business has been increasing significantly, Indonesia has not reached its optimal growth. The head of organising committee, Rifda Ammarina, reported that , as a comparison, in Malaysia, a country in which only 65% of its population are Muslims, the Shariah financial sector accounts for 20% of the total assets. At the moment, Indonesia’s Shariah Financial sector only accounts for less than 5% of the total assets despite the fact that over 85% of its population are Muslims. Clearly, there’s so much room for improvement.

Third, Indonesia has great potentials to be a market leader in the global Halal industry. Muslim population has now reached  2 billions, representing about 28% of the world population. As reported by Republika Online (13/8/2011), Hatta Rajasa explained that the transaction value of food products in the world is estimated to reach US$ 580 billion with 7% annual growth. Of this total value, it is predicted that 20% of the food commodities are Halal products.

Fourth, Indonesia’s positive economic growth in  the last years, as indicated by rising middle-income class, combined with the significant increase of technology use among Indonesians  to some extent has contributed to the rising demand for Halal products and concerns over the Halalness of the services and food products that Indonesians consume. The Indonesian Muslim Intellectual Association (ICMI) represented by its presidium head at the IHBF expo launched ‘i-Masjid’ (Source: Republika Online (13/8/2011)). This ‘i-Masjid’ consists of i-clinic, i-media, i-learning, i-net, dan i-mart aiming at re-functioning Masjids (mosques) as the centre of health services, media, education, technology development and economic. The idea goes back to the Golden Age of Muslims during the leadership of Prophet Muhammad.

Nevertheless, there are some remaining challenges that Indonesia must deal with. First, Indonesia is lacking of comprehensive Halal regulations. The Coordinating Minister for Economic Affairs of Indonesia Hatta Rajasa in his opening speech at the IHBF expo argued that the issuance of such a comprehensive regulation will promote the growth of Halal business and food production in Indonesia as well as provide protection to the Halal industry.

Second, the lack of monitoring of Halal practises in Indonesia has been a concern of Muslim Indonesians for a long time. In Indonesia, Ministry of Agriculture is responsible for ensuring that all food products coming into Indonesia and being marketed in Indonesia are Halal (source). This is stated at Law No. 7 Year 1996 on Food, Law No. 8 Year 1995 on Consumer Protection and Law No. 18 Year 2009 on Animal Husbandry and Health. A recent incidence on the ban on Australian live exports to Indonesia following the spread of videos showing inhumane treatment to the cattle at an Indonesian abattoir has made Indonesians feel that their basic need to access Halal food cannot be satisfied by the government. This ‘within-the-border’ issue should be addressed seriously by the government before Indonesia can realise its ambition to be the market leader in the global halal industry. This is important considering that as Hatta Rajasa argued, Indonesia’s Halal certification has been referred by many countries. To ensure a positive growth of trade in Halal commodities across borders, Halal certifications across countries must be standardised. It is obvious that having good standards and proper monitoring are essential.

This article is prepared by Risti Permani.

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4 Comments

Filed under Conference, Economic development, Food and agriculture, Indonesia, Islam, Trade

4 responses to “Halal Industry in Indonesia

  1. Lyn Hasan

    assalamualaikum, I am a post grad student from Malaysia, I need some infos regarding the Halal certification in Kalimantan area… anybody can guide me where to get the relevant infos.?

  2. Wa’alaikumussalam, thanks for your question. We never made any direct contact with any of LPPOM MUI (halal certification body) Kalimantan branches. But, would you like to try to contact the secretariat office and I’m sure they can direct you to the Kalimantan office:
    http://www.halalmui.org/index.php?option=com_content&view=section&layout=blog&id=17&Itemid=367&lang=in

  3. Ilyas Ahmed

    Assalam alaikum,

    I’d like to get in touch with meat importers in Indonesia for supply of halal meat from India.

    Regards,

    Ilyas

  4. Mohd. Abdus Salam

    To get experience on Best Halal practice in the food industry required training in this regards.

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