Industry News

Indonesia is the beating heart of the global halal economy, with its 229 million Muslims representing the world's largest Muslim population. Indonesia's halal market was valued at approximately US$279 billion in 2023, demonstrating the country's significant role in the global halal industry. This market is projected to grow at a significant compound annual growth rate of 14.2%, reaching approximately US$807 billion by 2030. As the largest consumer market for halal products, Indonesia offers a wealth of opportunities across various sectors, including food and beverages, modest fashion, and halal tourism.

Backed by strong government policies, an expanding middle class and a thriving digital economy, the country is a top destination for local and international investors seeking to capitalize on its vibrant halal ecosystem.

Food and beverages: Indonesia's largest halal sector thrives in domestic market

The food and beverage sector dominates Indonesia's halal industry, driven by high domestic demand and regulatory requirements ensuring that all consumer products meet halal certification standards. In 2022, Muslim consumers in Indonesia spent approximately $149 billion on halal food and beverages. Forecasts indicate that this figure will grow significantly, with the market projected to reach $258.02 billion by 2030, growing at a compound annual growth rate of 6.78% from 2023 to 2030. This growth is driven by an expanding middle class and increasing consumer awareness of the importance of halal compliance.

Halal food exports from Indonesia

Indonesia's halal food exports are a vital component of its economy, demonstrating the country's potential as a global supplier. Halal food exports are projected to reach $42.33 billion in 2023, with processed foods, beverages, and condiments contributing significantly. In 2022, approximately $13 billion of these exports went to the Organization of Islamic Cooperation (OIC) countries. Key product categories include:

Processed foods:Halal-certified snacks, canned goods and ready meals.drinks:Non-alcoholic beverages such as juice and soft drinks.Condiments and Sauces:A variety of sauces and spices that meet Halal requirements. Adapting to Halal Standards: Lessons from Foreign Fast Food Chains

Global fast food giants like McDonald's and KFC have successfully adapted to Indonesia's stringent halal certification requirements, providing valuable experience for other foreign investors. These companies operate in strict compliance, ensuring their supply chains, preparation processes, and final products meet halal standards. Their success highlights the adaptability of international brands to Indonesia's regulatory environment and the strong consumer preference for certified halal food.

Changing lifestyles and evolving consumer preferences

Indonesia's expanding middle class and improving economy are driving significant changes in consumer behavior, with rising disposable income enabling greater access to higher-quality halal-certified products. One notable shift is the growing demand for beef, which has become more affordable and accessible to a wider range of people. Indonesia is Australia's largest cattle export market, importing approximately 359,305 head of cattle in 2023, a 6% increase from the previous year. The country is also a significant market for Australian boxed beef, with imports reaching 11,026 tonnes in October 2024 alone.

This trend reflects a broader shift in Indonesian dietary habits, with consumers seeking high-quality, protein-rich food options. Beyond beef, demand is also growing for other halal-certified products, including processed snacks, functional beverages, and ready-to-eat meals. These shifts are being driven by Indonesia's growing middle class, which increasingly prioritizes convenience, quality, and adherence to religious guidelines.

As Indonesia continues to urbanize and modernize, these changing preferences present lucrative opportunities for businesses. By aligning their products with the demands of a more discerning and affluent consumer base, both local and international companies can tap into Indonesia’s vibrant and rapidly growing halal market.

Modest fashion: a cultural and economic phenomenon

Indonesia's halal fashion industry is booming, becoming a major player on the global stage. Indonesia ranks third globally in the Muslim modest fashion industry, with the Muslim fashion market estimated to be worth approximately $20 billion in 2023 and projected to grow to $22 billion by the end of 2024. This robust growth highlights the country's key role in shaping trends in the modest fashion industry.

