Indonesia Halal Report 2021 - 2022

INDONESIA HALAL
MARKETS REPORT 2021/2022
Supported by: Produced by:

DISCLAIMER: The data of this report is believed to be correct at the time of publication but cannot be guaranteed. Please note that the
findings, conclusions and recommendations that DinarStandard (DS), Indonesia Halal Lifestyle Center (IHLC) and Bank Indonesia (BI) have
delivered are based on information gathered in good faith from both primary and secondary sources, whose accuracy we are not always in a
position to guarantee. The findings, interpretations, and conclusions expressed in this report do not necessarily reflect the views of DS, IHLC,
and BI. As such the information contained in this report is intended to provide general information only and, as such, should not be considered
as legal or professional advice or a substitute for advice covering any specific situation. DinarStandard, Indonesia Halal Lifestyle Center and
Bank Indonesia specifically disclaim all liability arising out of any reliance placed on this material. DinarStandard, Indonesia Halal Lifestyle
Center and Bank Indonesia make no representations or warranties of any kind, express or implied, about the completeness, accuracy, reliability
or suitability of this material for your purposes.
DinarStandard (DS) 2021 and Indonesia Halal Lifestyle Center (IHLC) and Bank Indonesia (BI) All Rights Reserved.
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The material in this report is subject to copyright. Because the Bank Indonesia encourages dissemination of this report, this work may be
reproduced, in whole or in part, for non-commercial purposes as long as full attribution to this work is given as follows: “Produced by Bank
Indonesia in partnership with DinarStandard and Indonesia Halal Lifestyle Center.
CONTENTS
1 FOREWORD . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
2 EXECUTIVE SUMMARY . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
3 INDONESIA HALAL MARKET OVERVIEW . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
4 THE GLOBAL HALAL MARKET TRADE & INVESTMENT OPPORTUNITY . . . . . . . . . . . . . . . . . . . . . . 12

4.1. The Global Halal Economy Opportunity 12
4.2. Drivers of the Global Halal Economy Opportunity 28
4.3. Impact of the COVID-19 Pandemic on the Global Halal Economy 30
4.4. Indonesia’s Central Role in the Global Halal Economy 34
5 INDONESIA CURRENT HALAL MARKET LANDSCAPE .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38

5.1. Indonesia Halal Economy Landscape 38
5.2. Indonesia Halal Compliance Ecosystem 58
5.3. Domestic consumer drivers 63
5.4. Impact of the COVID-19 Pandemic on Indonesia’s Halal Economy 65
6 INDONESIA HALAL MARKET TRADE & INVESTMENT OPPORTUNITY . . . . . . . . . . . . . . . . . . . . . . . 68
6.1. Indonesia Trade Opportunity 69

6.2. Indonesia Domestic Production Opportunity 75
6.3. Indonesia Investment Opportunity 80
7 INDONESIA HALAL MARKET OPPORTUNITY ASSESSMENT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 82

7.1. Global Proposition 85
7.2. Domestic Proposition 88
7.3. Government Commitment 90
7.4. Production Capabilities 92
7.5. Operational Support Ecosystem 93
8 PROMOTION STRATEGY FOR INDONESIAN HALAL TRADE & INVESTMENT . . . . . . . . . . . . . . 96
ACKNOWLEDGEMENT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 105
REPORT PURPOSE AND METHODOLOGY.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 106
APPENDIX.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 110
ENDNOTES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 112
Indonesia Halal Markets Report 2021/2022 3

1 FOREWORD
Bismillahirrahmanirrahiim
Assalamu’alaikum Warahmatullahi Wabarakaatuh
Praise be to Allah SWT, God Almighty, for His guidance and mercy in the completion of the Indonesian Halal
Market Report as part of Bank Indonesia’s contribution in encouraging the development of the national
Islamic economy and finance. May prayers and greetings always be devoted to the Prophet Mohammed
SAW along with his family and companions, who struggled to deliver the sharia light that we enjoy today.
This year was marked by the global economic recovery after we struggled to face the extraordinary and
unprecedented economic challenges brought by the global Covid-19 pandemic. Severe disruptions have
been felt in the global supply chain as a corollary of the pandemic, forcing countries to optimize their
economic potential. For Indonesia, the pandemic has re-emphasized the importance of the Islamic economy
and finance as a new source of growth. Indonesia as a country with the biggest Muslim population in the
world, coupled with bonus demography opens up opportunity halal industry players to drive production
growth and become key players in the global halal industry. With this promising potential, the development
of the halal industry in Indonesia is very important to support inclusive and sustainable economic growth.
Recognizing this urgency, Bank Indonesia has committed to developing the national Islamic economy and
finance by synergizing with the authorities in the KNEKS forum and other relevant authorities. The policy
of developing Islamic economics and finance is one of the supporting policies in Bank Indonesia’s policy
mix in achieving macroeconomic stability. The sharia economic development strategy is carried out with
a halal value chain ecosystem development approach, which includes strengthening in various ecosystem
components, including the halal industry.
With our committed efforts and the aspirations of achieving global center excellence of Islamic economy
and finance, we present Indonesia Halal Markets Report 2021/2022 as part of the preparation of the
forthcoming Sharia Economy and Finance Report 2021. This report, which was prepared in collaboration
with the Dinar Standard and the IHLC, showcases the potential and opportunities for trade and investment
in the Indonesian halal industry. We hope that this report could serve as a reference for Indonesian halal
players and foreign investor alike in formulating their development strategies.
In closing, may Allah SWT always bless and guide us to accelerate the development of the post-pandemic
country towards the vision of Indonesia Maju (Advanced Indonesia). Aamiin YRA.
Wassalamu’alaikum Warahmatullahi Wabarakaatuh
Jakarta, 27th October 2021
Bank Indonesia,
M. Anwar Bashori
Head of Sharia Islamic Economic and Finance Department
4 Indonesia Halal Markets Report 2021/2022

Bismillahirohmanirrohim
Assalamualaikum Warohmatullahi Wabarokatuh
The halal economy has been envisioned to be an important engine of Indonesia’s economic growth and
realizing its vision of Indonesia Maju (Advanced Indonesia). Towards this vision, the President and Vice
President of Republic Indonesia strongly support with policies to brought Indonesia ready for becoming the
global hub for Islamic Economy in 2024. Indonesia Halal Lifestyle (IHLC) together with the DinarStandard
(bringing its global halal economy expertise) are humbled to present the Indonesia Halal Markets Report
2021/2022 delivering actionable insights on Indonesia’s halal economy trade and investment opportunities
for national and global corporates and investors.
We are inspired to see Indonesia’s young entrepreneurs, its industry leaders and government leadership
aligned towards realizing the potential of this opportunity. While we share facts, figures and practical
strategies in this report, it is the underlying values of syariah economics of equitable financing anchoring
a halal (lawful) and tayyib (wholesome, sustainable) products and services consumption that is the real
socio-economic trend we are all excited to be a part of.
As this report shows, Indonesia has the potential to realize tremendous economic value, given its stature
as the largest halal economy consumption market with a competitive production base. At the same time,
it can also serve as a role model economy for the rest of the world through its socially responsible syariah
economic policies and by positioning its halal brands as global champions.
We thank Bank Indonesia for the strong commitment to publish this report and the various industry
stakeholders that shared their expertise.
Wassalamualaikum Warohmatullahi Wabarokatuh
Wallahu Muwafiq Ila Aqwaamithoriq
Sapta Nirwandar Rafiuddin Shikoh

Chairman Managing Partner
Indonesia Halal Lifestyle Center DinarStandard

2 EXECUTIVE SUMMARY
In the pursuit of Indonesia Maju (Advanced Indonesia) 2045, the shariah economy and finance (herein
referred to as ‘halal economy’) have been identified as key contributors given the vast global opportunity of
$1.9 trillion (2020 est.) and domestic opportunity of $184 billion in the related consumer spending market
that has yet to be fully tapped.
Since the launch of the shariah economy and finance blueprint by Bank Indonesia and the subsequent
Indonesia Islamic Economic Masterplan 2019-2024 by KNEKS, Indonesia has seen a rapid rise in its ranking
in DinarStandard’s Global Islamic Economy Indicator, rising from the 10th position in 2018 to 4th in 2020.
Indonesia continues to move up the halal food indicator ranking, placing 2nd this year, and ranks among the
top 10 in other halal economy sectors (except media).
Indonesia is home to the world’s largest domestic halal economy market, driven by the largest global
Muslim population of 229.6 million in 2020. This population’s domestic spending across halal economy
products and services stood at $184 billion in 2020 and is projected to increase by 14.96% CAGR to reach
$281.6 billion by 2025. The share of the Shariah economy in the national economy has expanded over the
past 5 consecutive years. The Shariah economy remained more unscathed by the effects of the COVID-19
pandemic than the national economy, with a contraction of -1.70% (YoY) compared with -2.07% (YoY) for
the national economy (Source: Sharia Economy and Finance Report 2020, Bank Indonesia).
The COVID-19 pandemic led to the first negative growth in GDP that Indonesia has experienced since
1998. To decrease the spread of the virus, the government introduced large-scale social restrictions (PSBB)
and restrictions on community activities (PPKM). These had significant impacts on the lives of citizens
and, in turn, the economy at large. Consumer spending habits were also altered, with many households
experiencing a decrease in income. Many consumers also turned to e-commerce platforms and other
digital avenues for shopping.
Overall, this report estimates Indonesia’s halal economy opportunity to further boost its GDP by $5.1
billion a year through incremental exports and FDI and import substitution opportunity. The report
presents key sectors and markets and overall strategic areas based on a National Halal Economy
Strategy framework to expand trade and investment opportunities.

2 EXECUTIVE SUMMARY
The substantial global opportunity that is awaiting Indonesia’s leadership:
The global opportunity: The global halal economy spans Muslim consumer spending across lifestyle
categories most impacted by their faith-based values, from food and clothing to travel, pharma and
cosmetics, and totaled $1.9 trillion in 2020, according to the State of the Global Islamic Economy Report
produced in 2021 by DinarStandard. This is in addition to the $3.4 trillion in global Islamic finance assets.
The cross-sector halal economy opportunity is a lucrative, high-growth opportunity addressed increasingly
by multinationals, governments, startups and investors.
Indonesia’s tremendous potential in the domestic halal economy:
Consumer opportunity: Indonesia is home to the world’s largest Muslim population. Indonesia’s Muslim
consumers are some of the most adherent to their Islamic faith in the world, with 98% of surveyed Muslims
considering religion very important. The country’s Muslims are predominantly young, digitally native, and
fiercely loyal to domestic brands, although they are also price-sensitive, creating substantial opportunities
for new market entrants to reap significant rewards.
Business success stories: The size, structure and values-based preferences of Indonesia’s Muslims
have given rise to scaled local champions who have generated at least $500 million in revenues annually
across the food, pharma and cosmetics industries. These include Indofood, Mayora, GarudaFood, and
Kimia Farma, as well as attracting leading multinationals in setting up local ventures, including Unilever
and L’Oréal.
Relatively low imports, but room for improvement: The country has also achieved an important measure
of success in self-reliance compared to many of its peers in the 57-member Organization of Islamic
Cooperation (“OIC”). Indonesia is a net exporter for most categories in the halal economy, except for
cosmetics and pharmaceuticals. There is substantial room for Indonesia to reduce its reliance on imports
in key categories such as sugar and sugar confectionery, animal fodder and cosmetic and pharmaceutical
raw ingredients, which would, in turn, provide an incremental boost to domestic production and a $1 billion
addition to GDP.
The under-addressed export opportunity:
Current capture: Trade is inherent to the halal economy, with $200 billion in halal products (requiring some
degree of compliance) imported across the OIC in 2020.
Indonesia is among the top global suppliers of halal and related products (food, fashion, pharmaceutical and
cosmetics) to the OIC countries in 2020 and can capture a much larger proportion of this trade opportunity.
Indonesia is the ninth-largest exporter to the OIC, exporting $8.6 billion in halal products (including those
halal by nature such as vegetables), far less than the leading exporter, China, which exported over $25
billion in 2020, but larger than Malaysian exports. Indonesia’s food industry has no representation in the
Global Corporate 2000 list; but its local champions have the potential to expand global reach.
Halal economy-specific FDI can be improved. In 2019, Indonesia was the highest-ranked OIC country in
terms of FDI, 81% higher than the UAE (at $13.8 billion) and 175% more than Malaysia (at $9.1 billion).
Indonesia received 43% of global investments in the halal economy. This equates to $5.01 billion out of a
total of $11.78 billion. By capturing a further 10% of halal economy investments, Indonesia can increase
GDP by $0.5 billion.

