Indonesia all set to make halal labeling mandatory this week

Bloomberg

Indonesia is all set to make halal labeling mandatory for consumer products and services from this week, but the high cost of securing the license and absence of clear guidelines mean millions of local producers are still without certificates.
The compulsory labeling will first apply to the food and beverage products and services from October 17 before being gradually expanded to include drugs, cosmetics and other consumer goods, according to the nation’s Halal Product Guarantee Agency. But a large number of small and medium companies are struggling to meet
the rules without detailed technical guidelines, the Indonesian Food and Beverage Producers Association said.
Indonesia is seeking to position itself as one of the Shariah economic and finance centres as demand for halal products in the world’s largest Muslim-majority nation surges. Companies from Nestle SA to Unilever are developing more halal products to capitalise on population growth and mushrooming middle classes in Muslim-majority countries, according to Bloomberg Intelligence.
“Almost all businesses in various sectors, whether big or small ones, have concerns on the halal product guarantee policy,” said Shinta Widjaja Kamdani, the deputy chairwoman of the Indonesian Chamber of Commerce and Industry.
The government has yet to detail how it plans to subsidise small and medium enterprises and how it will treat products without the halal label. That’s posing a challenge to even producers who have met all the criteria for halal labeling but haven’t been able to secure certification, said Adhi S Lukman, chairman of the food and beverage association.
The food and beverage industry consists of 6,000 medium to big-sized players and about 1.6 million micro, small and medium enterprises, the association estimates. That’s the segment set to benefit the most from soaring demand for halal products among Asia’s 1 billion Muslim population, according to Bloomberg Intelligence.
Indonesia’s Shariah economy is expected to soar to $427 billion by 2022, with halal food alone accounting for more than 60%, according to central bank estimates.