Halal poultry certification in Indonesia presents vast market opportunities
Indonesia announced mandatory halal certification for food, beverages and services starting 17 October 2024. The detailed and intricate certification presents vast market opportunities, but suppliers will need to overcome time-consuming inspections. Micro, small and medium enterprises will get some leeway until 2026.
The global halal market has grown significantly, primarily driven by increasing awareness and demand for halal goods and services. This demand originates not only from Muslims but also from non-Muslim consumers who perceive these products as ethical and safe. According to Research and Markets, the halal food market size was valued at US$2.4 trillion in 2023 and it is set to continue to grow. Muslim consumers lead the surge, with poultry meat in particular. Big investments, mandatory certifications and global trade are reshaping the industry. Non-Muslims embrace halal for its safety and reliability; thus the industry has a promising future.
In Indonesia, the halal F&B market is ranked as the largest in the world at US$149.8 billion, indicating the sector’s high market potential. Taufan Ruwaman, certified halal supervisor, said Halal Asia Network has conducted Halal Landscape Studies of Indonesia. This survey was completed by 157 respondents, with 91.7% identifying as Muslim and the rest identifying as Protestant, Catholic, Hindu and Buddhist. The questionnaire results demonstrate that halal certification plays a significant role in product purchasing decisions in various industries, especially food. Those with diverse employment backgrounds and spending levels are even willing to pay 10-20% more for halal-labelled products. Furthermore, most respondents believe that imported products must be labelled halal.
Halal compliance requirements
Ruwaman explained that, apart from BPJPH, the institutions involved in obtaining halal certification are the Halal Examining Agency (LPH) and the Indonesian Ulema Council (MUI). BPJPH establishes regulations, receives, and verifies products, submits applications for halal certification from business actors and product owners, and issues halal certificates along with halal labels. LPH checks and tests the ‘halalness’ of products submitted for halal certification, while MUI determines the halalness of products through a halal fatwa hearing.
The first step in the flow process of halal certifications is that the business owner or company submits an application request to BPJPH and then BPJPH verifies the authenticity of the document submitted by the applicant. BPJPH will assign LPH to check product halalness and LPH will report an audit to MUI. Next, BPJPH will issue a halal certification after MUI has declared the product halal. Yuliana Pangaribuan, a legal expert at Halal Asia Network, added the requirements that must be prepared by business actors to obtain halal certification, including company data (name, address, and license). Also product name and type, (food, beverage, or other). Product data and materials used (making sure the materials used are halal), and product processing (making sure the processing process meets halal requirements).
After the certification is issued, product halalness must be maintained by multiple measures such as separating the location, place and slaughter, processing equipment, storage, packaging, distribution, sale and presentation between halal and non-halal products. The halal certificate is valid as long as there are no changes to composition and/or process. If the company changes the composition or process, the company must renew the halal certification.
Optimising halal certification benefits
The mandatory halal certification rule applies to all businesses regardless of their size, and failure to comply will result in strict administrative action or product recalls. Halal certificates for products and services from slaughterhouses, for example, are crucial for producing meat according to Islamic law. Wahyu Suhadji, director of the Professional Certification Body of the Indonesian Halal Products Organizer told Poultry World that halal food is not only for Muslims. Many non-Muslims also prefer it due to the hygienic principles that make the food wholesome and healthy. So, consumer perceptions of halal have changed.
Wahyu states that implementation will be challenging, particularly with micro, small, and medium enterprises (MSMEs) that own non-standard slaughtering premises or those that slaughter in traditional markets. “Sellers in traditional markets, for instance, want compensation for income loss on days on which they undergo training, or at least a stipend for transport and to attend the training.” The other challenge is the cost of halal certification. “Many MSMEs feel it is costly. However, they should understand that the benefits outweigh the cost,” he explained.
Supervisor Ruwaman concurred. Halal certification has unavoidable challenges. International brands seeking to enter the halal market in Indonesia with halal certification from other countries must adjust the certification. This is because not all halal certificates from other countries are accepted in Indonesia. Still, this is a promising market. With the provisions in place, it can expand global halal product cooperation, with significant international interest and participation from 120 certification bodies across 40 countries.
Postponed for MSMEs
The Indonesian government is targeting a total of 10 million halal certificates, but had only reached 4,418,343 certificates by mid-2024. For this reason, the halal certification obligation, which was initially set for 17 October 2024, was postponed until 2026. “We decided to postpone it. Although there has been an increase, only 64% of MSMEs have been certified. But this is still far from being achieved,” the Coordinating Minister for Economic Affairs, Airlangga Hartarto, said. He explained that one of the reasons for delaying halal certification obligations for MSMEs is the limitation of the budget. Besides the budget, the delay in halal certification is also related to many MSMEs who are unwilling to formalise their business with a business identification number (NIB).
The Minister of Cooperatives and Small and Medium Enterprises, Teten Masduki, stated that it soon became clear that 17 October 2024 was not feasible for all MSMEs to obtain halal certification. “Looking at data from the BPJPH, the average is only 2,600 certificates, so it’s impossible. That’s why I believe the decision to delay the certificate obligation until 2026 is appropriate. If it is forced, not only is it impossible, but they will also be considered to be breaking the law and this could cause legal problems,” he added. However, for large and medium-sized entrepreneurs, the government is enforcing halal certification from 17 October 2024.