EXECUTIVE SUMMARY
Potential: Indonesia can boost halal economy exports by $3.6 billion a year to OIC and non-OIC markets
with sizeable Muslim populations through focusing on producing processed food products, notably meat-
based products, animal feed, and women’s clothing, as well as pharmaceuticals and cosmetics.
The strategic path forward:
Shortcomings: Closer cooperation is needed between halal certification institutions, producers, scholars,
researchers, and the government to efficiently meet consumer demands and create regulations that would
attract investment and position Indonesia as a leader in the halal economy. There are a limited number
of scaled market players which could participate globally, with a notable gap in the R&D space and the
manufacturing of halal-suitable ingredients.
Strategy: In this report, we recommend 17 comprehensive strategic priorities for Indonesia to cement
its leadership potential in the global halal industry, based on DinarStandard’s National Halal Economy
Development framework. Some key strategic priorities covered in this report include:
• Becoming a top halal exporter through targeting high-value OIC and non-OIC countries with large
Muslim populations and prioritized halal product segments.
• Facilitating trade promotion and international exposure for local companies while also helping them
leverage market intelligence.
• Implementing the necessary legislation to facilitate exports, attract investment to halal sectors and
develop halal industrial hubs.
• Increasing production competitiveness through adopting high-tech for the production and sourcing of
cheaper raw materials of higher quality.
• Streamlining Islamic finance regulations to enable effective convergence with halal economy
development.

3 INDONESIA HALAL MARKET OVERVIEW
AT $184 BILLION CONSUMER SPEND IN 2020, INDONESIA REPRESENTS THE
LARGEST HALAL CONSUMER MARKET IN THE WORLD
US$ billion 2020 2020-2025 CAGR % 2019-20 (COVID-19 Impact)
FOOD 135.00 14.64% -6.44%
3 AREAS FASHION 15.60 8.34% -4.99%
OF OPPORTUNITY WITHIN PHARMA 5.13 5.83% -4.29%
1. EXPORT GROWTH COSMETICS 4.19 12.62% 0.71%

2. IMPORT SUBSTITUTION
MEDIA 20.73 8.95% -4.65%
3. FDI GROWTH
TOURISM 3.37 18.96% -70.00%
Assets, US$ billion 2020
ISLAMIC FINANCE 119.5 20.5%

1.
Existing $8 billion exports of halal
products* by Indonesia (2020 est.)
2.
Existing $10 billion imports of halal
products* by Indonesia (2020 est.)
3.
Existing $5 billion investments in halal
economy sectors* in Indonesia (2020 est.)
*Halal products include food, fashion, pharma and cosmetics products requiring some level of halal compliance.
Halal economy sectors include halal product sectors plus travel, media and finance sectors.
INDONESIA’S SELECT CORE COMPETENCIES TO LEVERAGE AND CHALLENGES

TO OVERCOME TO MEET GROWTH OPPORTUNITIES
CORE COMPETENCIES CHALLENGE
LARGEST HALAL CONSUMER MARKET IN THE WORLD BEHIND ON EXPORT
11.34% of global halal

economy spend 3% of halal products exports to OIC
(9th largest)
9th
DOMESTIC CHAMPIONS HAVE POTENTIAL TO BECOME LARGEST SUPPLIER
GLOBAL PLAYER
NO GLOBAL CHAMPIONS IN 2021 FORBES GLOBAL
Saudi Arabia and UAE lead ranking with halal

economy players
LEADING ISLAMIC FINANCE PLAYER $ LIMITED ISLAMIC FINANCE CONVERGENCE WITH HALAL
ECONOMY SECTORS
$2.9 fintech market size and largest Including gaps in Islamic finance experts and
BILLION sovereign sukuk issuer penetration

INDONESIA HAS THE POTENTIAL TO ADD $5.1 BILLION TO ITS GDP THROUGH
HALAL ECONOMY EXPORT GROWTH, FDI GROWTH AND IMPORT SUBSTITUTION
HALAL TRADE & INVESTMENT OPPORTUNITY

SELECT TRADE OPPORTUNITIES
IMPACT ON GDP
$1.95 $1.63 Key Categories of export for prioritization
BILLION BILLION
$3.6 BILLION Top Non-OIC
EXPORT OPPORTUNITY Top Export Top OIC Import Import Markets
IMPACT Sector Categories and Markets with Large Muslim
+
OIC EXPORT NON-OIC EXPORT Opportunity
OPPORTUNITY OPPORTUNITY Consumption
Animal or 1. Pakistan 1. India

vegetable fats 2. Malaysia 2. Netherlands
and oils 3. Turkey 3. China
$1 BILLION FOOD
($0.31 billion)
IMPORT SUBSTITUTION OPPORTUNITY IMPACT
+
Apparel 1. UAE 1. Germany
(not knitted / 2. Saudi Arabia 2. France
crocheted) 3. Turkey 3. United States
FASHION ($0.44 billion)
$0.5 BILLION Medicaments

(for retail sale)
1. Saudi Arabia
2. Turkey
1. Singapore
2. China
FDI OPPORTUNITY IMPACT ($0.08 billion) 3. Egypt 3. Hong Kong,
=
PHARMA China
Oral care 1. UAE 1. Germany

($0.02 billion) 2. Saudi Arabia 2. UK
$5.1 BILLION INCREASE IN GDP 3. Malaysia 3. United States
COSMETICS
DEVISING INDONESIA’S HALAL ECONOMY STRATEGIES AND KEY TRADING

PRODUCTS AND PARTNERS
NATIONAL HALAL ESTABLISHING THE HALAL ECONOMY AS AN ENGINE OF

INDONESIA’S MACROECONOMIC GROWTH AND LEADING
ECONOMY FRAMEWORK INFLUENCE ACROSS THE MUSLIM WORLD
GOAL 1 GOAL 2
BOOST GDP BY $5.1 BILLION THROUGH INCREMENTAL DEVELOP ENABLING PILLARS THAT WILL HELP THE FULL
EXPORTS, FDI AND IMPORT SUBSTITUTION ECONOMIC POTENTIAL OF THE HALAL ECONOMY MATERIALIZE
GLOBALLY DIFFERENTIATED DOMESTIC GOVERNMENT PRODUCTION OPERATIONAL

PROPOSITION PROPOSITION COMMITMENT CAPABILITIES SUPPORT ECOSYSTEM
STRATEGIC STRATEGIC STRATEGIC STRATEGIC STRATEGIC

PRIORITIES PRIORITIES PRIORITIES PRIORITIES PRIORITIES
Target export markets; Trade promotion through Ease regulations; Investment in Streamline Islamic
Value-added product events; Trade agreements; high-tech and up- finance rules;
development; Invest in infrastructure; Dedicated halal fund; stream industry; Fintech for individual’s
Global networking through Market intelligence; Halal industrial hubs Strengthening halal investment;
embassies; Attract international investors supplier base Triple-helix model for
Promote halal lifestyle talent pool
STAKEHOLDERS STAKEHOLDERS STAKEHOLDERS STAKEHOLDERS STAKEHOLDERS

Government; Government; Government; Government; Government;
Large & Medium Corporates; Industry Associations; Investors Industry Associations; Industry Associations;
Industry Associations Large & Medium Corporates; Large & Medium Large & Medium
Investors Corporates; Corporates;
Investors Investors

THE GLOBAL HALAL MARKET
4 TRADE & INVESTMENT OPPORTUNITY
In 2020, Muslims made up 25% of the global population and accounted for $1.9 trillion in consumer spend.
Muslims have unique, faith-based requirements across many product categories, most notably food as
well as clothing, pharmaceuticals, cosmetics, travel and media and recreation. Halal trade is truly a global
value chain with major participants worldwide, with exports of halal goods worth $200 billion. Investments
have also been directed into the halal economy, with $11.8 billion invested into the halal economy sectors
in 2019/20.
4.1. THE GLOBAL HALAL ECONOMY OPPORTUNITY
Defining the Global Halal Economy
The Muslim Consumer:

Muslims represent the world’s largest faith-based consumer base. Muslims represented 1.9 billion people
or 25% of the global population in 2020 and are projected to reach 2 billion by 2030. Consumers are tied
together by their core Islamic values, which dictate their way of life and translate into their purchasing
behavior. Around 70-90% of Muslims in the Asia-Pacific and MENA regions, for instance, rate religion as
“very important.”1

Islamic values impacting the global economic sectors
FOR MANY... ISLAM: ... TOUCHES MANY ... VALUES WITH

“WAY OF LIFE” SECTORS UNIVERSAL APPEAL
God consciousness Food and food services Just & equitable business
Family values House financing Zakat - charity
Modesty Recreation Family values
Dietary law/healthy Clothing Fasting/Self-control
Just & equitable financing Service Wholesome food
Education Education Education
Spirituality Service/Charity
Socal responsibility Personal care
B2B infrastructure
Defining Halal:
The word ‘halal’ originates from Arabic and means allowed or permissible in Islamic law, the opposite of
which is ‘haram.’ These laws are derived from two sources: the Qu’ran, Muslims’ central religious text, and the
Sunnah, which is a record of the traditions or sayings of the Prophet Mohammed (peace be upon him).
While references typically relate to food and drink, halal directly impacts any product consumed or applied,
such as cosmetics and pharmaceuticals. It’s also important to note that Islamic values also extend beyond
halal. There is also an increasingly important emphasis on Tayyib, which means pure or wholesome, and
applies to broader ethical considerations across all of the core halal economy sectors, from organic food to
ethically sourced and manufactured products.
Select Qur’anic verses with regards to halal consumption are as follows:
“He (God) has only forbidden to you dead animals, blood, the flesh of swine, and that which has been
dedicated to other than Allah. But whoever is forced [by necessity], neither desiring [it] nor transgressing
[its limit]—then indeed, Allah is Forgiving and Merciful.” Al-Quran 16:115
“O mankind, eat from whatever is on earth [that is] lawful and pure and do not follow the footsteps of
Satan. Indeed, he is to you a clear enemy.” Al-Quran 12:168

4 THE GLOBAL HALAL MARKET TRADE & INVESTMENT OPPORTUNITY
Defining the Global Halal Economy:

The State of the Global Islamic Economy Report (produced by DinarStandard) defines the halal economy
as: “The halal economy comprises sectors of which core products and services are structurally affected by
Islamic law, values-driven consumer lifestyle and business practices.” The halal economy is also commonly
referred to as the Islamic economy or economy.
Included within the core halal economy opportunity, which is the focus of this report, is halal food, Islamic
finance, halal pharmaceuticals, halal cosmetics, modest fashion, Muslim-friendly travel, and Islamic-
themed media and recreation. While each sector is ordinarily distinct, common faith-based values bring
them together as an intrinsic whole, serving the same ethical consumer base, with a variation in Shariah
compliance by sector.
The core principles of the halal economy ensure that financial transactions are based on real assets
or projects, thus guaranteeing the halal economy plays a critical role in improving economic structure,
developing the real sector, and catalyzing sustainable economic growth1. Halal economic development
supports economic empowerment through halal value chain development, including the application of
diverse partnership-based business models, from MSMEs to large corporations, which will also increase
economic inclusivity.
Muslim-majority countries, or the Organization of Islamic Cooperation (OIC) member countries, are defined
as playing a significant role in driving the halal economy, from consumption of products to trade and
investment opportunities.
Overview of core sectors:
FOOD FINANCE CLOTHING TOURISM MEDIA/ PHARMACEUTICALS COSMETICS

RECREATION
GLOBAL HALAL
ECONOMY
...STRUCTURALLY ...DRIVEN BY REATIL ...DRIVEN BY BUSINESS

CORE SECTORS AFFECTED BY ISLAMIC VALUES CUSTOMER NEEDS CUSTOMER NEEDS
1 Halal economy definition as per the Sharia Economy and Finance Report of Bank Indonesia.

