Following the first-time implementation of the mandatory halal certification of foods and beverages, the Government of Indonesia continued with the second phase implementation of the mandatory halal certification under Government Regulation No. 39 of 2021 on the Implementation of Halal Product Assurance, targeting products that are imported into, distributed, and traded in Indonesia, such as cosmetics, medicines, as well as wearable/usable goods (e.g., apparel – including headscarves and head coverings, cooking utensils, and household appliances made from or containing animal ingredients/elements).
Prior to granting halal certification for a particular product, the competent authorities will verify the product to ensure conformity with the halal principles. The halal certification is valid for a limited time, and the product will need to be reverified for any certification renewal.
To get the halal certification from the authorities, businesses need to understand both the halal requirements and the applicable halal certification regulations alike. For example, businesses need to know what halal requirements they should meet in order that their goods and services can qualify as halal products, or how the raw materials, additives, and supplementary materials of their finished products are assessed in the verification process for the halal certification. Without sufficient knowledge of the certification process or regulatory requirements, it would be challenging to assess/quantify the potential financial impact of complying with the halal certification.
Halal products is one of the efforts of the Indonesian government to boost domestic halal industry – amidst growing concerns that a large consumption of halal products in Indonesia, are imported. The development of halal industry is expected to further help accelerate the country’s economic growth as a whole.
Main sectors that are anticipated to gain momentum are, among others, halal food and beverage, Muslim fashion, halal tourism, halal media and recreation as well as halal pharmaceuticals and cosmetics.
As a separate but related note, in December 2021, Indonesian Stock Exchange issued a new index in stock exchange (namely ESG Sector Leaders IDX Kehati) which lists public companies with highest Environmental, Social and Governance (ESG) scores. While the index does not set halal certification as a requirement, yet some companies intentionally expressed that their products are halal certified. It seems the additional information is expected to offer additional selling point to investors.
If you are interested to understand further about the requirements for the mandatory halal certification or to know whether the products that you produce or distribute in Indonesia are subject to the requirements, please reach out to us.
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