Indonesia, as the country with the largest Muslim population in the world, places a high priority on ensuring that all halal products comply with Islamic law. The halal certification process, regulated by the Halal Product Assurance Organizing Agency (BPJPH) and recommended by the Indonesian Ulama Council (MUI), is designed to guarantee that products sold in the market adhere to strict halal standards. This process, however, varies significantly depending on whether the products are produced domestically or internationally.

However, the certification process varies depending on whether the product is produced domestically by a local company (PT), a foreign-owned company (PT PMA), or an international manufacturer outside Indonesia. For international products, especially from countries without mutual recognition agreements (MRAs) with BPJPH or MUI, the procedure involves unique challenges and additional steps.

This article delves into the distinctions between halal product registration inside Indonesia and for foreign products, with a focus on the complexities of MUI conducting overseas audits.

Overview of the Halal Certification Process in Indonesia

For both local PT and foreign-owned PT PMA companies, the halal certification process in Indonesia follows a structured framework to ensure that products meet Islamic standards. Here’s a general breakdown of the steps involved:

Steps for Halal Certification in Indonesia (Local PT and PT PMA)

1. Application Submission
   Both local PT and PT PMA companies must first register their products with BPJPH, submitting detailed documentation that includes the product’s ingredients, the source of raw materials, production processes, and internal control mechanisms such as the Halal Assurance System (HAS).
2. Appointment of a Halal Supervisor
   Every company must appoint a halal supervisor who oversees the production process to ensure adherence to halal standards. This is a mandatory requirement for both local PT and PT PMA entities, with the halal supervisor acting as a liaison between the company and BPJPH during the audit process.
3. Audit by Halal Inspection Bodies (LPH)
   BPJPH will assign an accredited Halal Inspection Body (LPH) to conduct a thorough audit of the production facility. The audit involves an inspection of the ingredients used, production methods, equipment, and storage facilities. LPHs ensure that the product’s entire lifecycle from raw material sourcing to final packaging meets halal standards.
4. Review by MUI Fatwa Committee
   Once the audit is completed, the results are forwarded to the MUI Fatwa Committee, where Islamic scholars review the findings. If the product complies with Islamic law, MUI will issue a fatwa, recommending that BPJPH grant halal certification.
5. Issuance of Halal Certificate by BPJPH
   BPJPH, based on MUI’s fatwa, issues the halal certificate, allowing the company to legally market its products as halal in Indonesia. The certificate is valid for a set period and must be renewed before expiration.

Read More: Mandatory Halal Certification

Halal Certification for Local PT vs. PT PMA in Indonesia

While both local PT (Perseroan Terbatas) and PT PMA (Penanaman Modal Asing – Foreign Investment Companies) must follow a similar halal product certification process, certain differences exist in terms of regulatory requirements and compliance expectations:

Local PT (Indonesian-Owned Companies)

1. Easier Compliance with Local Standards
   Local PT companies generally find it easier to comply with Indonesia’s halal standards, as they are familiar with domestic regulations and market expectations. They often have established relationships with local suppliers, which simplifies the verification of raw material sourcing and ingredient compliance.
2. Faster Response Time from Authorities
   Local PT entities benefit from quicker processing times, as they are physically located within Indonesia, allowing for more efficient communication with BPJPH and MUI, as well as faster scheduling of LPH audits.
3. Lower Costs
   Costs related to halal certification for local PT companies tend to be lower because they are not subject to additional legal and administrative requirements that foreign-owned entities may face. Furthermore, travel expenses for auditors are minimized as inspections are conducted within the country.