THE GLOBAL HALAL MARKET TRADE & INVESTMENT OPPORTU NITY
The Global Halal Economy Market Opportunity

The halal economy is a multi-trillion-dollar opportunity that captures the core of faith-based Muslim spend.
The global halal economy represents the global spending power of Muslims across core lifestyle products
and services that are most structurally impacted by Islamic values. The halal economy sectors covered
in this report are halal food and beverage, halal pharmaceuticals, halal cosmetics, modest fashion, and
services such as Muslim-friendly travel, Islamic-themed media and recreation, and Islamic finance.
Across the core halal economy sectors, Muslims spent an aggregate of $1.9 trillion in 2020 on lifestyle
products (food, fashion, travel, media/recreation, pharmaceuticals/cosmetics), which was a decline of 6%
from $2 trillion in the pre-COVID-19 year (2019). However, Muslim spending in these sectors is expected
to regain momentum and grow by 7.81% CAGR reaching US$2.76 trillion in 2025. Islamic finance assets,
currently at $3 trillion in 2020, are also expected to rise steadily over the next 5 years with a CAGR of 7.9%,
reaching $4.9 trillion worth of assets by 2025. Many countries saw a surge in Islamic finance assets during
the COVID-19 year, such as Indonesia, where Islamic finance banking assets grew by 10.97% in 2020,
higher than the 7.7% registered by the conventional banks.2
Global Muslim Consumer Spend on Key Halal Economy Sectors

Islamic Finance
US$ Billion Assets
$4,922
$3,374
$1,668
$1,185
$375 $308
$279 $216
$129 $189
$94 $65 $93 $58
2020 2025 2020 2025 2020 2025 2020 2025 2020 2025 2020 2025 2020 2025
FOOD & BEVERAGE FASHION PHARMACEUTICALS COSMETICS TRAVEL & TOURISM MEDIA/ ISLAMIC FINANCE
RECREATION
Source: DinarStandard, State of the Global Islamic Economy Report 2020/21

By Sector Opportunity:
FOOD & BEVERAGE

MUSLIM SPEND PARAMETERS
Market
2020 (US$ Billion) 2025 (US$ Billion) 2019-20 (COVID-19 Impact) 5 Years CAGR% (2020-25)
opportunity
Global $1,185 $1,668 1.54% 7.08%
Indonesia $135 $204 -6.44% 14.64%
Food and beverage represent the largest sector by spend in the halal economy, with Indonesia, Bangladesh
and Egypt the top countries for Muslim spend, which includes, but is not limited to, halal food. Global Muslim
spend on food and beverage was estimated at $1,185 billion in 2020, representing 16% of global spend on
food. Despite sizeable companies addressing the opportunity, there remains a substantially fragmented
market ripe for investment and consolidation.
The regulation of halal food falls below comparable benchmarks in the food industry, with over 400 certification
bodies worldwide overseeing the sector, with limited oversight or mutual recognition.
Core overview INDONESIA HALAL FOOD MARKET OVERVIEW:

The products with the highest demand in Indonesia include packaged food, fruits, vegetables, seafood, health
food, cooking oil, gourmet food, tea, and coffee.3 Due to the Halal Law, all products traded, distributed, and
imported to Indonesia must obtain halal certification. This is advantageous as it makes their products more
desirable to exporters seeking halal food.
Halal food is by far the largest segment of the Islamic economy in Indonesia. With a decrease in income for
many and the strict movement restriction orders, Muslim spend on food in Indonesia decreased by 6.44%,
while globally, Muslim spend on food increased by 1.54% compared to the previous year. Spend levels in
Indonesia are set to return to pre-COVID 19 levels by 2021.
Select key producers Select key brands Select key retailers

Landscape
• BRF (Brazil, Meat) • Nestle (Switzerland) • Carrefour (France, Grocery)
(1) Select • Danone (France, Dairy) • Al Islami (United Arab Emirates) • Lulu (United Arab Emirates,
Global • PT Sreeya Sewu • Saffron Road Grocery)
players (Indonesia, Poultry) (USA, Halal/Organic)
Top 5 Food and Beverage Muslim Consumer Spend Markets, Global Islamic Economy Indicator
2020 (US$ Billion) (GIEI) Ranking 2021
HALAL FOOD
135 1 Malaysia
2 Indonesia
113 111 3 Turkey
4 Russia
Key countries
83 5 United Arab Emirates
81
Indonesia Bangladesh Egypt Pakistan Nigeria

FASHION
Market
opportunity
Global $279 $375 0.72% 6.09%
Indonesia $15.6 $23.28 -4.99% 8.34%
Fashion represents the second-largest sector by spend in the halal economy, with Iran, Turkey and Pakistan
the top countries for Muslim spend, which includes, but is not limited to, modest fashion. Global Muslim
spend on fashion was estimated at $279 billion in 2020, representing 14% of global spend on fashion. Modest
fashion investments are expected to remain low until the economy recovers. However, the sector is ripe for
consolidation among producers and retailers.
INDONESIA MODEST FASHION MARKET OVERVIEW:

The modest fashion industry in Indonesia has seen tremendous growth in the past 10 years with the inception
of brands like Dian Pelangi and Ria Miranda, which helped shift customer perceptions of modest wear in
Core overview
a fashion context. The industry has a lot of potential for expanding internationally, especially into other
Southeast Asian markets which have similar modest clothing preferences. The industry is dominated by
businesses categorized as small to medium enterprises.
The movement restrictions and income decrease caused spending in Indonesia’s modest fashion segment
to drop by 4.99%. Working from home and people having fewer social gatherings also caused a significant
decrease in demand for clothing. However, most fashion businesses were quick to pivot and fulfill the demand
for face masks, PPE and more comfortable home wear. Spend levels in Indonesia are set to return to pre-
COVID-19 levels by 2021.
Select key producers Select key brands

Landscape
• LC Waikiki (France) • Modanisa (Turkey)
Select key • Uniqlo (Japan) • Hijup (Indonesia)
players • H&M (Sweden)
Top 5 Fashion Muslim Consumer Spend Markets Global Islamic Economy Indicator
(Apparel & Footwear), 2020 (US$ Billion) (GIEI) Ranking 2021
MODEST FASHION
1 United Arab Emirates

2 Turkey
50.13 3 Indonesia
4 China
5 Spain
Key countries
33.72
20.84 20.58
17.52
Iran Turkey Pakistan Saudi Egypt

Arabia

PH ARM ACEUTICAL AND COSME TICS

MUSLIM SPEND PARAMETERS4
Market 2019-20 5 Years CAGR%

Sector 2020 (US$ Billion) 2025 (US$ Billion)
opportunity (COVID-19 Impact) (2020-25)
Pharmaceutical $94 $129 -0.30% 6.64%

Global
Cosmetics $65 $93 -1.52% 7.43%
Pharmaceutical $5.13 $6.81 -4.29% 5.83%

Indonesia
Cosmetics $4.19 $7.59 0.71% 12.62%
Muslim spend on pharmaceutical products, due to an obvious emergence of health care, saw a relatively
smaller drop of 0.3% in 2020, while spend on cosmetics went down by 1.52%.
Muslim demand for halal products is moving beyond food to encompass nutritional supplements,
medicinal ingredients, and cosmetics products. Halal cosmetics sales have grown in East Asia at a
faster pace than any other market, driven by Indonesian brands, small and large-sized. While South Korean
K-beauty brands have also started getting halal certification.
Pharmaceuticals and cosmetics together are increasingly falling under the scope of halal certification
bodies, as Muslim consumers push for halal alternatives to gelatin and other meat-based ingredients across
Core overview
a range of product categories, going beyond food. An increasing number of companies are addressing
increasing Muslim consumer adherence. For instance, Malaysia’s Duopharma Biotech and South Korea’s
PanGen Biotech are investing in the world’s first halal biosimilar to treat anemia. While Indonesia’s Paragon
is expanding cosmetic ranges beyond women to include men.
INDONESIA HALAL PHARMACEUTICAL & COSMETICS MARKET OVERVIEW:

Consumers tended to purchase items categorized as necessities, thus making cosmetics more of a
luxury purchase during this time. Globally, Muslim spend on cosmetics also decreased while spend on
pharmaceuticals fell by 0.3%. Cosmetics spend levels in Indonesia are set to return to pre-COVID 19 levels
by 2022, while pharmaceutical spend will reach pre-pandemic levels by 2021.
Ingredients Pharmaceutical products Cosmetics
Landscape • BASF (Germany) • Noor Vitamins (USA) • Wardah (Paragon)

• DSM (Switzerland) • CCM Berhad (Malaysia) (Indonesia)
Select key • Symrise (Germany) • Kalbe Farma (Indonesia) • Pure Halal Beauty
players (United Kingdom)
• One Pure
(United Arab Emirates)

PH A R M ACEU T ICAL AND COS ME T ICS

Key countries Top 5 Pharmaceutical Muslim Consumer Spend Markets, Global Islamic Economy Indicator
HALAL
10.92 PHARMACEUTICAL
& COSMETICS
1 Singapore
2 Malaysia
7.76
7.04 3 Netherlands
4 Belgium
Pharmaceutical
5.36 5 France
9 Indonesia
4.04
Turkey Saudi United Indonesia Algeria

Arabia States
Top 5 Pharmaceutical Muslim Consumer Spend Markets,

2020 (US$ Billion)
5.88
Cosmetics 4.19
3.67 3.44 3.44
India Indonesia Bangladesh Malaysia Russia

TRAVEL & TOURISM

Market
opportunity
Global $58 $189 -70% 26.65%
Indonesia $3.37 $8.03 -70% 18.96%
Travel and tourism were largely hit sectors in the global economy. Its effects were also shared by the halal
economy, where Muslim spend on travel fell by almost 70% to $58 billion in 2020. If accounting for Hajj and
Umrah travel restrictions, this number may reduce further. With lockdowns and travel restrictions easing, the
travel and tourism sector is gaining momentum, with increasing investment interests from investors. Most
governments globally and in the OIC provided various forms of stimulus packages to the tourism industry.
Total investment deals recorded in 2019/20 in the Islamic economy were $340 million (a drop of 40% from the
Core overview
previous year), but this is expected to rebound.
INDONESIA HALAL TRAVEL & TOURISM MARKET OVERVIEW:

