Thursday, November 17, 2016

Halal push hits a snag in Indonesia

Squabbling between the government and Islamic organizations threatens to delay the implementation of a law that Jakarta hopes will make Indonesia the premier global hub for Islamic products and services. The law, which would require all food, beverage, cosmetics and medical products sold there to be certified as halal, or allowed under Quran, the Islamic holy book, is slated to be implemented in October 2019. But that date may have to be pushed back if the disagreements continue.

The government wants to oversee the certification process, a prospect that does not sit well with the Islamic organizations that currently handle certification. The deadline for establishing the certification framework was set for the end of October. But despite missing the deadline, an official at the Ministry of Religious Affairs said the plan to implement the law in 2019 "has not changed."


The legislation was passed in October 2014 during the presidency of Susilo Bambang Yudhoyono. It does not ban the sale of products prohibited under Quran -- such as pork and alcohol -- but they would have to be clearly labeled as "non-halal."

Indonesia has the world's largest Muslim population, with some 90% of its roughly 250 million citizens adhering to Islam. The government sees the law as a way to better tap the huge market for halal goods and services, not just at home but also in the Middle East and elsewhere.

The law is also seen as a response to Malaysia's national certification system, which has become one of the international standards for halal certification.

Many processed foods sold in Indonesia are halal-certified, but most cosmetics and other daily goods are not.

For a product to obtain certification, no alcohol or pork-derived substances can be used in the manufacturing process. These constraints sometimes force manufacturers to change the ingredients used in their products.

Adhering to Islamic law can also bump up logistics expenses, as no pork or alcohol products can be transported with halal goods during the distribution process. Any resultant increases in costs would likely be passed on to consumers.

Companies with Indonesian operations are already girding for the change. The local unit of Unilever, the Anglo-Dutch consumer goods giant, has already prepared its Indonesian factories for making halal products.

As adapting to the rule could involve significant costs, smaller companies will be keeping an especially anxious eye on developments regarding its implementation.

JUN SUZUKI, Nikkei staff writer


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