1 Introduction

According to the Indonesia Halal Market report in 2021/2022, the world's Muslim population spent US$ 1.9 trillion in 2020 on various lifestyle products such as food, beverages, fashion, and tourism. The food and beverage sector has the highest expenditure compared to other industries. Spending on this sector reached US$ 1,185 billion in 2020 and is predicted to rise to US$ 1,668 billion in 2025.

Even for the halal food product sector, Indonesia is ranked second in the world based on the State of the Global Islamic Economy (SGIE) Report 2022, released by DinarStandard, on March 31, 2022. Malaysia occupies the first position in the halal food and beverage category. As for the modest fashion, pharmaceutical, and cosmetic categories, Indonesia is ranked third and ninth.

Indonesia has experienced significant progress, especially in developing the Sharia ecosystem and providing halal products since the enactment of the halal product guarantee law in 2014, which came into force in 2019. The Indonesian government's desire to become number one in providing halal food has encouraged the government to perfect all the necessary regulations so that the target of mandatory halal certification for all products circulating in Indonesia can be achieved.

As is known that the issuance of law Number 33 of 2014 concerning halal product guarantees aims to provide security and comfort for the Muslim community in particular. Based on this law in 2017, a halal product guarantee organizing agency was formed or commonly abbreviated as BPJPH. The establishment of this BPJPH aims to implement the implementation of halal product guarantees, and this law also regulates all forms of halal product guarantees.

In 2021 the Indonesian government issued Government Regulation 39 of 2001, which regulates that products that enter, circulate, and are traded in the territory of Indonesia must be halal certified. The products in question include goods or services related to food, beverages, cosmetics, medicines, and valuable goods used, used, or utilized by the public. Besides that, products derived from prohibited materials must be given a non-halal statement.

Halal certification will also provide added value for business actors in selling and producing their products. With this halal product guarantee law, it is hoped that all imported and circulating products in Indonesia will have halal certificates.

The halal product guarantee law changes halal certification obligations from voluntary to mandatory. Halal certification has since been carried out by BPJPH as the leading sector administratively by involving the Halal Examining Agency (LPH), which is authorized to inspect and test the halalness of products, as well as the Indonesian Ulema Council (MUI), which determines the fatwa on product halalness.

2 Staging of Halal Certification

Law Number 33 of 2014 concerning Halal Product Guarantee regulates that products that enter, circulate, and are traded in the territory of Indonesia must be halal certified. The obligation to be halal certified by BPJPH has been in effect since October 17, 2019. This obligation applies to food, beverages, and slaughter products and services in the first stage.

In the second stage, halal certification obligations will apply to cosmetic medicine products and utility goods. This is stated in government regulation number 39 of 2001 concerning implementing the halal product guarantee sector; the second stage will be implemented from October 17, 2021, to the nearest October 17, 2026.

According to the Minister of Religion, it was conveyed that this staging aims to make halal-certified obligations for products as stipulated in the regulations well implemented and avoid potential difficulties, especially for business actors in maintaining the sustainability and development of their business. The scope of products in the Halal Product Guarantee is comprehensive, including food, beverages, drugs, cosmetics, chemical products, biological products, genetically modified products, and goods used, used, or utilized by the public. This staging policy is a necessity in implementing mandatory halal certification.

The phasing of halal certification obligations allows business actors to prepare the entire production process to comply with established halal standards. One of the obstacles faced by business actors is providing halal-certified raw materials that still need to be made available in large quantities. This means that business actors have few choices regarding the ingredients used. This is a problem because if you continue to use other ingredients even though they are halal certified, it will impact the taste of the products produced. Another obstacle faced by business actors who use raw materials derived from meat is the need for halal-certified slaughterhouses, even though meat products are one of those required in the halal certification process.