In 2019, the travel and tourism industry in Indonesia contributed 6.1% to the country’s GDP.5 The travel
industry was, by far, one of the worst affected by the COVID-19 pandemic. In March 2020, restrictions on all
foreigners entering Indonesia were put in place. Recovery is expected to happen gradually as restrictions ease,
particularly for domestic tourism.
Select suppliers Select key brands

Landscape
• Saudi Airlines (USA) • Rhadana Hotel (Indonesia)
(2) Select key • LSG Sky Chefs (Germany) • Shaza Hotel (UAE)
players • Women Deluxe (Turkey)
Top 5 Outbound Muslim Spend Travel Countries, Global Islamic Economy Indicator
MUSLIM-FRIENDLY
TRAVEL
7.29 1 Malaysia
2 Singapore
3 Turkey
4 Bahrain
5.15
Key countries 5 Tunisia
4.26 12 Indonesia
3.89
3.37
Saudi United Arab Qatar Kuwait Indonesia

Arabia Emirates

MEDI A & RECREATION

Market
opportunity
Global $216 $308 -2.75% 7.35%
Indonesia $20.73 $31.82 -4.65% 8.95%
Media and recreation represent the third largest area of spend among Muslim consumers. Although spending
has fallen by 8.8% since pre-COVID-19, the media sector globally was less affected by the pandemic and saw
a rise in internet usage, driven by work from home and online education.
Core overview
INDONESIA HALAL MEDIA & RECREATION MARKET OVERVIEW:
Indonesian consumer spend in media and recreation dropped by 4.65% in 2020, compared to global
consumer spend which fell by 2.75%. Spend levels in Indonesia are set to return to pre-COVID 19 levels
by 2021.
Production Distribution
Landscape
• 5 Pillar Games (Saudi Arabia, Gaming) • Peace TV (UK, TV)
• Marvel (USA, Print) • Iqra (Saudi Arabia, TV)
(3) Select key
• Barjoun Entertainment (UAE, Films) • Al Huda (Egypt, TV)
players
• Digital Durian (Malaysia, Cartoons) • Bayyinah, TV (USA, Online)
Top 5 Media & Recreation Muslim Consumer Spend Markets, Global Islamic Economy Indicator
MEDIA & RECREATION
1 Malaysia
25.49 2 Singapore
4 China
21.34
20.90 5 Turkey
Key countries
29 Indonesia
11.25
10.08
Turkey Indonesia United Saudi Pakistan

States Arabia

ISL AMIC FIN ANCE

ISLAMIC FINANCE ASSETS
Market
2020 (US$ Billion) 2019-20 (COVID-19 Impact)
opportunity
Global $3,374 17.36%
Indonesia $119.5 20.5%
Globally, Islamic finance is rebounding from the effects of the pandemic, with Islamic banks’ profitability
recovering after 2020 drops. Many countries saw a surge in Islamic finance assets during the COVID-19
year, such as Indonesia, where Islamic finance banking assets grew by 10.97% in 2020, higher than the
7.7% registered by conventional banks.6
Core overview
Islamic finance is a rapidly growing industry, attracting both Muslims and a broader set of ethical finance
stakeholders. Several major investments can be seen, along with an upswing in Islamic fintech. There are
some 241 Islamic fintechs, with a market size of around $49 billion in 2020, which is forecast to reach
$128 billion by 2025 (based on transaction volumes).7
Select key regulators Select key banks Select key fintech services
Landscape • Bank Indonesia (Indonesia) • Dubai Islamic Bank (UAE) • IslamicMarkets

• OJK (FSA, Indonesia) • Bank Syariah Indonesia (Capital Markets, UK)
(4) Select key • Accounting and Auditing (Indonesia) • Wahed
players Organization for Islamic • HSBC (UK) (Wealth Management, USA)
Financial Institutions • PayZakat
(Standard Setting, Bahrain) (Social Finance, Russia)
Global Islamic Economy Indicator

Select Countries by Islamic Finance Assets, 2020 (US$ Billion)
(GIEI) Ranking 2021
ISLAMIC FINANCE
838 1 Malaysia
826
2 Saudi Arabia
3 Bahrain
4 Kuwait
620
Key countries 6 Indonesia
251
156 144
119
Turkey Saudi Malaysia UAE Qatar Kuwait Indonesia
Arabia
Source: Refinitiv

The Global Halal Economy Trade Opportunity
Halal trade is truly a global value chain with major participants worldwide. It is driven primarily by imports
for the 57 mostly Muslim-majority Organization of Islamic Cooperation (OIC) member countries. Across all
halal economy sectors, food represents the largest category of OIC imports at $200 billion (2020 est.). This
is followed by modest fashion ($27 billion imports), pharmaceuticals ($39 billion imports), and cosmetics
($13 billion imports).
There were an estimated 1.9 billion Muslims around the globe in 2020, with Indonesia hosting the largest
number of Muslims at 229.6 billion.8 The large, young, and affluent Muslim population represents a core
driver of the demand for halal Islamic economy products and services.
Trade represents a key component of Muslim spending, with halal food and beverage products, fashion,
pharmaceuticals, and cosmetics being the core sectors affected by halal requirements. The figures below
show the top OIC importing markets and top supplying markets to OIC for food and beverage, fashion,
pharmaceuticals, and cosmetics.
This analysis has focused on the trade flow for products, and as such, does not look at other lifestyles and
services sectors (media, travel and finance).

Top OIC Halal Food & Beverage* Exporters & Importers - US$ Billions, 2020
4
FOOD & BEVERAGE 3
5 5
1
$200 BILLION 14% 2
3
TOTAL F&B IMPORTS GLOBAL SHARE 2
INTO OIC MARKETS
1
29% TOP 5 TOP 5 41%

SOURCE MARKETS REPRESENT IMPORTERS REPRESENT
29% OF TOTAL
$20.0 $30.0
41% OF TOTAL
1 $16.45 Brazil Saudi Arabia $20.10 1
2 $15.35 India Indonesia $17.55 2
3 $13.22 USA Malaysia $16.23 3
4 $12.74 Russia Turkey $14.16 4
5 $9.54 China Egypt $13.54 5
7 $7.83 (1st OIC) Indonesia
Source: DinarStandard synthesis and analysis; ITC Trade Map statistics

Top Exporter Top Importer * Imports into Islamic countries assumed to be subject to Halal compliance at same level
Top OIC Clothing & Accessories Exporters & Importers - US$ Billions, 2020
3 3
FASHION 4 4
1 1
2
$27 BILLION 5.5% 2
5 5
TOTAL CLOTHING & ACCESSORIES GLOBAL SHARE
IMPORTS INTO OIC MARKETS
TOP 5 TOP 5
76% SOURCE MARKETS REPRESENT IMPORTERS REPRESENT 53%
76% OF TOTAL
$20.0 $8.0
53% OF TOTAL
1 $13.52 China UAE $5.49 1
2 $3.00 India Saudi Arabia $3.65 2
3 $2.17 Turkey Turkey $1.79 3
4 $1.23 Italy Iraq $1.78 4
5 $1.10 Viet Nam Malaysia $1.54 5
9 $0.39 Indonesia
Top Exporter Top Importer Source: DinarStandard synthesis and analysis; ITC Trade Map statistics

Top OIC Pharmaceuticals Exporters & Importers - US$ Billions, 2020
1
24 2
PHARMACEUTICALS 5
5 4
1
$39 BILLION 6% 3
3
TOTAL PHARMACEUTICAL IMPORTS GLOBAL SHARE
INTO OIC MARKETS
47%
TOP 5 TOP 5 47%
SOURCE MARKETS REPRESENT IMPORTERS REPRESENT
47% OF TOTAL
$8.0 $4.0
47% OF TOTAL
1 $5.30 Germany Saudi Arabia $1.99 1
2 $4.15 France Turkey $1.88 2
3 $3.31 India Nigeria $1.16 3
4 $3.02 Switzerland UAE $1.13 4
5 $2.82 USA Egypt $0.98 5
38 $0.07 Indonesia
Top OIC Cosmetics Exporters & Importers - US$ Billions, 2020
5 2
1
3
COSMETICS 3
1 4
2
$13 BILLION 9% 5
TOTAL COSMETICS IMPORTS GLOBAL SHARE
4
INTO OIC MARKETS
40%
TOP 5 TOP 5
SOURCE MARKETS REPRESENT IMPORTERS REPRESENT 56%
40% OF TOTAL
$6.0 $6.0
56% OF TOTAL
1 $1.90 France UAE $1.99 1
2 $0.94 Germany Saudi Arabia $1.88 2
3 $0.77 USA Turkey $1.16 3
4 $0.72 China Indonesia $1.13 4
5 $0.68 Ireland Malaysia $0.98 5
20 $0.19 Indonesia

The Global Halal Economy Investments Opportunity
Investments in the global halal economy fell by 13%, from $13.6 billion in 2018/19 to $11.8 billion in 2019/20.
There are around 156 investments recorded in the halal economy that include the relevant mergers &
acquisition (M&A), private equity (PE), and venture capital (VC) transactions in 2019/20. Compared to other
sectors, there has been more private investment activity in halal food, totaling $6.1 billion in 2019/20.
While the pandemic deeply impacted the HORECA (Hotel, Restaurant and Catering) sector, other sectors
such as ready-to-eat meals and food delivery witnessed explosive growth and will continue post-COVID-19
pandemic.9
Indonesia attracted the largest share of investments, 25% of all recorded transactions, showing the market
is ripe for potential investments. Together, investments in the halal food and Islamic finance sectors
accounted for more than 90% of total deal value.
Top 10 countries by number of investment deals in 2019/20*
COUNTRY TOTAL DEALS IN 2019/20 (M&A/PE/VCS)

Indonesia 38
Malaysia 31
United Arab Emirates 20
Egypt 16
Kuwait 8
Nigeria 7
Saudi Arabia 6
Pakistan 5
Turkey 4
Bangladesh 2
Source: DinarStandard synthesis and analysis. Details in methodology section.

Sector Opportunity: Investments Overview in 2019/20*
INVESTMENTS IN # TOTAL TOP 3 COUNTRIES BY SELECT GLOBAL INVESTORS

SECTOR
US$ MILLIONS DEALS NUMBER OF DEALS (M&A/PE/VCS)
Islamic Economy
$11,781
Aggregate
• Indofood CBP SUKSES

• Malaysia (16) MAKMUR TBK, PT (Indonesia)
Halal Food $6,110 61 • Indonesia (10) • Crown Flour Mills Nigeria
• UAE (8) Limited (Nigeria)
• Gateway Partners (Singapore)
• Bangkok Bank Public Company

• Indonesia (14)
Limited (SET:BBL) (Thailand)
Islamic Finance $4,925 38 • UAE (7)
• Zurich Insurance Group Ltd
• Kuwait (5)
(Switzerland)
• Malaysia (10) • Ogilvy Istanbul (Turkey)

Media $121 27 • Indonesia (6) • Utusan Melayu (Malaysia)
• UAE (4) Berhad
• Indonesia (4) • PT Indonesian Paradise

Travel & Tourism $340 14 • Malaysia (3) Property Tbk (IDX:INPP)
• Turkey (2) • Goldman Sachs Funds
• Mega Lifesciences Public

• Egypt (4)
Company Limited (SET:MEGA)
• Indonesia (2)
Halal (Indonesia)
$157 9 • Kuwait (1)
Pharmaceuticals • Egyptian International
• Malaysia (1)
Pharmaceutical Industries
• Nigeria (1)
Company (CASE:PHAR) (Egypt)
• Egypt (3)
Modest Fashion $3 4 • Innovacia Sdn Bhd (Malaysia)
• Netherlands (1)
• Indonesia (2) • Daio Paper Corporation

Halal Cosmetics $125 3
• Turkey (1) (TSE:3880)
* Investments from August 1st, 2019, through July 31st, 2020.

