Transforming the Halal Industry: Indonesia’s Pursuit of Universal Epicenter of Halal Certification

The concept of universal Halal certification has been a topic of considerable interest lately. Halal certification is a verification process that confirms products are in compliance with Islamic law. This includes the ingredients used, the methods of production, and the facilities, all of which must adhere to international Halal guidelines. This certification provides Muslim consumers with the confidence that the product is acceptable and aligns with their religious beliefs.

Halal certification is not only limited to food and drink but also includes non-consumables like cosmetics, air/water filters, industrial cleaners, and oils. The certification process is essential for businesses that want to open up to an entirely new market of consumers.

In today’s universal market, consumers are increasingly interested in buying from brands they trust, and Halal certification can strengthen a brand’s image. It conveys to consumers that the brand produces high-quality products, which can lead to increased sales and profitability.

The demand for Halal products has increased universally, and the certification process has become a significant trend in the Halal industry. The Malaysian model has been regarded as the role model for the development of world Halal food industries. The Indonesian Halal Certification bodies have also shifted from community-centric into state-centric.

Indeed, a universally recognized halal certification system has not been established to date.

Challenges on Implementing Universal Halal Certification

The implementation of universal Halal certification faces several challenges. Three major challenges that need to be addressed are the lack of collaboration and harmonization among Halal certification bodies, lack of awareness, and technical expertise and investment costs.

The absence of a unified approach among global Halal certification bodies has led to skepticism among Muslim consumers regarding the legitimacy of the Halal certification process. This lack of standardization also results in differing standards and procedures, causing potential confusion for both businesses and consumers.

Second, The insufficiency of knowledge regarding Halal food prerequisites, both from the perspective of the applicants and the certifying organizations, has been identified as a significant issue. This lack of understanding can result in delays in the collection and submission of necessary documentation, as well as in the internal management of Halal-related matters. Smaller Halal certification bodies may also face challenges due to a lack of expertise in comprehending critical ingredients and effectively communicating both domestic and international Halal standards.

Last, the adoption of emerging technologies in Halal certification brings challenges such as technical expertise, investment costs, and standardization of implementation. Despite the immense potential, the adoption of emerging technologies in Halal certification also brings challenges.

Collaboration between Halal certification authorities, technology providers, and businesses is essential to address these challenges and realize the full potential of emerging technologies in the Halal industry.

Utilization of Emerging Technologies in Halal Industry

In order to fortify Indonesia’s position as the world’s leading Halal producer and to establish it as the future of universal Halal certification, it is imperative to harness the power of emerging technologies.

Emerging technologies such as blockchain offer tremendous opportunities for enhancing the Halal certification process. These technologies enable greater transparency, efficiency, and trust, benefiting Halal certification bodies, businesses, and consumers.

Here are some examples of how blockchain technology is being used in the Halal industry :

1. Tracking the origin and authenticity of Halal products. Blockchain technology can be used to record and verify each step in the supply chain, ensuring that products are prepared according to Halal guidelines. This can help consumers have confidence in the Halal status of a product and verify that livestock has been raised and slaughtered in accordance with Halal guidelines.
2. Streamlining the certification process for Halal products. Blockchain technology can create a more efficient and transparent certification process, with all relevant information stored in a secure and immutable database. This can help reduce the time and cost involved in the certification process and make it easier for businesses to obtain Halal certification.
3. Improving financial transactions. Blockchain technology can be used to create more transparent and secure payment systems that are in line with Islamic principles. This can help Halal-compliant financial institutions to create more reliable and secure payment systems.
4. Enhancing Halal traceability. Blockchain technology can enhance the traceability of the Halal labeling process, allowing stakeholders to trace data recorded from farm to fork. This can boost consumers’ trust regarding the Halal labeling process of the food purchased.
5. Building a sustainable blockchain framework for the Halal food supply chain. Blockchain technology can be used to create a sustainable blockchain framework for the Halal food supply chain, enhancing supply chain transparency and improving financial transactions. This can help ensure that the entire process of procurement, distribution, handling, and processing materials, spare parts, livestock, work-in-process, or finished inventory is well documented and performed fit to the Halal and Toyyib (Ali et al, 2021).

Implementation of Blockchain Technology in Indonesia Halal Industry

Indonesia has been actively involved in implementing blockchain technology in the Halal industry. The potential of Indonesia as a future hub for universal Halal certification can be interpreted as a promising indicator.

For example, blockchain adoption for Halal food integrity. Indonesian researchers  have proposed a blockchain platform for Halal food integrity, which has been implemented by several institutions and companies. The platform aims to enhance transparency, traceability, and trust in the Halal certification process (Vanany et al, 2020).

Blockchain technology adoption in Halal traceability scheme. Indonesian firms have shown a positive intent to adopt blockchain-facilitated Halal traceability (BFHT) schemes in their Halal food supply chain. The adoption of BFHT is considerably affected by perceived attractiveness, institutional forces, and Halal-focused attitude (Sumarliah et al, 2023).

Evaluation of barriers of blockchain technology-based Halal traceability systems adoption. A study conducted in Indonesia identified 19 barriers to adopting Halal traceability systems based on blockchain technology in the Halal food industry. The barriers were classified into three aspects, including technical, organizational, and environmental (Susanti et al, 2022).

Blockchain-based traceability system to support the Indonesian Halal supply chain ecosystem. A blockchain-based traceability system has been proposed to support the Indonesian Halal supply chain ecosystem. The system aims to create real-time Halal assurance that effectively monitors the Halal supply chain (Alamsyah et al, 2022).

The integration of blockchain technology within Indonesia’s Halal industry demonstrates significant potential for future advancements, concurrently bolstering Indonesia’s position as a leading global Halal producer.

Amin.