3 Self-Declare Halal Certification Mechanism and Regular Scheme

Apart from the regular mechanism in the process of applying for halal certification. In 2021, the Indonesian government issued Minister of Religious Affairs regulation number 20 of 2021 concerning halal certification for micro and small business actors based on a statement from the micro and small business actors (self-declare) scheme.

Fig. 1
A process flow of seven stages lists its functions. Application of Business Owner, Inspection of B P J P H, Assignment of B P J P H, Testing of L P H, Checking of B P J P H, Fatwa of M U I and Komite Fatwa, and Publishing of B P J P H.

The step of self-declare halal certification

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In general, the differences between halal certification with regular and self-declare schemes are described in the figure and table below:

The step of Self-Declare Halal Certification (Fig. 2).

Regular scheme

Self-declare scheme

∙ The business actor bears the service fee for applying for halal certification

∙ The application fee for halal certification is zero Rupiah (free)

∙ A halal inspection agency carries out inspection activities (audits), and business actors can choose LPH (Halal Inspection Agency) registered with BPJPH

∙ Verification and validation activities are carried out by a companion institution for the halal product process where business actors choose a PPH Companion Institution registered with BPJPH, such as Islamic organizations and accredited universities

Mechanism:

1. Business actors apply for halal certification to BPJPH online through the halal website

2. BPJPH checks and completeness of business documents and issues an inspection fee bill based on the LPH determined by the applicant

3. Business actors make payments and obtain documents Document receipt letter

4. LPH conducts product inspection and testing

5. The MUI Fatwa Commission holds a fatwa session and issues a decision to issue a product halal determination decision

6. BPJPH issues halal certification based on the decision to determine the halalness of the Product by MUI

Mechanism:

1. Business actors apply for halal certification through halal by selecting the self-declaration scheme and entering the facilitation code

2. PPH assistants will verify and validate the submission of business actors

3. Document verification by BPJPH

4. BPJPH issues document receipt letter

5. MUI Fatwa Commission or BPJPH fatwa committee conducts a fatwa hearing

6. BPJPH issues halal certification that business actors can download

Fig. 2
A chart reads the system of commitment and responsibility as the halal production process, product, evaluation, and raw material. It lists the following. 1. Introduction. 2. Scope, 3. Term and definition. 4. Principle. 5. Criteria. 6. Documented information.

The flow of self-declare halal certification

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4 The Latest Halal Certification Mechanism

The Indonesian government issued Government Regulation instead of Law (Perppu) No. 2 of 2022 concerning Job Creation on December 30, 2022. According to BPJPH, there are changes in the provisions of halal products regulated in Perppu 2/2022 compared to Law 11/2020 on Job Creation, among others:

No

Matters regulated

Explanation

1

Regular halal certification

∙ Determination of Product halalness is carried out by MUI, Provincial MUI, Regency/City MUI, or Consultative Assembly of Aceh Ulama

∙ If the time limit for determining the halalness of the Product is carried out by the MUI, Provincial MUI, Regency/City MUI, or the Aceh Ulama Consultative Assembly is exceeded, the determination of the halalness of the Product is carried out by the Halal Product Fatwa Committee, based on the provisions of Halal Fatwa

∙ Determination of Product halalness by the Halal Product Fatwa Committee is done within 2 working days

2

Certification by halal declaration (self declare)

∙ In the application for halal certification carried out by micro and small business actors through a halal statement, the determination of the halalness of the Product is carried out by the Halal Product Fatwa Committee based on the provisions of Halal Fatwa

∙ Determination of Product halalness by the Halal Product Fatwa Committee is carried out by 1 working day from the receipt of the results of PPH assistance

3

Halal product fatwa committee

∙ The Halal Product Fatwa Committee is formed and is responsible to the Minister

∙ The Halal Product Fatwa Committee consists of the following elements

∙ Ulama; and academics

4

Halal certification validity period

∙ Halal Certificate is valid since BPJPH issues it and remains valid as long as there is no change in the composition of ingredients and PPH