Source: DinarStandard synthesis and analysis. Details in methodology section.

4.2. DRIVERS OF THE GLOBAL HALAL ECONOMY OPPORTUNITY
As the global Muslim population grows, becomes wealthier and more demanding, the halal economy is
expected to thrive, creating substantial trade and investment opportunities.
(1) The world Muslim population covers 25% of the global population
The global Muslim population was estimated at 1.9 billion in 2020, covering 25% of the global population.
Muslims are growing twice as much as the non-Muslim population, and this trend will remain the same
over the next decade. Muslims are projected to grow up to 2 billion in 2030. Muslims are also the
youngest of all major religious groups, with young adults (ages 15-29) covering 27.3% of the Muslim
population in 2020.10
(2) Muslim nations set to grow faster than the global average in next 6 years
Despite sluggish global economic growth due to the pandemic, OIC countries are projected to grow
faster than the rest of the world’s GDP growth. Based on the latest IMF GDP projections (April 2021), the
compounded annual growth rate (CAGR) of the OIC economy is expected to hit 7% between 2020 and 2026
compared to the global average of 6.4%.
(3) Halal adherence is increasing among the Muslim population

Globally, more people favor an increased role for religion in their countries than 20 years ago. Among the
highest percentages in favor of a more important role for religion were Muslim-majority countries: Indonesia
(85%) and Nigeria (88%).11 It’s important to note that many Islamic values have a universal appeal. Thus,
many products and services do not have to be exclusively positioned for Muslims.
(4) Digital connectivity and the rise of e-commerce

With social distancing measures being applied across the world, digital connectivity is playing an essential
role in enabling domestic and cross-border e-commerce and m-commerce. Many of the Muslim-majority
countries from the MENA and South-East Asia regions had a higher internet penetration in 2020 than
the global average of 59%. Indonesia, Malaysia and Saudi Arabia are some of the OIC countries that had
the highest global e-commerce and m-commerce adoption, above the worldwide average of 76.8% and
55.4%, respectively (December 2020).12 The changing preferences of Asia-Pacific consumers are creating
opportunities for businesses that embrace an agile mindset.13
(5) Health is becoming increasingly important among Muslims, not just taste
Many of the values underpinning the Islamic economy sectors are universal and appeal to consumers
concerned about the environment. Several global studies show that consumers are increasingly demanding
cruelty-free, organic, natural and vegan-certified products, having a proportionate impact on demand for
halal-certified products, given the shared principles. A study by IBM shows six in 10 consumers are willing
to change their shopping habits to reduce environmental impact. The demand for ethical and organic
products has heightened due to the COVID-19 pandemic.
(6) Government regulations and national Islamic economy strategies

OIC governments are increasingly scrutinizing the halal integrity of products imported into the region
through halal certification requirements. In many Islamic countries, designated national bodies, such as
the UAE’s ESMA, Saudi Arabia’s SFDA, Indonesia’s BPJPH, and Malaysia’s JAKIM, monitor and provide
accreditation to halal certification bodies. With dropping oil prices in 2020, many Muslim-majority countries
are focusing on investing in the broader global Islamic economy.

(7) Role of Islamic finance in wealth creation

Islamic finance is a key driver of the overall ecosystem. Capital continues to flow both across and into the
OIC countries, from early-stage funding to sovereign wealth levels. Merger and acquisitions, government
grants, and public-private partnerships are some of the ways that helped companies in the Islamic economy
strive during the pandemic. In the first half of 2021, global sukuk issuances reached a record high of $100
billion.
(8) Participation of top global food brands

The growing Islamic economy space has attracted top global brands that are also creating innovative
products and services across sectors. Multinational giants such as Nestle, Cargill, and BRF in halal food,
H&M in modest fashion, and Daewoong in halal pharmaceuticals are producing halal-related products
across the world.

4.3. IMPACT OF THE COVID-19 PANDEMIC ON THE GLOBAL

HALAL ECONOMY
As the world faces the COVID-19 pandemic, technology has proven to be key in keeping businesses afloat
by enabling remote work, agile business, and digital engagement. In the long run, organizations will leverage
technology to underpin every process and value chain as they journey to the new normal.
The halal economy is a part of the wider global economy. Hence, the global impact of COVID-19 on the
economy has a direct repercussion on the halal economy. This section covers the impact of COVID-19 on
global and halal economy growth, consumer habits, supply chain and production, trade and FDI.
Global Islamic Economy – V-Shaped Recovery
2019 2020 2021 (f)

12%
10%
8%
6%
4%
2%
0%
-2% -2.7%
-3.2%
-4%
-4.0%
-6% -5.6%
-8%
Advanced economies World Emerging market and developing economies OIC
Source: IMF, GDP current prices (April 2021)
The global economy dropped to an all-time low in decades during the COVID-19 crisis, falling by 3.2%
in GDP in 2020 from last year. Around 8.8% of global working hours were lost in 2020, equivalent to 255
million full-time jobs, an amount that is four times greater than job losses during the 2009 financial crisis.14
OIC countries were the fasting growing economies pre-COVID-19, even compared to the advanced
economies. Following COVID-19, OIC countries economy decreased to almost twice as low as the world’s
GDP and other economies, almost by 5.6%.
As restrictions ease and people adjust back to pre-COVID-19 spending habits, the year 2021 and those
proceeding it bring a ray of hope for the economy. OIC countries’ economies will rebound, however, at a
much slower pace than the rest of the world and other emerging and advancing economies. Over the next
6 years, the OIC economy is expected to grow at a CAGR of 7% compared to the global average of 6.4%.

Consumer Spending Habits
Drastic changes in consumer shopping habits were seen during the pandemic. Fears of the virus spreading
and social distancing measures meant that consumers avoided potentially crowded places. Trends like
delivery and take-out meals increased, while the HORECA (Hotel/Restaurant/Café) and travel industries
suffered the most. Work from home and leisure time led to increased use of the internet for gaming and
video streaming.
These trends meant that e-commerce was the winner during the pandemic. With vaccinations rolling out
and restrictions easing up, people are moving out for work, shopping and travel. However, e-commerce is a
trend that will stay and flourish in the long run. The following figures show the e-commerce categories that
were impacted due to the pandemic in 2020.
Year-on-year growth in total amount spent globally on e-commerce products
CATEGORY YOY% (2019-2020)

Travel & accommodation -51%
Fashion & beauty +27%
Electronics and media (products) +18%
Food & personal care +41%
Toys, DIY & hobbies +25%
Video games +23%
Source: WeAreSocial - Digital 2021 Global Report
Supply Chain and Production
Annual growth rates in manufacturing production output
2018 2019 2020

8
-2
-4
-6
-8
World Industrialized economies China Developing and emerging industrial economies
Source: UNIDO Statistics

Most OIC countries were classified as developing and emerging industrial economies by UNIDO.
The world saw a major decline in manufacturing production in 2020. The previous year had already
indicated a slowdown in manufacturing growth, mainly due to the ongoing trade tensions between China
and the USA. In 2020, global manufacturing production dropped by 4.1% as many countries resorted to
containment strategies. The manufacturing output of developing and emerging industrial economies
(excl. China) fell by 7.1% in 2020, which covers many OIC countries as well (including Indonesia). East Asia
experienced a decline both pre-COVID-19 and during the pandemic: a 1.6% decline in 2019, followed by a
4.7% decline in 2020.15
Estimated growth rates of global output by select manufacturing categories, 2020
8,0%
6,0%
4,0%
2,0%
0,0%
-2,0%
-4,0%
-6,0%
-8,0%
-10,0%
Food Beverages Textiles Wearing Leather Basic Computer, Other
products apparel and pharmaceutical electronic transport
related
Source: UNIDO Statistics
The COVID-19 pandemic revealed vulnerabilities in the long, complicated supply chains of many
companies. Disruptions triggered a sharp fall in maritime trade volumes (which carry 80% of the world’s
trade merchandise) across all market segments in early 2020, in particular for containerized trade, which
carries intermediate and manufactured goods.16
Food, textiles, OTC pharmaceutical products and media products saw an increase in global production.
However, disrupted supply chains meant a surge in raw material prices for food and garments and concerns
over food availability and safety. The COVID-19 pandemic has highlighted weaknesses in supply chains and
over-reliance on imports, especially for Active Pharmaceutical Ingredients (APIs) – the central ingredient in
drugs. This was as the world’s largest producer of APIs—China—curtailed industrial production to limit the
spread of COVID-19.

Trade and FDI
Quarterly trade growth in global and OIC merchandise trade
2019-Q4 2020-Q1 2020-Q2 2020-Q3 2020-Q4
30,0%
20,0%
10,0%
0,0%
-10,0%
-20,0%
-30,0%
World OIC
Source: ITC Trademap, DinarStandard analysis
Prospects for a quick recovery in world trade and the OIC have improved as merchandise trade expanded
more rapidly than expected in the second half of last year. According to new estimates from the WTO, the
volume of world merchandise trade is expected to increase by 8.0% in 2021 after falling drastically in 2020
(released on 31st March 2021).17
Shipping and ports handle over 80% of global merchandise trade by volume and about 70% of its value.
International maritime trade is estimated to have fallen by 4.1% in 2020 but will recover and rebound by
4.8% in 2021.18
Foreign direct investment (FDI) was also severely impacted by the COVID-19 pandemic. According to
UNCTAD, FDI is estimated to have decreased by 40% in 2020, bringing it below $1 trillion for the first time
since 2005. The outlook remains dire, with further deterioration projected in 2021 and only beginning to
recover in 2022 at the earliest. Many countries took actions to mitigate the adverse effects on FDI and
shield domestic industries from foreign takeovers.19
Regional trade deals saw significant activity in 2020, including agreements among Muslim-majority
countries. The adoption of various measures associated with the African Continental Free Trade Area
(AfCFTA) was accelerated, including requirements for members to remove 90% of tariffs on goods and
take steps to create an Africa-wide Customs union. In Asia, the Regional Comprehensive Economic
Partnership (RCEP) was signed in November, with the hope that the deal would help its 15 signatories
(including Indonesia) recover from the economic fallout of the pandemic by boosting regional trade.20
Through bilateral trade agreements, more vaccines are being produced in OIC countries than ever before,
such as in Turkey, the UAE, Egypt and Saudi Arabia.

Support Services: Tourism
All the sectors on which tourism has significant multiplier effects have been impacted, including agriculture
and food services. Travel services were down 63% in 2020 and are not expected to fully recover in the
short run.21
The pandemic has been the worst recorded year for international tourism. The decline of 74% in international
tourism due to the pandemic is estimated to cause a loss of $1.3 trillion in international tourism expenditure,
about 11 times that of the 2009 global crisis. This will affect the global GDP by more than $4 trillion in 2020
and 2021.22
Most governments globally and in the OIC are providing various forms of stimulus packages to the tourism
industry. It is estimated that COVID-19 related cleaning protocols will cost hospitality $9 billion each year.
And while tourism is set to rebound in many OIC countries, others are not expected to be so fortunate,
adversely hit by political instability on top of the pandemic, such as Lebanon and Tunisia.
4.4. INDONESIA’S CENTRAL ROLE IN THE GLOBAL HALAL ECONOMY
Home to the world’s largest Muslim population, Indonesia is in the perfect position to rank amongst the
leaders of the global halal economy. Indonesia is in a positive position in terms of trade and investment
with the potential to further capitalize on their strengths.
Indonesia’s Trade Leadership
Indonesia retains the 4th position in the overall GIEI (Global Islamic Economy Indicator, a global ranking of
countries ecosystem strength across all halal economy sectors) ranking. Indonesia continues to move up
the halal food indicator ranking, placing 2nd this year, and ranks among the top 10 in other halal economy
sectors (except media). One of the leading factors for its leading position is its trade potential.
Indonesia was among the top global suppliers of halal and related products (food, fashion, pharmaceutical
and cosmetics) to the OIC countries in 2020. With $8.5 billion exports of halal products, Indonesia is the
10th largest exporter globally and 2nd largest exporter among the OIC countries. This shows high potential
for Indonesia to emerge as the global leader in halal products exports and strengthen intra-OIC trade, given
that the COVID-19 pandemic has severely affected the supply chains of the largest supplying markets to the
OIC, such as China, India and the USA. The top OIC markets for Indonesia’s aggregate halal product exports
are Malaysia, Pakistan, Egypt, Bangladesh and Saudi Arabia, that make up 69% of the total exports to OIC.

