Indonesia passed Law No. 33/2014 on Halal product assurance in October 2014, which requires all products to be certified Halal in 2019. This law also created the Halal Certification Agency (BPJPH) to oversee the process and provide ongoing certification for products. This means even non-Halal products have to go through the exhaustive process.
The law requires Halal certificates and labels for 3 sectors namely food and beverage, cosmetics and pharmaceuticals – and goes further than most in that it requires not just final products but also all equipment and raw materials used during the production process to be acceptable under Islamic Law.
Unfortunately, this requirement is considered burdensome for businesses as it is difficult to apply, and could discourage investments in these sectors. Aside from high production costs, this will also make it difficult for the Halal certification institutions to verify.
There is also ambiguity in articles 4 and 26 of the law. Article 4 can be interpreted that “all products in Indonesia must be certified Halal”. In the context of international trade law, “must” means “obligatory and necessary with legal consequence”. This will result in restriction of non-Halal products in Indonesia as importers who do not obtain Halal certification cannot enter and trade in Indonesia.
However, in Article 26, the law provides an opportunity for entry and distribution of non-Halal products if they attach non-Halal information on the products. This ambiguity will make importers confused and difficult to market their products in the territory of Indonesia and regarded as trade restriction.
The World Trade Organization (WTO) allows each country to apply Halal standards to protect Muslim consumers in accordance with GATT Article XX (general exception). Each WTO member country for the benefit of the consumer may apply its own technical regulation. However, the Halal standard must be established and implemented in accordance with the Technical Barrier to Trade (TBT) Agreement, in order to gain international trade benefits.
The Indonesian government should simplify the processes and procedures for obtaining Halal certificates, whether those processes are related to additional tests or procedures in obtaining Halal certificates. Simple processes and efficient procedures will translate to lower cost of production for food manufacturers. There must be a on-stop solution to applying and obtaining Halal certification.
The BPJPH should also be able to cooperate with Halal certification bodies in some exporting countries in order to recognise Halal certification of these countries. This will reduce discriminatory practices.
Trade restriction should also be eliminated by providing additional rules in the application of articles 4 and 26 of the law. The rules should also describe procedures relating to 'non-Halal products', so they can enter the territory of Indonesia.
Indonesia’s Halal regulations should align with other collective standards from Organization of Islamic Countries (OIC) and Muslim-majority countries worldwide, which in the future could lead to a global harmonisation of Halal standard.
There are 1.75 billion Muslims around the world, amounting to around 26% of the global population. The Halal product market is currently estimated at more than US$2.3 trillion.