Indonesia, aiming to become a global halal industry leader, has extended its halal certification deadline for Micro and Small Enterprises (MSEs) until 2026. This move, outlined in Government Regulation No. 42 of 2024 (GR 42/2024), raises questions about its impact on small businesses. Is it a helpful reprieve or a potential hindrance in the long run?
The Halal Imperative: A Background
As of October 17, 2024, Indonesia mandates that all products entering, circulating, and sold within the country must be halal-certified. This regulation aims to align with Indonesia’s ambition to be a leading producer of halal products globally, targeting export transactions reaching US$64.11 billion in 2024. Currently, Indonesia ranks third in the global Islamic economy, behind Malaysia and Saudi Arabia.
Deadline Extension: A Double-Edged Sword
The extension provides MSEs with additional time to comply with halal certification requirements. This is particularly crucial, considering the challenges small businesses often face in meeting regulatory standards due to limited resources and expertise. The reprieve allows them to adapt their processes, ensuring products meet halal standards without facing immediate penalties.
However, the extension could also present challenges. Some businesses might delay compliance, potentially leading to a last-minute rush as the new deadline approaches. This could strain the resources of the Indonesia Halal Product Assurance Organizing Body (BPJPH), the agency responsible for issuing halal certificates.
Benefits of Halal Certification
Halal certification, issued by BPJPH, is now permanently valid, provided there are no changes to the product’s composition or production process. This offers long-term benefits for businesses, including access to a growing global halal market and enhanced consumer trust. As consumers increasingly seek halal-certified products, businesses that comply can gain a competitive edge.
Expert Opinions and Analysis
Industry experts suggest that while the extension is beneficial, MSEs should proactively use this time to understand and implement halal standards. Training programs, subsidized certification fees, and streamlined processes can further support small businesses in achieving compliance. Moreover, the government’s commitment to facilitating the halal certification process is crucial for its success.
The Path Forward
Indonesia’s halal push reflects a broader trend in the global Islamic economy, with countries like the UAE also launching strategies to dominate the halal and Islamic finance sectors. The UAE, for example, aims to increase Islamic bank assets to Dh 2.56 trillion within six years and boost Islamic sukuk issuances to over Dh 660 billion by 2031.
For Indonesian MSEs, the deadline extension is an opportunity to embrace halal standards, tap into new markets, and contribute to Indonesia’s goal of becoming a halal industry leader. However, proactive engagement and strategic planning are essential to turn this extension into a boon rather than a burden.