Top 20 Halal Products Suppliers to OIC (2020)

$30.0
$20.0
U$ Billion
$10.0 Source: DinarStandard synthesis and analysis
$0.0
Turkey
Malaysia
China
India
USA
Brazil
Russia
France
Germany
Argentina
Indonesia
Ukraine
Netherlands
Thailand
United
Kingdom
Italy
Switzerland
Spain
Canada
Australia
Exporters to OIC
Top OIC Destinations for Indonesia’s Halal Products Exports
EXPORT VALUE (2020) US$ MILLION

Halal Food Total Exports $7,826
Malaysia $1,931
Pakistan $1,736
Egypt $790
Bangladesh $763
Saudi Arabia $371
Clothing & Fashion Total Exports $390
Malaysia $93
United Arab Emirates $91
Turkey $26
Somalia $24
Saudi Arabia $18
Pharmaceutical Total Exports $70
Nigeria $32
Malaysia $27
Pakistan $17
Afghanistan $3
Egypt $2
Cosmetics Total Exports $185
Malaysia $50
UAE $26
Nigeria $21
Pakistan $10
Yemen $4
Source: ITC Trademap, DinarStandard synthesis and analysis

Indonesia’s Domestic Production Leadership
With the 4th largest population in the world, as well as the largest Muslim population estimated 229.6 million
Muslims in 2020, Indonesia also represents the largest market for Muslim spend globally across the halal
economy sectors, with a combined $184 billion across halal products and lifestyle sectors, representing
11.34% of global halal economy spend.
Indonesia’s Muslim Spend and Global Muslim Consumer Ranking, 2020
SECTOR MUSLIM SPEND, 2020 US$ BILLIONS GLOBAL MUSLIM CONSUMER RANKING
Food & Beverage $135 1
Fashion $15.60 6
Pharmaceuticals $5.13 4
Cosmetics $4.19 2
Travel & Tourism $3.37 5
Media & Recreation $20.73 2
Source: DinarStandard synthesis and analysis.
Indonesia’s Investment Leadership
Indonesia, with US$ 199.5 billion Islamic Finance assets, is a global leader in Muslim financial inclusion. At
around 50 million accounts, Indonesia has the largest number of accounts in Shariah (Islamic) banks in the
world. It also has the largest number of Shariah rural banks, about 164 in total.
In 2020, Indonesia was the largest issuer of sovereign sukuk in the international market. Totaling $20.65
billion, Indonesia dominated 22.18% of all (foreign currency) international sovereign sukuk issued, well
above Saudi Arabia (13.97%) and the United Arab Emirates (8.83%) in the second and third positions,
respectively. This demonstrates that as a frequent sukuk issuer, governance sukuk issued by Indonesia
remain highly attractive to global investors.23
Composition of International Sovereign Sukuk Issuance
Others
Indonesia
12.67%
Oman
22.18%
4.99%
Pakistan
5.42%
Bahrain 5.63%
6.69% 19.34%
Qatar Saudi Arabia
6.72%
Turkey 7.52% 8.83%
Source: Bank Indonesia,
Sharia Economy & Finance Malaysia UAE (Dubai)
Report 2020

INDONESIA CURRENT
5 HALAL MARKET LANDSCAPE
With its large population, Indonesia is a super consumption market. This significant demand for products
across the board creates many opportunities for domestic and multinational players. Indonesia is home to
the largest population of Muslims in the world and with ever-increasing awareness around halal products,
the demand for products in the halal economy is huge. In 2019, the vast majority of manufacturing
companies were in the food and beverage industry and making significant contributions to exports. Other
halal economy sectors such as modest fashion, media and recreation and travel are mostly dominated
by MSMEs. The eCommerce sector has seen many startups scale successfully and grow into platforms
offering a wide array of services and products. The COVID-19 pandemic left far-reaching effects across the
economy and most notably on consumer spend. In fact, it is expected to permanently alter the behavior
of consumers going forward. Analysts expect GDP growth in Indonesia to recover to pre-pandemic levels
within the next two years. This will spur consumer spend, particularly in lifestyle sectors such as fashion,
cosmetics, media and recreation and travel. Consumers are also set to increasingly embrace digital
shopping platforms.
5.1. INDONESIA HALAL ECONOMY LANDSCAPE
This section shares details of Indonesian companies which are either industry leaders by revenue or are top
of mind for Indonesians when they consider that industry. International companies of similar revenue sizes
or which are industry leaders are provided as a benchmark.

Indonesia’s Halal Market Landscape and Select Key Players2
HALAL FOOD PHARMA AND COSMETICS MODEST FASHION
PHYSICAL
RETAILERS FOOD
DDED PRODUC
UE-A ERS
VAL
E-COMMERCE USTRY PLAYER PHARMACEUTICALS
IND S
DIS
ERS
TRI
RETAIL
BUTOR
S
229.6 MILLION
MUSLIM CONSUMER
RS
EC
TO
OS R S
SE
LA
IC YST E M PL AYE
RV
GU
EE RE
NA &
BLE E NT
LOGISTICS & RS NM GOVERNMENT
INDUSTRIAL HUB G OV E R BODIES
ISLAMIC FINANCE ASSOCIATIONS
HALAL TRAVEL & MEDIA REGULATORS
* Among others in government and regulators landscape
2 These are key select large corporates and not meant to be a comprehensive list as there are other corporates as well. These are identified
by DinarStandard team independently and with no commercial consideration.

5 INDONESIA CURRENT HALAL MARKET LANDSCAPE
VALUE-ADDED PRODUCERS
Halal Food
SECTOR OVERVIEW
In the first quarter of 2020, the food and beverage sector contributed 36.4% to Indonesia’s GDP.24 As of October 2019, the Halal Law
of Indonesia has been instituted. This makes it mandatory for all products (traded, distributed, and imported) within Indonesian land
to be certified halal.25 According to the National Statistical Agency (BPS), there are approximately 7,415 large and medium-sized
food and beverages companies with over 1 million employees; and 1.69 million micro and small producers in the food and beverage
industries with 3.44 million employees.26 In 2020, 252,897 products across 7,043 companies were given halal certification.
INDONESIA’S SELECT KEY PLAYERS 3
Revenue US$ 5.73 billion (IDR 81.73 trillion) Employees 88,704

• A Total Food Solutions company with operations in all stages of food manufacturing.
Indofood
• Most well-known for their IndoMie instant noodle range which is found in over 50 countries.
Sukses
Makmur • Other products include dairy products, sauces and seasonings, snack foods, nutrition products, baby food and
beverages.
• Halal and Halal Assurace System (Sistem Jaminan Halal) certified by Majelis Ulama, Indonesia.
Revenue US$ 1.74 billion (IDR 24.75 trillion)27 Employees 12,416

• Established in 1948 and grew to include a diverse range of products.
• Most well-known brands are Kopiko, Danisa, Roma, Energen, Torabika and Beng Beng.
Mayora • Products are distributed in over 90 countries through 6784 distributors.
Indah
• 39% of sales came from the Asian market and 3% from other markets.28
• Halal certified by Majelis Ulama, Indonesia
GLOBAL BENCHMARK
Revenue US$ 26.9 billion29 (IDR 383 trillion) Employees 101,911
Danone
• Products include essential dairy and plant-based products, waters, early life nutrition and medical nutrition.
(France) • Present in over 120 countries, with 46% of sales in Asia-Pacific, Latin America, Middle East, Africa and C.I.S.
• Most Karicare and Aptamil products are halal-certified.
• AQUA as a pioneer of Bottled Drinking Water (AMDK) in Indonesia since 1973, was awarded the “Halal Award -
Halal Top Brand 2019” (after previously being entitled to the same in 2016 and 2018)
Key Learning. Danone is one of the few major corporations with a significant proportion (30%) of subsidiaries B Corporation
Certified.30 Certified B Corporations are businesses that meet the highest standards of verified social and environmental
performance, and public transparency. They are accelerating a global culture shift to redefine success in business and build a
more inclusive and sustainable economy.31 These are the values that companies in the halal economy can easily adapt to and halal
certification would assist showcasing that.
Revenue US$ 4.8 billion32 (IDR 68.8 trillion) Employees 16,003

• Produces and sells mayonnaise, salad dressing, egg products, and health foods. Other products sold include
jam, sauce, canned and frozen foods.
Kewpie • About 12.1% of sales are international.
Corporation • Halal-certified products are produced in Malaysia, Indonesia and Thailand facilities. They are also sold in
(Japan) Japan.
Key Learning. Products are developed to suit specific international tastes. For example, for the Chinese market, a sweet mayonnaise
that people use with fruit salad was developed. They also produced a salad dressing for a type of salad sold in North China. This is
their second-biggest seller in Beijing.

INDONESIA CURRENT HALAL MARKET LANDSCAPE
Modest Fashion
SECTOR OVERVIEW
Indonesian fashion companies operate across the value chain with many large international brands choosing to have their products
manufactured in Indonesia. There are 4,899 medium to large manufacturing facilities in textile and apparel across the country33,
employing over 1.39 million people.34 SMEs also play a significant role in the fashion industry. Many have emerged during the
pandemic. In 2019, there were 909,822 businesses that were classified as micro and small enterprises in the textile and apparel
industries. These employed 1.57 million people.35 Many of the companies specialize in modest wear.
Revenue US$ 665 million (IDR 9.48 trillion) Employees 68,720

• One of the largest garment manufacturing companies in Indonesia, established in 1980.
PT Pam
• Headquartered in Tangerang and manufacturing facilities located in 6 locations across the country
Brothers
Tbk • Operate across the value chain with subsidiaries in textile manufacturing and clothing retail.36
Revenue US$ 6.87 million (IDR98 billion)37 Employees Not available

• Established in 2009 by fashion designer Indria Miranda
• One of the first modest fashion brands in Indonesia
Riamiranda • The brand has also been shown at fashion shows and exhibitions across Jakarta, and internationally in
Melbourne, Chicago, Singapore, Hong Kong, Malaysia, Dubai and London.
• Most of its sales are local.
• 30 stores across Indonesia and also sells via their own website and other online marketplaces.
GLOBAL BENCHMARK
Revenue US$ 2.63 billion (IDR 38 trillion) Employees >50,000
LC Waikiki • Tema Tekstil, the producer and licensor of LC Waikiki in Turkey, bought the worldwide rights of the LC Waikiki
(Turkey) brand in 1997.
• Currently export US$ 845 million (IDR 12 trillion) worth of goods and have over 1000 stores across 49 countries.
• Modest range available online and in selected stores.
Key Learning. Sustainability is one of the core values of the company. They have incorporated the LC Waikiki Ecology Policy, which
encompasses the full value chain of their products.
Revenue US$ 3.8 billion (IDR 54 trillion) Employees 37,000
American
• A leading global specialty retailer offering high-quality, on-trend clothing, accessories and personal care
Eagle products at affordable prices under its American Eagle and Aerie brands.
Outfitters • At the end of FY2020, there were 229 licensed stores in 28 countries.
(USA)
Key Learning. AEO recently acquired a logistics company, which will enable it to provide customers with same-day delivery. The
acquisition of key-value chain components can allow businesses to differentiate themselves from their competitors. AEO is also
continuously introducing innovative ideas to the business. They are currently developing an app that will allow for live retailing.38