∙ If there is a change in the composition of ingredients and PPH, Business Actors must renew the Halal Certificate

5

Electronic-based halal product guarantee implementation services

∙ JPH implementation services must use an integrated electronic system

∙ The integrated electronic system connects the halal certification service process carried out by

∙ BPJPH; LPH; MUI, Provincial MUI, Regency/City MUI, and Aceh Ulama Consultative Assembly; Halal Product Fatwa Committee; and PPH assistants

∙ BPJPH manages the integrated electronic system

5 Halal Product Assurance System and Micro-Small-Medium Enterprises (MSME’s) Progress

Along with the implementation of halal certification obligations, the term halal lifestyle is increasingly popular in society. This lifestyle refers to one part of Islamic sharia, namely, the obligation for Muslims to consume and use everything that has been proven halal.

Product halalness is very important, considering Indonesia is the world's fourth most populous Muslim country. For a Muslim, consuming food and drinks with a halal certificate can guarantee cleanliness and hygiene, which leads to product safety; this is in line with the willingness to increase awareness of the importance of healthy living.

For consumers, halal has now become the foremost preference. There is much evidence that shows people prefer halal products. Not only Muslims but also non-Muslims. For example, New Zealand is one of the world's largest exporters of halal meat. Sixty-five percent of the halal meat is exported to non-Muslim countries.

The halal lifestyle has become a trend. The halal lifestyle is gaining ground. From food and other aspects, people are paying more attention. So that everything is made into a lifestyle, including shoes. In Singapore, shoes are sold, and the lining is made of pig skin. This attention shows awareness of the halal lifestyle in various aspects of life.

The halal lifestyle is accompanied by the industry, which is also increasingly mushrooming. The halal industry is an industry of activities or activities that are based on the provision of sharia-compliant goods and services or under Islamic rules.

The halal industry covers many aspects; if, in the past, people talked about the halal sector more than the food industry or the food industry, then as awareness increased, people started to look at all other aspects.

However, the food industry accounts for less than a quarter of the halal industry. At the same time, half of it is almost contributed by cosmetics, pharmaceuticals, personal cases, and all kinds of things, while another quarter is from services. In this sense, services are halal logistics, such as the halal supply chain.

In Indonesia, the halal industry has the potential to grow well. This is because Indonesia is a large country with at least 225 million Muslim population.

With such a market supported by extraordinary natural resources, Indonesia can lead in the halal industry. The key to achieving that is to raise awareness at all levels of society.

For companies or business actors, halal certification is not only a guarantee of halal to consumers but more than that, the Consumer Halal label will provide added value to the product value, then become a point in penetrating the global market to increase the product market in the market and so on.

6 Halal Product Assurance System

Definition of Halal Product Guarantee System

Halal Product Guarantee System (SJPH) is an integrated system compiled, implemented, and maintained to regulate materials, production processes, products, resources, and procedures to maintain the sustainability of PPH. (Article 65 PP 39/2021 Chapter Explanation).

In the regulation of halal certification, Halal is not only seen from substances such as carrion, blood, pork, and so on, but the concept of halal also includes how the process or method of obtaining it or making it, which is referred to as the concept of traceability or traceability of halalness from upstream to downstream, from the provision of ingredients to products ready for consumption.

Producers are obliged to fulfill the needs/rights of consumers. The form of producer responsibility towards consumers, especially Muslim consumers, is to produce halal food products. To give consumers confidence that the products they have created are halal, MSME business actors need to have halal certificates. MSME business actors who have certified the halalness of their food products are required (mandatory) to prepare a system to consistently ensure the halal production process's continuity, which is referred to as the halal assurance system.

Objectives of the Halal Product Assurance System

The Halal Assurance System (SJH) aims to maintain the continuity of the halal production process so that the products produced can always be guaranteed halal under LP-POM regulations (Ariny, 2020). The Halal Assurance System (HAS) also aims for businesses to get added value for producing halal products under Law No. 33 of 2014 concerning the Halal Product Guarantee (BSN, 2017). Based on “Article 4 of Law Number 33 of 2014,” products that enter, circulate, and are traded in the territory of Indonesia must be halal certified.

