The Halal Industry in Indonesia Trends and Future Prospects

The Halal Industry in Indonesia: Trends and Future Prospects

  • InCorp Editorial Team
  • 23 November 2023
  • 6 minute reading time

Indonesia’s halal industry has seen significant growth and development in recent years. It is driven by the country’s large Muslim population and increasing demand for halal products and services worldwide. 

Indonesia is emerging as a key player in the global halal market to address the increased demand. Therefore, various industries, including food and beverage, pharmaceuticals, cosmetics, and tourism, are pitched to adopt the halal philosophy. 

The Indonesian government focuses on increasing infrastructure investment to promote the halal industry. The government is also developing regulations to ensure compliance with halal standards. 

This article will explore the rise of the halal industry in Indonesia, its impact on the economy, and the trends and prospects it presents to foreign businesses for tapping into.

An Overview of the Global Halal Industry in 2023

The Halal Industry in Indonesia Trends and Future Prospects

The Halal industry in the F&B sector is predicted to reach nearly $4 trillion by 2028. The prediction comes with an 11.25% compound annual growth rate over the next eight years. 

In 2019, Halal consumers spent an astonishing $1.17 trillion on Halal food, making it the second largest sector after Islamic finance. In addition, the trend of customers purchasing natural and regular food and beverage items has led to increased revenue from consumers who use Halal food products. 

Halal food manufacturers can exploit this growing interest by developing new products marketed in Western-style supermarkets, including grocery stores and hypermarkets. As a result, many grocery stores and food makers in various countries have begun offering more Halal products to cater to consumers. 

Consequently, the halal food market is anticipated to experience substantial growth. The growth owes to the rising demand from Muslim and non-Muslim consumers.

This growth can be attributed to the hygiene-related advantages offered by halal food, which include being free from impurities, alcohol, and blood.

Read more: Why Does Food Safety Matter for Indonesian Products?

Halal Consumerism in Indonesia

The Indonesian government focuses on accelerating the development of the national Halal industry and aims to achieve the vision of “Indonesia as a leading Halal producer in the world.” 

Given its significant Muslim population and demographic dividend, Indonesia has the potential to emerge as the world’s largest market for halal products.

The State of the Global Islamic Economy Report 2022 reveals that Indonesia ranks fourth in the world in Shariah economy indicators. 

In addition, Indonesia is one of the largest consumers of Halal products globally, with 11.34% of global Halal expenditure. 

The Indonesian Halal food sector is the second-largest in the world, while the Halal cosmetics sector is the fourth-largest. As a result, the government is encouraging Indonesian consumers to use and take pride in locally-made Halal products.

Indonesia is The Number One Muslim Population in The World

Indonesia is recognized as the country with the highest Muslim majority in Asia. With around 88.1% of its total Muslim population, it accounts for 12.7% of the world’s Muslim population and keeps growing. 

The growth in Muslim consumers is significant as it will impact the GDP and influence consumer behavior. Muslim consumers are obligated to choose, buy, and use Halal products. 

Muslim consumers’ behavior towards Halal products affects the Indonesian economy, as they spend around $190.4 billion on the food sector alone. 

Moreover, the guarantee of Halal products provides comfort, security, safety, and certainty of Halal product availability for the community to consume and use, increasing businesses’ added value. 

Using Halal products will impact the Indonesian GDP and contribute to the global Halal lifestyle progress, positively impacting the global Islamic economy.

Furthermore, businesses are racing to obtain Halal certification from the business aspect. The process can be stringent and lengthy. According to Indonesian Law No. 6 Year 2023, Halal certification is valid as long as there’s no change in the ingredient or process. 

InCorp Indonesia (formerly Cekindo) provides services for product registration and Halal certification, thereby allowing businesses to benefit from the Indonesian Muslim demography. 

Indonesia to Become World’s Halal Center

The Badan Penyelenggara Jaminan Produk Halal (BPJPH) held a virtual meeting with Dinar Standard and various associations to discuss the Halal industry development in Indonesia. 

