Halal certification will be mandatory for all food, pharmaceutical and cosmetic products from October 2019. Promoted as a Halal Product Guarantee, the certification forms part of the bid to make Indonesian products more competitive in the international market, especially among the world’s estimated 1.9 billion global Muslim consumers.
According to the Indonesian Food and Beverage Association, however, it is unlikely that the October 2019 deadline will be met as it entails certificating tens of thousands of new products over the next 33 months. At present, only 7,000 halal certificates are issued each year in Indonesia.
The upcoming legislation will not prohibit the sale of such products as pork or alcohol provided they are clearly labelled as non-halal.
INDONESIA-INVESTMENTS – 21 January 2017
Players in Indonesia’s food and beverage industry request the government to revise Law No. 33/2014 on the Halal Product Guarantee because this law is highly difficult to be implemented and makes the nation’s business environment less attractive. The law, drafted in 2014, requires all food, pharmaceutical, and cosmetic products that are consumed in Indonesia to have halal certification (which indicates the product was prepared according to Islamic law) by October 2019.
Adhi Lukman, General Chairman of the Indonesian Food and Beverage Association (Gapmmi), said Indonesia’s food and beverage industry is not ready for the “halal guarantee” and he feels that it is basically impossible for the law to be implemented in full force by 2019 as it would mean millions of products have to be halal certified in the next two and a half years. Moreover, the law does not make much sense at it would imply products like mineral water also needs halal certification.
Lukman suggests a revision to Law No. 33/2014, namely that it will only be mandatory to have halal certification to those who label their product as halal.
Over the past 20 years the Indonesian Ulema Council’??s Assessment Institute for Foods, Drugs and Cosmetics (LPPOM MUI) has been the institution that grants halal certification in Indonesia. However, on average, LPPOM MUI only issues around 7,000 halal certificates per year. To issue several million over the next 2.5 years seems a highly unrealistic target. Most of the big Indonesian companies already have halal certification, so new certification would mostly involve Indonesia’s micro, small and medium companies.
Based on data from Indonesia’s Statistics Agency (BPS), the number of food and beverage producers in Indonesia numbered 1.25 million in 2014. About 99 percent of this total are micro and small companies (for example local street vendors) that usually lack a strict or standardized production process and therefore it would be difficult for them to obtain halal certification.
Moreover, it costs money to obtain halal certification. For the small and micro food and beverage entrepreneurs this is a major obstacle. And, considering LPPOM MUI is not a government institution these funds will not flow to the government. If it will indeed become prohibited to sell food and beverages that lack halal certification by October 2019, then it could seriously undermine attractiveness and earnings in Indonesia’s lucrative food and beverage industry, a key engine of the nation’s manufacturing industry.
Danang Girindrawardana, Head of the Public Policy Department within the Indonesian Employers Association (Apindo), is also skeptical about Law No. 33/2014 and urges the government to review the law as it is not in line with other existing laws and contradicts the government’s ambition to cut red tape in Indonesia.
Halal Certificates Issued by the Indonesian Ulema Council (MUI):
|Number of Companies||691||4,325||5,829||6,666||10,180||6,213|
|Number of Products||27,121||39,002||32,890||64,121||68,576||77,405|
Source: LPPOM MUI