Legal Basis for the Halal Product Guarantee System

Strengthening and regulating halal regulations are regulated in a progressive and responsive legal institution, Law Number 33 of 2014 concerning Halal Product Guarantee. The most crucial objective of the government to pass Law Number 33 of 2014 concerning Halal Product Guarantee is legal certainty; Radbruch argues that there are four things related to the meaning of legal certainty (Fig. 3).

Fig. 3
A workflow of 11 stages. Sign Up, Registration, Pay Halal Certification, Upload Document and Submit Halal Assurance System, Pre-Audit Monitoring, Audit, Auditor Meeting, Post-Audit Monitoring, Pass all approval auditing and S J H, M U I fatwa commission meeting and Issuance of Halal Certification.

System of halal product assurance

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The government is responsible for the halal guarantee system organized by the Minister of Religion by establishing the Halal Product Guarantee Agency (BPJPH), which is domiciled under and responsible to the Minister of Religion (Article 6 of the Halal Product Guarantee Law). The Halal Product Guarantee Organizing Agency (BPJPH) has the following authorities: (a) Formulate and establish JPH policies; (b) Establish JPH norms, standards, procedures, and criteria; (c) Issue and revoke Halal Certificates and Halal Labels on Products; (d) Register Halal Certificates on foreign products; (e) Conduct socialization, education, and publication of Halal Products; (f) Accreditation of LPH (Halal Examining Institution); (g) Registration of Halal Auditors; (h) Supervise JPH; (i) Conducting guidance for Halal Auditors; and (j) Cooperating with domestic and foreign institutions in the field of organizing JPH (Article 10 of the Halal Product Guarantee Act).

7 Progress of MSMEs

Business actors in the Law of the Republic of Indonesia Number 8 of 1999 concerning Consumer Protection Article 1 Paragraph (3) is every individual or business entity, both in the form of a legal entity and not a legal entity established and domiciled or conducting activities in the jurisdiction of the Republic of Indonesia, either alone or jointly through agreements organizing business activities in various economic fields.

Micro, small, and medium enterprises are the leading players in economic activities in Indonesia (Suri, 2023). In realizing national development goals, MSMEs have an essential role in national business and have a strategic position, position, and role (Gunawan et al., 2020). The revival of MSMEs cannot only be done by providing funds from the government but must also improve the quality of MSME products themselves (Donny & Kurniawan, 2023). In order to improve the competitiveness of MSME products, it is necessary to take strategic steps under the capabilities and resources of MSMEs. One of the strategic steps that can be taken is through the halal certification program. Islamic teachings are no longer just beliefs and rituals; Islamic teachings function as a symbol of a product (identity). Regarding the symbols listed on the packaging of a product that shows products in the form of food and drinks with halal labels, it gives consumers and the broader community confidence that the Product is safe and healthy for consumption.

Micro, small, and medium enterprises (MSMEs) are improving the quality of their products by developing registration to obtain products with halal labels. The Indonesian Halal Label has been determined by the Ministry of Religion's Halal Product Guarantee Agency (BPJPH) and applies nationally. This determination is contained in the Decree of the Head of BPJPH Number 40 of 2022 concerning the Determination of Halal Label as the implementation of the mandate of Article 37 of Law Number 33 of 2014.

With the presence of Law No. 33 of 2014, the atmosphere or business climate will improve, especially for the halal industry in Indonesia. A good ecosystem is needed for halal industry players in this country (Fatima et al., 2023) because the halal product guarantee system involves many parties who can collaborate. Law Number 33 of 2014 is related to several policy target groups originating from business actors, the public as consumers, the Halal Inspection Institute, MUI, and BPJPH.

