Halal product imports affect national trade balance deficit

Jakarta (Indonesia Window) – Although Indonesia is the largest halal product market in the world with a Muslim population of more than 87.18 percent or  232.5 million people, not many local business players have taken advantage of the domestic halal industry sector.

The Indonesian Islamic Economic Master Plan 2019-2024 shows that most of domestic halal products are still imported to meet the large domestic demands.

As a result, imports of halal products indirectly affect Indonesia’s trade balance which continues to experience a deficit.

This means that the development of the halal industry in terms of production to make products in accordance with Sharia (Islamic law) can reduce the trade balance deficit.

Overall, the consumption of the halal industry in Indonesia in 2017 reached more than US$200 billion (around Rp2,805 trillion) or more than 36 percent of total Household Consumption and Non-Institutional Gains.

This figure also reaches more than 20 percent of Indonesia’s total GDP.

Of the expenditure totaling US$200 billion, as much as US$169.7 billion or 84.85 percent came from the consumption of halal food. However, Indonesia has not been in the top 10 in the Global Islamic Economic Index (GIEI) ranking for halal food production since 2014.

One of the government’s efforts to increase the number of halal industrial production in Indonesia is by requiring certain products to obtain halal certification as stipulated in Law No. 33 of 2014 on Halal Product Guarantee.

Reporting by Indonesia Window