[KH Explains] Indonesia’s halal certification: Double-edged sword for Korean meals business?

Indonesia’s new regulation mandating Halal certification for all imported meals merchandise is predicted to widen the export hole between giant conglomerates and small companies in Korea as a result of excessive prices and time want to fulfill the necessities.

After a five-year grace interval, the Indonesian authorities has formally ordered companies in most industries to be Halal compliant and Halal licensed, beginning Thursday.

Whereas merchandise missing halal certification can nonetheless be exported, they have to be labeled “non-halal” and adjust to laws set by Indonesia’s Meals and Drug Authority. Halal refers to gadgets permissible beneath Sharia, Islamic legislation. Usually prohibited meats embrace these from pigs, canines and any animals not slaughtered based on Islamic practices.

Early movers in Islamic market

Because the fourth most populous nation and the biggest financial system in Southeast Asia, Indonesia presents important alternatives for meals firms worldwide.

Massive corporations acknowledged the potential of Islamic markets over a decade in the past, getting ready halal-certified manufacturers and manufacturing traces early on.

“Main meals firms aiming for world enlargement started acquiring halal certification for choose manufacturers suited to the Islamic market as a part of their export technique within the early 2010s,” an business insider stated on situation of anonymity.

“Prices are one issue. However acquiring certification for every product sometimes takes a couple of yr. These firms have been keen to take a position time for long-term positive factors within the Islamic meals sector, and this has begun to repay.”

Nongshim has secured halal certification for about 40 merchandise throughout 10 manufacturers, together with flagship product Shin Ramyun, focusing on over 40 nations, together with Indonesia, Malaysia, Saudi Arabia, the UAE and Kazakhstan.

Daesang has licensed 50 merchandise, together with common kimchi and different gadgets like soybean oil, beneath its Indonesia-exclusive model, Mamasuka. CJ CheilJedang has expanded its halal-certified choices to over 100 merchandise, together with seaweed, kimchi and sugar.

In 2017, Samyang Meals confronted a serious setback when some ramyeon merchandise exported to Indonesia examined constructive for pig DNA, leading to a suspension of import approvals. Nevertheless, they efficiently obtained halal certification for his or her Buldak sequence from Indonesia’s Ulama Council (MUI) later that yr, turning into the primary within the Korean ramyeon business to take action. SPC can be finishing a halal meals manufacturing facility in Johor Bahru, Malaysia, to cater to future markets in 12 nations throughout the Center East and Africa.

Challenges for small market gamers

For small and medium-sized meals firms, prices related to acquiring halal certification are a major concern.

Based on the Korea Commerce-Funding Promotion Company, the certification course of in Indonesia begins at round 18.3 million rupiah ($1,200), with extra prices for inspections associated to meals components, provides and packaging.

Furthermore, even after investing in halal certification, firms face the problem that this certification will not be universally acknowledged. Halal requirements fluctuate extensively by area and certifying our bodies, complicating the export course of.

“A halal product licensed by the Korea Muslim Federation could also be accepted in Malaysia, however in Indonesia, MUI certification entails a way more rigorous assessment course of,” an business supply defined. “MUI certification examines not solely the completed product but additionally the uncooked components from the beginning, which may extend the certification course of for even well-known manufacturers. Furthermore, MUI certification is legitimate for under 5 years, necessitating a brand new software afterward.”

The burden of facility upkeep is one other appreciable problem. Though there’s no rule towards producing halal and non-halal meals on the identical line, managing each concurrently is impractical. Sustaining a devoted halal manufacturing line within the manufacturing facility requires important sources, making competitors powerful for smaller firms.

Final yr, the KMF and MUI signed an settlement to streamline the certification course of, however many extra paperwork and necessities nonetheless complicate the panorama.

Korea’s place in halal licensed merchandise

The rising recognition of Korean delicacies amongst millennials and Era Z in Indonesia is certainly seen as a promising marketplace for home meals firms.

Based on the Korea Worldwide Tradition Alternate Basis’s 2022 survey, the rising appreciation for Korean cultural content material correlates with elevated consciousness of Korean meals.

Explicit cause for Okay-food’s enchantment in Indonesia is its use of robust seasonings like gochujang (crimson pepper paste), which align with native tastes of getting choice for daring flavors and frequent use of sauces of their delicacies.

Subsequently, Korean meals conglomerates have largely ready for the halal certification, positioning themselves favorably for exports.

Final yr, 3,243 Korean merchandise acquired halal certification from Indonesia’s halal product assurance company BPJPH, rating fifth globally, behind China, Singapore, Malaysia and India.

“In anticipation of necessary halal certification in Indonesia, we’ve got been working with the non-public sector to determine mutual recognition agreements between halal certifying our bodies and to assist exporters in acquiring certification,” stated Yang Ju-pil, director of meals business coverage on the Agriculture Ministry. “We’ll handle any export challenges to make sure a easy course of.”