8 Halal and Its Components

Muslims comprise about 67% of the world's population, mainly in Asia (Pradana et al., 2023). Muslims are obliged to follow a halal lifestyle, including halal food, clothing, media, entertainment, cosmetics, medicine, and hospitals (Adinugraha et al., 2019).

9 Halal Food and Beverages

World food consumers consider the ethics and sustainability of food consumption (Nazaruddin et al., 2023). Some religions have rules, such as halal rules for Jews and halal rules for Muslims (Corte et al., 2018).

Food that has been certified halal can embed the halal logo on the packaging. This confirms that the Product is suitable for consumption. Embedding the halal logo on the packaging provides legal certainty to consumers that these foods and beverages have passed the halal test, are safe for consumption, and are guaranteed health and hygiene (Fathoni et al., 2023). Embedding the halal logo on the packaging also serves to help simplify the consumer decision-making process.

10 Halal Fashion

Halal fashion trends are in demand by the majority Muslim Indonesian community and are coupled with the awareness of Muslim women today to perfect their star's appearance (Lukmana, 2023). Halal fashion is a set of tools to beautify one's appearance under Islamic teachings. The development of Muslim fashion has recently proliferated and advanced; this can be seen in many teenagers and adult women wearing sari clothing (Lukmana, 2023).

The halal fashion industry aims to maintain halal integrity in halal fashion products to eliminate Muslim consumers' doubts about using them (Sumarliah et al., 2021). The halal fashion halal supply chain also has challenges that can be divided into three aspects, namely, (1) the lack of halal certification that is globally recognized as a disparity in criteria indicating product processing regulations in Muslim societies; (2) the absence of internationally agreed halal criteria related to the integrity of halal products; (3) technological advances distort halal raw materials and non-halal raw materials, requiring additional expert resources and time to provide decisions based on Islamic law regarding these raw materials (Poniman et al., 2015).

11 Halal Tourism

The global Halal tourism market has been proliferating recently, driven by the increasing demand for Halal travel options among Muslim travelers. According to a recent report, The global Halal tourism market was valued at over $200 billion in 2020 and is expected to grow at a Compound Annual Growth Rate of over 6% between 2021 and 2028 (Azam et al., 2022).

Some of the common facilities and services offered by halal tourism providers include (Gündüz & Topaloğlu, 2021):

  1. 1.

    Halal Food Options

Halal food options include access to halal-certified restaurants, cafes, and food stalls and providing halal food in hotels and other accommodations.

  1. 2.

    Prayer Facilities

Prayer facilities include the provision of prayer mats, Qibla (Mecca direction), and designated prayer areas in hotels and other public spaces.

  1. 3.

    Separate Swimming and Recreation Areas for Men and Women

This aligns with traditional Islamic modesty guidelines, which require separate spaces for men and women in some activities and situations.

  1. 4.

    Modest Dress Code

Many halal travel providers have dress codes that align with Islamic principles, such as covering the head and avoiding tight and revealing clothing.

  1. 5.

    Alcohol-Free Environment

Usually, halal tourism facilities are free from alcohol and other intoxicants under Islamic principles.

  1. 6.

    Religious and cultural tourism: Halal tourism providers often offer tours that focus on Islamic history and culture, such as visits to mosques, Islamic art museums, and historical sites.

The halal tourism industry is dynamic and growing, with excellent market potential. The halal tourism market industry worldwide will continue to make a significant contribution and provide economic benefits for countries that can provide a comprehensive halal tourism experience (Gunduz, 2023).

