Jakarta aims to become a top manufacturer of products compliant with Halal regulations.

Jakarta -- Businesses in Indonesia's consumer and real estate sectors are confident that a regulation requiring products to obtain Halal certification, taking effect this month, will bring growth opportunities for Indonesia domestically and for exports.

The government will require food and beverage companies and their raw material suppliers in the world's most populous Muslim country to obtain Halal certification from the Ministry of Religious Affairs by October 17. Businesses that fail to comply will face fines or having their products removed from shelves.

According to government officials, although most large companies are expected to complete the task before the deadline, many micro, small and medium-sized enterprises (most of which operate in the informal sector) find dealing with the bureaucracy challenging and costly to handle. The government will issue 1 million certificates to these sectors free of charge and give them an additional two years to meet the requirements. The regulation is expected to apply to other sectors in the coming years.

'A company's application may take several months to process, and it is very costly, especially for small and medium-sized enterprises,' said Dellvionico, a marketing officer at Indonesian food company Kecap Korma, whose sauce products have already been certified.

Industry insiders say that given that more than 85% of Indonesia's population is Muslim, obtaining certification is worthwhile. Dellvionico said: 'Despite the high cost, we think obtaining certification is important, because it will be attractive when distributing products to supermarkets and major retailers.' He added that uncertified products have limited sales channels, such as traditional markets where prices are usually lower.

Adinda Maharani of Mondelez International's Indonesia branch said: 'The introduction of Halal certification will help us expand sales, because most people in Indonesia are Muslim and consumers always check whether a product is Halal.'

Maharani said consumers' doubts about whether products comply with Islamic dietary rules should now be removed, prompting them to buy more products. Mondelez is one of the world's largest food and beverage companies, with many of its brands certified, including Kraft cheese products, Cadbury and Oreo.

After October 17, non-Halal products can still be sold in Indonesia, but they need to be labeled accordingly. These products must indicate non-Halal ingredients on the packaging.

Samer Elhajjar, a senior lecturer in marketing at the National University of Singapore Business School, said: 'This move aims to enhance the confidence of domestic and foreign consumers and promote Indonesia as a leader and top producer of Halal products.'

Businesses appear to be embracing this goal. Dellvionico said that although Kecap Korma currently focuses on the domestic market, it is considering exporting to markets such as Malaysia, because Malaysia's food culture is similar to Indonesia's, and the country has a Muslim population of more than 20 million.

Meanwhile, local land developer Modern Industrial Estate believes that the Halal regulations can help attract foreign investors wanting to produce Halal products to a Halal-certified industrial park in Banten province, west of Jakarta. Charoen Pokphand Group, one of Thailand's largest conglomerates, has purchased nearly 20% of the total area.

'With government regulations about to take effect, we recognize this is a huge business opportunity,' said Levina Siatono, senior marketing director of the developer. 'We have noticed that as the implementation of the new regulations approaches, inquiries from investors are increasing.'

She added, 'If the government can provide appropriate support and opportunities, we are considering developing a second industrial park in another region of Indonesia.'

Indonesian President Joko 'Jokowi' Widodo said that the certification campaign is part of the effort to build people's confidence in Indonesian Halal products.

Widodo said last month, 'This is a large market with huge potential, and we must take this into account so that the existing opportunity is not taken away by other countries,' adding that 'Indonesia has a good opportunity to become the center of the world's Halal industry.'

Additional reporting by Ismi Damayanti.

FAQ

What does Indonesia's new Halal certification regulation mandate for businesses?
The government required food and beverage companies and their raw material suppliers to obtain Halal certification from the Ministry of Religious Affairs by October 17, with non-compliant businesses facing fines or product removal. After October 17, non-Halal products can still be sold but must indicate non-Halal ingredients on the packaging. Given that more than 85% of Indonesia's population is Muslim, industry insiders consider certification worthwhile.
What difficulties do Indonesian SMEs face with Halal certification, and how is the government helping?
Many micro, small and medium-sized enterprises (mostly operating in the informal sector) find dealing with the bureaucracy challenging, with high processing costs and applications that may take several months. The government will issue 1 million certificates to these sectors free of charge and give them an additional two years to meet the requirements.
How does Halal certification help businesses expand sales?
According to businesses, certified products are more attractive when distributed to supermarkets and major retailers, while uncertified products have limited sales channels (such as traditional markets with usually lower prices). Mondelez International's Indonesia branch said introducing Halal certification helps expand sales, because consumers always check whether a product is Halal, and certification removes consumer doubts and prompts them to buy more.