Halal Pharmaceuticals
SECTOR OVERVIEW
As of 2019, there were 338 medium to large manufacturers of pharmaceuticals, chemical medicinal products and traditional medicines
across Indonesia. These companies employ 6,886 people. There are 14,597 micro and small enterprises in the sector that employ
24,815 people. In 2020, 4,631 products were certified halal across 208 corporations.
Revenue US$ 149.8 million39 (IDR2.14 trillion) Employees 750

• State-owned enterprise and the holding company of PT Kimia Farma and PT Indofarma.
Bio Farma • Bio Farma specializes in the production of vaccines and sera.
• Aims to reduce imports of pharmaceutical raw materials or Active Pharmaceutical Ingredients (API) from 90%
to 75% and improve distribution across the country.
• Exports to 117 countries.
• Products ranges include BCG vaccine, DTP-HB vaccine, DT vaccine, Td vaccine, Hepatitis B vaccine, Polio
vaccine, Measles vaccine, Influenza vaccine, anti-venom serum, anti-diphtheria serum, anti-tetanus serum.40
Revenue US$ 769.41 million (IDR10.97 trillion) Employees 5,190

• The business network covers 173 locations - 46 branches and 127 sales points across Indonesia, including 6
DC (Distribution Center) and 2 ECFS (e-Commerce & Cosmetics Fulfilment Service).
Tempo • The Company has four core business divisions, namely Pharmaceutical Division, Consumer Products and
Scan
Cosmetics Division, Manufacturing Division and Distribution Division as well as Supporting Division.
• The company also operates in Thailand, Malaysia and the Philippines.
GLOBAL BENCHMARK

• Operates through the following business segments: Modernised Chinese Medicines and Chemical Medicines,
Investment, and others.
Sino
• Also runs a research and development sector, which provides services to third parties; and related healthcare
Biopharmaceutical
and hospital business.
(Hong Kong,
China) • It also develops medicines for treating tumors, analgesia, diabetes, and respiratory system diseases.41
Key Learning. Offering R&D services to external companies can be an excellent source of revenue and may generally lead to
increasing Indonesia’s capability for the development of new drugs.
Revenue US$ 2.46 billion (IDR 35 trillion)6 Employees >1,70044

• A global biopharmaceutical company focused on finding solutions for unmet medical needs through the
Incyte discovery, development and commercialization of novel medicines, specifically in the areas of Oncology and
(USA) Inflammation & Autoimmunity.
• Operates across North America, Europe and Japan.
• Recognized by Forbes as one of the World’s Most Innovative Companies.
Key Learning. Innovation is a key differentiator in the pharmaceutical industry. If a company can successfully and continuously
produce innovative solutions, they can succeed.
6 Total product and royalties revenue

Halal Cosmetics
SECTOR OVERVIEW
Between January and August 2020, Indonesia’s cosmetics product exports totaled US$ 135.67 million.45 Muslim consumer spend on
cosmetics in Indonesia was the 2nd highest globally in 2020. The pandemic lead in a shift from make-up products to skincare. In 2020,
26,197 products were certified halal across 214 corporations.
Revenue US$ 214 million46 (IDR 3.05 trillion) Employees > 10,000
• One of the largest manufacturers of cosmetics in Indonesia.
• Popular brands from the company include Wardah, Make Over, Emina, Putri and Kahf (for men).
Paragon
Technology • They have 41 distribution centers.
& Innovation • US$1.6 million (IDR 22.9 billion) worth of Wardah products was exported to Malaysia in October 2020.47
• Products are certified by the Mejalis Ulama, Indonesia.
Revenue US$ 20.83 million (IDR 297 billion) Employees 517

• Founded in 1977 and established its first modern factory in 1981.
Martina • Brands include Mirabella, Martha Tilaar products and Rudy Hadisuwarno Cosmetics.
Bertho
TbK • Mirabella Cosmetics have received certification from the Mejalis Ulama, Indonesia.
GLOBAL BENCHMARK
Revenue US$ 69.45 billion (IDR 990 trillion) 110,302
BASF
• One of the largest global producers of chemicals and ingredients for food, pharmaceuticals and cosmetic
(Germany) products.
• It operates in more than 80 countries, including Muslim countries in the Middle East, Asia Pacific and Europe.
• Product categories for cosmetics include ingredients for personal care products (antiperspirants and
deodorants), body care, face care, hair coloring and styling, shampoo, skincare, and oral care.
• BASF offers 145 ingredients for personal and home care products that have been certified by the international
halal standard HAS 23000. It complies with strict halal guidelines along the entire value chain.
Key Learning. With such a large range of product offerings, BASF is easily a leader in its field. This was accomplished through
strategic acquisitions of businesses that had a positive outlook. Such acquisitions are key to becoming a leader in an industry.
Oriflame
• Oriflame cosmetics is an international social selling beauty company
Cosmetics • Operates in 60 countries across Europe, Africa, Asia and Latin America.
• Its portfolio of innovative beauty products is marketed through approximately 3 million Independent Brand
Partners.
• They currently ensure that the raw materials used are halal compliant and are working on a portfolio of halal-
certified products for key Muslim markets like Indonesia.
Key Learning. About 98% of the company’s orders are received through their online platform. When COVID-19 occurred, they were
already in a good position to prevent any severe disruptions to their business and independent business partners.

PHYSICAL RETAIL STORES

SECTOR OVERVIEW
Indonesia is predominantly a consumption market. With the large population, retail is a lucrative industry. The retail market in Indonesia
is separated into Wet markets and modern markets. Before the pandemic, the retail market was growing between 8-9% per year. With
the easing of PSBB restrictions, the growth has begun to increase again. The pandemic also had an impact on consumer shopping
preferences with more shoppers opting for modern markets compared to before the pandemic.
Sector Fashion, Cosmetics

Revenue US$ 455.96 million (IDR 6.5 trillion) Employees > 40,000
• Indonesia’s first modern department store established in 1978.
• It currently operates 145 stores in 76 cities across Indonesia.
PT Matahari
Department • Partners with around 400-500 local suppliers, as well as international suppliers.
Store • They stock a selection of modest wear.
Sector Food
• A mini-mart chain of supermarkets established in 1999.
Alfa Mart • In 2016, they launched AlfaMind, the first virtual store in Indonesia with Augmented Reality technology.
• In 2020, Alfamart opened its 1000th branch in the Philippines. It has over 13,600 branches in Indonesia.
Sector Food, Fashion

Revenue US$ 177.39 million (IDR 2.53 trillion) Employees 5,501
• Most prominent department stores in Indonesia, Market leader in the middle-low and lower retail segment.49
• Its key merchandise is clothing, accessories, shoes, toys, household items, stationery and foodstuff.
Ramayana
Lestari • They have a total of 119 stores and expanded their online business by collaborating with well-known
Sentosa e-commerce platforms in Indonesia: Blibli and JD.ID. Previously, they had collaborated with Tokopedia, Lazada,
and Shopee.
Sector Food, Cosmetics, Pharmaceuticals

Revenue US$ 623 million (IDR8.89 trillion) Employees 8,178
• HERO Group is a public company.
Hero
Group • It is divided into two business activity segments, food business (Hero Supermarket and Giant) and the non-food
business (Guardian Health and Beauty).
• Guardian Health & Beauty also has stores in Malaysia, Singapore, Brunei, and Cambodia.
GLOBAL BENCHMARK
Sector Food
Revenue US$ 100.48 billion (IDR1431.5 trillion) Employees 64,709
• Holding company, with a variety of business operations: convenience stores, superstores, department stores,
7-Eleven supermarkets, specialty stores and food services.
(Seven • In 2018, there were over 20,000 Seven-Eleven stores in Japan.
& I Holdings) • They offer a selection of halal products in different locations of their stores.
(Japan)
Key Learning. The holding operates across the supply chain for its stores. This gives it a significant advantage in broadening the
range of products and also making the products more affordable.

Sector Pharmaceuticals, Cosmetics

Revenue US$ 8.5 billion (IDR 121 trillion51) Employees 331,000
• A global leader in retail pharmacy.
Walgreens • Anchored by iconic brands, Walgreens in the U.S. and Boots in Europe and Asia
Boots
Alliance • WBA’s portfolio of retail and business brands also includes Duane Reade in the U.S., Benavides in Mexico and
(USA) Ahumada in Chile.
• Global beauty brands include No7, Soap & Glory, Liz Earle, Botanics, Sleek MakeUP and YourGoodSkin.50
Key Learning. WBA and VillageMD plan to open 500 to 700 “Village Medical at Walgreens” physician-led primary care clinics in more
than 30 US markets over the next five years.52 Providing customers with a one-stop-shop experience for healthcare may attract
more customers. An all-encompassing customer experience could improve sales and returning customers.
Sector Clothing, Cosmetics

Revenue US$ 17.35 billion (IDR247.28 trillion) Employees 90,000
• One of the USA’s premier omnichannel retailers.
Macy’s • Comprises of three retail brands: Macy’s, Bloomingdale’s and Bluemercury.
(USA)
• With a robust e-commerce business, rich mobile experience and a national stores footprint, customers have
multiple ways to shop with Macy’s.53
Key Learning. Many department stores in the USA did not survive the emergence of e-commerce, but with the right strategies,
Macy’s was not only able to survive but thrive. By the 2nd quarter of 2021, it is estimated that 34% of Macy’s net sales will be derived
from e-commerce sales.54

E-COMMERCE PLATFORMS
SECTOR OVERVIEW
The movement restriction orders during the COVID-19 pandemic have encouraged growth in the e-commerce sector. The Gross Market
Value of the e-commerce industry in Indonesia was valued at US$25.3 billion in 2020.55 Food and beverage manufacturer GarudaFood
saw improved sales over the last five consecutive months, driven by collaborations with e-commerce platforms, an expansion of its
distribution network, and adding stock for seasonal products that are usually hard to find during Ramadan.56 Investors have started
showing interest in Indonesian e-commerce companies.57
Sector All Products & Lifestyle