12 Halal Certification Procedures for Food and Beverages, Halal Fashion, and Halal Tourism

The stages that business actors must pass are: (1) Sign Up at e-lppommui.org; at this stage, business actors create a cerol account before the next stage. (2) after creating a Carol account, business actors register to apply for halal certification. (3) Pay the halal certification registration contract fee of Rp. 200,000 in cash or transfer to LPPOM MUI. (4) Upload documents and submit a Halal Assurance System (HAS) questionnaire. (5) Pre-audit monitoring and payment of certification contracts. (6) Submission of an audit schedule, after passing or meeting all the criteria during the pre-audit, the following procedure is to submit an audit schedule conducted by LPPOM MUI. (7) Auditors will conduct audits according to a predetermined schedule; auditing is also guided by data uploaded by businesses when registering their products for certification. (8) Auditor Meeting. (9) Post-audit monitoring, at this stage, business actors are advised to carry out daily monitoring to find any discrepancies in the audit results so that they can be immediately corrected and completed. Post-audit monitoring also includes four things, namely, halal documents, products, materials, and matrices. (10) Pass all approval auditing & SJH; at this stage, the business actor corrects and completes all documents as requested by the halal auditor from the audit results to carry out a fatwa by MUI. (11) MUI Fatwa Commission Meeting, The MUI Fatwa Commission conducts a meeting on documents from the results of the halal auditor, and a fatwa is given on whether the Product is halal or not according to the MUI Fatwa Commission. (12) Issuance of Halal Certification, if the results of the MUI Fatwa Commission state that the registered product is Halal based on the results of the audit by the halal auditor, then the halal certification will be issued by LPPOM MUI, but on the other hand, if according to the Fatwa Commission, the product is not halal, halal certification will not be issued. Halal Certificate from LPPOM MUI is valid for 4 years from its issuance (Fig. 4).

Fig. 4
A flow chart presents halal certification procedures. It starts with sign-up, then goes through steps such as registration, paying the halal certification registration, uploading documents and submitting the halal assurance system, pre-auditing, and ends with the issuance of halal certification.

Halal certification procedures

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13 New Risk of Halal Fraud

The actions of food manufacturers are part of a fraud that is very detrimental to consumers, especially Muslim consumers who expect to buy halal food but are deceived by the MUI halal logo that is not actually on the food packaging. The case of traders adding their halal logos to their products is alarming (LPPOM MUI, 2018). Attempts to install halal logos on products sold by small traders are called acts of fraud.

As of September 2021, a total of 63,599 halal products with 1,510 active halal certificates from 1,291 companies circulating in Indonesia have carried out the halal certification process through the Halal Examining Agency (LPH) of the Indonesian Ulema Council's Food, Drug and Cosmetics Assessment Institute (LPPOM MUI). With this large number, preventive action is undoubtedly needed to minimize fraud or counterfeiting of products on the market, especially those related to using the halal logo.

It is hoped that the public will be more careful in consuming the products offered by entrepreneurs. The public can also ensure the correctness of the halal logo on a product through the official website of LPPOM MUI.

LPPOM MUI has regulated the use of the halal logo. Here are the provisions and procedures for its use:

  1. 1.

    Organizations that already have a halal decree for their products can only use the halal logo for these products according to the scope listed in the halal decree and only apply to the manufacturer's factory location listed in the halal decree.

  2. 2.

    The affixing of the halal logo depends on the type and nature of the product, and the marking must be such that it is straightforward to read.

  3. 3.

    The halal logo must be affixed directly on the product unless this is not possible either because the size of the product is too small or because of the nature of the product; in such cases, the halal logo must be affixed to the smallest packaging used in marketing the product.

  4. 4.

    The affixation of the halal logo is placed in a place that is easily visible with a size such that the halal logo and its complementary information can be read easily without tools.

  5. 5.

    Business actors can change the green color of the logo but are not allowed to change the shape of the halal logo.

LPPOM MUI will suspend or revoke the license to use the halal logo if the business actor is proven negligent or fails to meet the terms and conditions of halal product certification. Business actors are also required to publish the granting, cancellation, suspension, and revocation of certificates through public media so that the public can find out the halal status of their products.

Further actions include stopping the halal logo on products and publication in brochures or advertisements accompanied by cancellation, suspension, revocation, or return of halal provisions.