Key drivers and trends

The industry is driven by a number of factors, includingDigital transformation, Government support and innovative design:

Digital Transformation:
Indonesia's halal fashion industry is increasingly leveraging digital platforms to reach a wider audience. The country's e-commerce gross merchandise value (GMV) is projected to reach $53.8 billion by 2023, making it a dominant force in Southeast Asia's online economy. Local Muslim fashion brands use platforms such as Tokopedia, Shopee, and Instagram to market and sell their products, enabling them to more effectively reach domestic and international customers.Government support:
The Indonesian government has been actively promoting the halal fashion industry through initiatives such as Jakarta Muslim Fashion Week, showcasing local talent to a global audience. The government’s approval of laws ensuring halal product certification has further bolstered confidence in the industry.Innovative design:
Local Muslim fashion brands such as Elzatta and Rabbani have gained international recognition for their innovative designs, skillfully blending traditional cultural elements with modern aesthetics to create unique styles that appeal to both domestic and international markets.Sustainability and Ethical Practices:
Sustainability is an emerging trend in Indonesia’s halal fashion industry. Designers are adopting eco-friendly materials and ethical production practices in response to global demand for more environmentally friendly fashion.Cultural Heritage:
Indonesian designers use traditional fabrics such as batik and tsuba to weave the country's rich cultural heritage into their creations. This fusion of tradition and modernity resonates with diverse audiences, enhancing the global appeal of Indonesia's demure fashion. Indonesia's Global Influence

As the world increasingly embraces modest fashion, Indonesia's halal fashion industry stands out for its innovation and authenticity. Events like Jakarta Muslim Fashion Week provide a platform for Indonesian designers to collaborate with the international market, solidifying the country's position in the global modest fashion economy. With increasing government support, a booming digital economy, and a commitment to sustainable development, Indonesia is poised to further solidify its position as a leader in the halal fashion industry.

The role of Indonesia’s digital economy

Indonesia's thriving digital economy has played a key role in supporting the modest fashion industry. According to the Google e-Conomy Southeast Asia 2024 report, Indonesia's e-commerce gross merchandise value is projected to reach US$65 billion by 2024. That same year, the country's digital economy had a total GMV of US$90 billion and is projected to grow to between US$20 billion and US$360 billion by 2030. This robust online ecosystem enables local designers to enter the global market, making Indonesia a leader in modest fashion e-commerce.

Halal tourism: Indonesia's rising star in tourism

Indonesia's halal tourism industry is rapidly expanding to cater to both domestic and international Muslim tourists. The country is also a major contributor to global religious tourism, with 209,782 Indonesians performing the Hajj in 2023. Saudi Arabia approved 221,000 Indonesian pilgrims in 2023 and expects a similar number in 2025.

Domestically, Indonesia ranked first out of 140 countries in the GMTI 2023 report, solidifying its position as the world's leading halal tourism destination. Regions such as West Nusa Tenggara and Aceh are developing into halal-friendly hotspots, offering certified accommodation, prayer facilities, and culturally inclusive experiences.

The global Muslim tourism market is worth over US$200 billion and is expected to grow as the Muslim population reaches 2.2 billion by 2030. Indonesia's efforts to strengthen its infrastructure and services to promote Muslim-friendly tourism will enable it to capture a significant share of this growing market.

Indonesia's evolving halal certification framework

Indonesia has established a comprehensive regulatory framework to ensure the integrity of its halal industry. Central to this effort is the Halal Product Assurance Law (Law No. 33/2014), which mandates that all consumer products entering, circulated, and traded in Indonesia must be halal certified. This law underscores the country's commitment to maintaining high standards of halal compliance, making it a trusted global player in the halal economy.

The Halal Product Assurance Organization (BPJPH) oversees the certification process in collaboration with the Indonesian Ulema Council (MUI) and the Halal Inspection Agency (LPH). In October 2024, the government introduced Government Regulation No. 42 of 2024 (GR 42/2024), which brought significant updates, including:

Extending the Halal certification deadline for small and medium-sized enterprises toOctober 17, 2026Granting permanent validity of Halal certificates unless there are changes in the production process. Simplifying the application process for foreign products through importers or representatives.

Non-compliance can result in sanctions such as fines or product withdrawals, highlighting the importance of adhering to these rules. Indonesia’s evolving regulatory framework demonstrates its commitment to creating a trusted halal ecosystem that supports consumers and businesses.