PT PMA (Foreign-Owned Companies)

1. Additional Documentation Requirements
   PT PMA entities may face more stringent documentation requirements, especially regarding foreign ownership and international supply chains. PT PMAs need to ensure that their foreign suppliers meet Indonesia’s halal standards, which can involve complex cross-border verification processes.
2. Language and Cultural Barriers
   Foreign-owned companies often encounter language and cultural challenges when navigating the Indonesian regulatory environment. These companies may require translation services for compliance documents, slowing down the process and increasing costs.
3. Potential for Increased Scrutiny
   Foreign-owned PT PMAs may experience more thorough inspections from LPH auditors to ensure that their processes align with Indonesia’s halal standards, especially when foreign ingredients or manufacturing techniques are involved.
4. Extended Processing Time
   Due to the additional steps involved in verifying foreign supply chains and production processes, PT PMAs often experience longer processing times for their halal certification.

Read More: A Complete Guide to BPOM Registration

Halal Certification for Products Manufactured Outside Indonesia

The process becomes significantly more complex for companies manufacturing products outside Indonesia, particularly in countries without mutual recognition agreements (MRAs) with MUI or BPJPH. Without an MRA, the foreign halal certification bodies are not recognized by Indonesia, requiring MUI to conduct direct inspections of the foreign production facilities. Here’s how this process differs:

Halal Certification Steps for International Products (Outside Indonesia)

1. Initial Application to BPJPH
   Foreign manufacturers must first apply to BPJPH, providing detailed documentation, including ingredient lists, manufacturing processes, and internal halal controls. The applicant must also include a commitment to allow MUI to conduct an overseas audit if no MRA is in place.
2. MUI’s Overseas Audit
   In countries without an MRA, MUI will send a delegation to the foreign production facility to conduct an audit. The audit covers everything from ingredient sourcing to production methods and equipment used. The logistical complexities of sending a team abroad, combined with potential language and cultural barriers, make this step far more complicated compared to domestic audits.
3. MUI’s Fatwa and Recommendation
   Once the overseas audit is complete, MUI reviews the findings and issues a fatwa if the product meets halal standards. The fatwa is then forwarded to BPJPH for the issuance of the halal certificate.
4. Issuance of Halal Certificate by BPJPH
   Based on MUI’s recommendation, BPJPH issues the halal certificate, allowing the product to be legally marketed in Indonesia. This certificate carries the same legal weight as domestically certified products.

Key Challenges for Foreign Manufacturers

1. Higher Costs: The cost of sending MUI auditors overseas, including travel and accommodation, is borne by the foreign manufacturer, leading to significantly higher certification costs compared to domestic audits.
2. Extended Processing Time: Overseas audits require more time to organize, especially when coordinating MUI’s audit teams and the foreign company’s production schedules. This extended processing time can delay market entry.
3. Limited Access for SMEs: Small and medium-sized enterprises (SMEs) outside Indonesia may find the costs and complexities of overseas audits prohibitive, limiting their ability to enter the Indonesian market.

Comparison of Domestic and International Halal Certification Audits with Non-Mutual Recognition Agreements (MRAs)

In contrast, when foreign manufacturers are located in countries with MRAs, the process is much simpler. In these cases, MUI recognizes the local halal certification bodies, eliminating the need for direct audits by MUI. The foreign certification body’s approval is accepted by BPJPH, significantly reducing both the cost and time required for halal product certification. This framework ensures smoother market access for foreign products while maintaining halal integrity.

Read More: Understanding K3L Certification

Conclusion

Halal certification in Indonesia is a rigorous process designed to protect the interests of Muslim consumers by ensuring that products meet stringent Islamic standards. The process for local PTs and PT PMAs is more straightforward, but foreign manufacturers, particularly in non-MRA countries, face additional challenges, including direct audits by MUI. Companies aiming to enter Indonesia’s vast halal market must understand these differences and prepare accordingly, whether they are a local PT, PT PMA, or an international manufacturer.

By proactively addressing the unique requirements of each category, businesses can streamline their certification process and ensure compliance with Indonesian halal regulations, securing their position in the lucrative halal market.

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ET Consultant is a Business Consultant and Legal Consultant Expert that provides support for local and multinational clients to start and manage their business operations in Indonesia. ET Consultant specializes in Business Incorporation, Licensing & Legal, Accounting & Taxes, Immigration, and Advisory Services.

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