BPJPH presented the progress in building the Halal ecosystem in Indonesia, including digitalizing Halal registration and certification processes and improving Halal product guarantee regulations. 

According to Dinar Standard’s State of the Global Islamic Economy (SGIE) Report 2022, Indonesia ranks fourth in the global Halal economy and has made significant progress in the Halal food sector.

The general expectation for this sector is that there continues to be significant growth and progress. The Indonesian government is visibly very focused on developing this sector. 

Business actors should jump into this sector and benefit from the international cooperation and government support provided. 

The Future of Halal Industry in Indonesia

The Halal Industry in Indonesia Trends and Future Prospects

Indonesia has made significant strides in the Halal industry, and the future looks bright. 

Collaborative efforts with Saudi Arabia, Malaysia, and Japan have been implemented to boost Halal consumerism and promote the country’s Halal products globally.

Collaborative Efforts of Indonesia and Saudi Arabia in Halal Consumerism

Indonesia’s Vice President, Ma’ruf Amin, has requested assistance from the Saudi Arabian Ambassador to Indonesia to ease access to Halal products. 

He specifically asked the Ambassador to expedite the issuance of a permit from the Saudi Food and Drug Authority (SFDA) for Indonesian Halal products. 

This collaboration aims to enhance Halal consumerism in Indonesia and promote the country’s Halal products in the global market, particularly in the Middle East region.

Indonesia and Malaysia Unite for Halal Consumerism

The collaboration between Indonesia and Malaysia in the Halal industry is highlighted in this news article. The two countries signed an MoU to strengthen the Halal industry in both nations in June of 2023. 

The MoU covers areas such as Halal certification, trade, investment, research and development, and human resource development. 

The cooperation aims to promote the development of Halal products and services and expand the Halal market domestically and internationally.

The Synergy of Indonesia and Japan in Halal Consumerism

The collaboration between Indonesia and Japan in the Halal industry focuses on developing human resources and supporting Japanese companies. 

Ma’ruf Amin urged Japanese companies to support the Halal industry and its human resources development in Indonesia. 

He highlighted that Japan’s technology and innovation expertise could help Indonesia develop its Halal industry, which has considerable growth potential. 

The collaboration also includes the exchange of knowledge and technology transfer between the two countries to enhance the Halal industry’s growth in Indonesia. 

Conclusion

In conclusion, the Halal industry in Indonesia is on a steady rise, backed by the collaborative efforts of the Indonesian government with various countries and organizations. 

The progress in building the Halal ecosystem and improving regulations have set the foundation for continued growth and development in the sector. 

With Indonesia’s strong position in the global Halal economy and the government’s focus on the sector’s development, businesses have many opportunities to tap into. 

As we move forward, we expect to see further advancements in the Halal industry in Indonesia and increased international cooperation in the sector.

Pandu Biasramadhan

Senior Consulting Manager at InCorp Indonesia

An expert for more than 10 years, Pandu Biasramadhan, has an extensive background in providing top-quality and comprehensive business solutions for enterprises in Indonesia and managing regional partnership channels across Southeast Asia.

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Frequent Asked Questions

According to Indonesian Law No. 6 Year 2023, halal certification is valid if there's no change in the ingredient or process.

You can transfer the license as long as your current local distributor agrees to change the product license holder. The procedure will be different for each product category. We can only recommend you try to prevent these issues by setting cooperation with a trustworthy partner from the beginning

There are plenty of products, but the most common products include food, beverages, traditional medicines, health supplements, cosmetics, chemical products, genetically engineered products, medical devices and household appliances.

Before you can distribute your products in Indonesia, you will have to register your product with the BPOM (National Agency of Food and Drugs) and MoH (Ministry of Health). Only an Indonesian legal entity can register the product. If you decide to distribute your product via a local distributor, they will register the product under their entity in Indonesia and become the product license holder. Cekindo can act as your local distributor and register the product under its name.