Revenue US$ 22 billion10 (IDR313.62 trillion)58 Employees 8,00011
• In May 2021, Indonesia’s two largest start-ups, Tokopedia (ride-hailing) and GoJek, merged to form the GoTo
GoTo Group group, the largest technology group in the country.
• Combined, the two companies had 1.8 billion transactions, 2 million registered drivers, over 11 million merchant
partners and over 100 million monthly active users. Their ecosystem encompasses 2% of Indonesia’s GDP.
• The group will offer services across sectors including eCommerce and financial services.59
• The company is expected to have a gross merchandise value of US$ 125 billion by 2025.
Sector Fashion
Revenue US$ 5.6 million61 (IDR 79.83 billion) Employees 10362
• The world’s first Islamic fashion e-commerce established in 2011.60
Hijup • Specializes in modest wear, hijabs and accessories for Muslim women. They also offer a selection of men’s and
kids’ clothes.
• Connects designers and customers, and features an extensive collection of different brands.
• The company offers international shipping to all countries.
Sector Food
Revenue US$ 7 million65 (IDR99.79 billion) Employees 40066
HappyFresh
• Founded in 2004, the platform allows customers to shop for groceries online from shops around their area.
• It operates its own delivery fleet and staff that pick the fresh groceries from partnering supermarkets.63
• The company has operations in Indonesia, Malaysia and Thailand.
• HappyFresh closed a US$ 65 million Series D round led by Korean internet giant Naver and Netherlands-based
investor Gafina.64
GLOBAL BENCHMARK
Sector Fashion
Zalando
• Offers fashion and lifestyle products to customers in 23 European markets.
(Germany) • It allows fashion companies and retailers to make sales via a Partner Program.67
• In June 2021, the company launched its new online platform in Slovenia, Lithuania and Slovakia.68
• In 2020, the group received 5.39 billion website views with 185.5 million orders.
Key Learning. In 2015, Zalando acquired a 20% stake in the software company Anatwine, an e-commerce platform used to integrate
the brands featured on the site.69 This move enabled Zalando to successfully progress from a fashion e-retailer to a fashion platform
featuring more than 4,500 brands. Strategic acquisitions and investments can assist companies in growing on a large scale.
Sector Food, Fashion, Cosmetics, Pharmaceuticals

Revenue US$ 110.93billion12 (IDR 1581 trillion) Employees 251,462
• One of the world’s largest retailers and e-commerce companies.
Alibaba Group • In 2020, it was also rated as the fifth-largest artificial intelligence company.70 It is also one of the biggest
Holding venture capital firms, and one of the biggest investment corporations in the world.71
(China) • The company hosts the largest B2B (Alibaba.com), C2C (Taobao), and B2C (Tmall) marketplaces in the world.
Key Learning. One of the key values of the company is putting customers first, employees second and shareholders third. This is because
Alibaba believes that only by creating sustained customer value can employees grow and shareholders achieve long-term benefits.
10 Total Group Gross Transaction Value (GTV)
11 Combined Tokopedia and GoJek employees
12 Net income from operations

DISTRIBUTORS
SECTOR OVERVIEW
Distributors are key to connecting manufacturers and retailers with the materials and products they require, specifically from abroad.
Sectors such as fashion are more reliant on imported raw materials. The food and beverage industry are more reliant on locally
sourced materials. Distributors can also assist manufacturers to export their products to international markets.
Sector Food
Revenue Not disclosed Employees Not disclosed
• PT Anugrah Indo Mandiri is a distributor of food and beverage products from companies in Europe, the
Americas, Australia, Japan and Asia within Indonesia.
PT Anugrah
Indo Mandiri
Sector Pharmaceutical
Revenue Not disclosed Employees Not disclosed
• Distributor for various pharmaceutical brands.
• Mangalla has developed successful distribution networks across the 5 major islands in Indonesia with
Manggalla
Pharmaceutical
distribution channel spanning supermarkets, convenience stores, independent pharmacies, clinics, and
Distribution hospitals, with more than 100 sub-distributors spread out across 24 provinces.
Centre
Sector Food
• The largest family-operated broadline food distribution company in North America.
Gordon Food • Also operates in more than 175 Gordon Food Service Store locations in the U.S. which are open to the.72
Service (USA)
Key Learning. The Gordon Food Service company carries out an Annual Stewardship Report. This is a progress report which
focuses on 4 main areas: Sustainable Operations, Responsible Sourcing, Empowering People and Supporting Community. This
would be beneficial for companies to attract the attention of businesses and customers concerned over the sustainability of the
products they procure.
Sector Pharmaceuticals
Revenue US$ 59.1billion (IDR842.5 trillion) Employees 76,000
• Medical distribution and health care information technology company that provides prescription and over-the-
McKesson
(USA) counter drugs, medical supplies, healthcare IT, and pharmacy management software.
• Serves customers across 14 countries.
Key Learning. McKesson is the centralized distributor for COVID-19 vaccines in the USA. Medical-Surgical Solutions, a subsidiary
of McKesson, played a central role in the COVID-19 response efforts, assembling and distributing the ancillary supply kits needed
for COVID-19 vaccinations and distributing COVID-19 tests to healthcare provider customers. A company should develop its service
offerings and build a reputation of efficiency and good service such that they become the go-to company for significant occasions.

ISLAMIC FINANCE/FINTECH
SECTOR OVERVIEW
The growth in Islamic Finance was greater than that of conventional finance in Indonesia for 2020. Total assets grew by 10.97%
compared to 7.7% for conventional banks. Third-party funds grew 11.56% which was higher than conventional banks’ at 11.49%.
Financing grew 9.42% while conventional banks grew by 0.55%.74 Indonesia’s workers social security agency BPJS Ketenagakerjaan
has started offering shariah services. This is expected to boost the Islamic Finance market share.75 As consumers become more
aware of Islamic Finance, the demand for products will continually increase.
Revenue Not yet available Employees 20,00079

• Bank Syariah Indonesia is the product of the merge of 3 state-owned banks. BNI Syariah, Bank Syariah Mandiri
and BRI Syariah (BRIS).
Bank
Syariah
• This is the country’s largest Islamic bank.76
Indonesia • The total assets of the merged entity are estimated at US$ 15.2 billion (IDR214.6 trillion), with total equity of
US$ 1.4 billion (IDR20.4 trillion).
• Ranks among Indonesia’s top 10 banks in terms of assets and the top 10 Islamic banks in the world in terms
of market capitalization.77
• The bank has 14.9million customers with 1,200 bank branches.78
Assets US$ 127.74 million (IDR1.82 trillion) Employees Not available

• Provide a range of shariah compliant insurance products such as life protection, health protection, children’s
education planning, retirement planning, as well as investment planning.
Asuransi
Takaful
Indonesia
GLOBAL BENCHMARK
Assets US$ 125.03 billion (IDR1782.34 trillion) Employees 9,380
Al Rajhi
• According to 2015 data, Al Rajhi is the world’s largest Islamic bank based on capital.
Bank (Saudi • Has over 600 branches in Saudi Arabia, Kuwait and Jordan, with subsidiaries in Malaysia and Syria.
Arabia)
Key Learning. The operations of the bank include a dedicated Shariah Group, which is completely independent of all other banking
departments. This initiative is considered an important standard of quality assurance and will be an important function for any
Islamic bank.
Assets US$ 109.55 million (IDR1.56 trillion) Employees Not available
Wahed
• A fintech company, offering digital financial services to retail customers globally, starting with ethical wealth
Invest management. The company’s app enables users to easily invest locally and internationally with minimal
(USA) transaction fees.
• Over 200,000 customers globally in over 100 countries. They have 11 offices globally.
• Investment options include global stocks, emerging market stocks, sukuk, real estate and gold.
Key Learning. There is great value in a simple user interface, specifically when it comes to dealing with concepts that are inherently
challenging or perceived as more complex. It is the simplicity of the app and having a ready selection of shariah-approved stocks
to invest in which has made the company successful.
14 These are key select large corporates and not meant to be a comprehensive list as there are other corporates as well. These are identified by
DinarStandard team independently and with no commercial consideration.

MUSLIM-FRIENDLY TRAVEL
SECTOR OVERVIEW
Tourism is an important sector of focus for the Indonesian government, particular for Muslim-friendly tourism. The sector consists of
independent hotels, some hotel chains and travel agencies specializing in hajj and umrah trips. This industry was devastated by the
pandemic but with PSBB restrictions easing and domestic travel opening up, the industry should recover strongly.
• Rhadana Hotels and Resorts offer halal-friendly accommodation in several cities across Indonesia. There are
multiple new hotels currently being developed.
Rhadana
Hotels and
Resort
• Founded in 1972. It was one of the first providers of the Hajj Plus service.
• The company provides ticketing services, tours, travel document management (passports and visas) as well
as Hajj and Umrah services or known as PPIH (Hajj Travel Organizer). They have offices across Indonesia.
PT Patuna
Tour & Travel
GLOBAL BENCHMARK
• Specializes in providing luxury travel experiences for Muslim travelers.

• Five key criteria are taken into consideration including food preparation, prayer facilities, non-alcoholic
environments, Muslim-friendly activities and privacy levels.
Luxury Halal
Travel
Key Learning. Focusing on a niche segment within the travel sector will open up the customer base and will also result in a more
loyal one.
Revenue US$ 39.73 million (IDR566.4 billion) Employees >2,400
Intrepid
• Specializes in tourism packages and is made up of three tour operator brands, more than 25 destination
Group management companies, and a not-for-profit foundation.
• Globally, in 2019 they had more than 40 offices around the globe.
• Globally renowned as a leader in responsible travel, in 2018 Intrepid became the world’s largest certified travel
B Corp
Key Learning. After the severe impact that COVID-19 had on the company, they devised a solid strategy for moving forward towards
becoming a billion-dollar company by 2025. Companies should see the pandemic as an opportunity to evaluate their operations
and strategy to create a more resilient business.

ISLAMIC-THEMED MEDIA & RECREATION

SECTOR OVERVIEW
Muslim consumer spend on cosmetics in Indonesia was the 2nd highest globally in 2020. The pandemic lead in a shift from make-
up products to skincare. In 2020, 26,197 products were certified halal across 214 corporations.
• Nussa is an animated, Islamic children’s series featuring the main character Nussa.
• Nussa episodes began airing on YouTube in November 2018 and have received over 2 billion views to date.
• Nussa & Friends content is available via an app and the Nussa Dunya website, which offers a paid subscription
to access content such as related e-books, wallpapers and games.
Nussa • Products are also available on Shoppee and Tokopedia.
• An Islamic television channel that can be watched via MNC Vision satellites and those owned by MNC Channels.
• Content is created in Behasa.
Muslim TV
GLOBAL BENCHMARK
Revenue US$ 25 billion (IDR 356.33 trillion) Employees 12,135

• An American over-the-top (OTT) content platform and production company headquartered in Los Gatos,
Netflix California, USA.
(USA) • The company is a subscription-based streaming service provider offering online streaming from a library of
films and television series, 40% of which is Netflix original programming produced in-house.
• Netflix has also played a prominent role in independent film distribution.
• As of July 2021, Netflix had 209 million subscribers globally, including 72 million in the USA and Canada.80
Key Learning. Netflix began as a DVD rental company that sent DVDs via mail. They successfully pivoted into and were one of the
front runners of the subscription streaming services companies. This highlights the importance of being able to pivot when a market
becomes obsolete or close to it.

• A diversified worldwide entertainment company with operations in the following business segments: Media
The Walt Networks; Parks, Experiences and Products; Studio Entertainment; and Direct-to-Consumer & International
Disney (DTCI).
Company • In November 2019, the company launched Disney+, a subscription-based DTC video streaming service with
(USA) Disney, Pixar, Marvel, Star Wars and National Geographic branded content in the USA and four other countries
and has expanded to select Western European countries in the Spring of 2020.
Key Learning. Disney’s success is due to excellent brand development and key acquisitions. They have consistently adjusted the
content they produce to fit the norms of the time, and this has led to successful diversity and inclusion endeavors.

LOGISTICS AND INDUSTRIAL HUB

Logistics
SECTOR OVERVIEW
With the significant growth in eCommerce, logistics partners have become increasingly important. With the widely distributed
geography of Indonesia, efficient logistics companies are important. These companies also help facilitate exports and imports. They
played a critical role during the pandemic during PSBB.
Revenue US$ 4.3 billion (IDR61.3 trillion)81 Employees 40,00082

• Established in 1990 with a focus on handling customs activities/import of goods/documents and their delivery
from abroad to Indonesia.
JNE Express
• They currently provide a host of different services across Indonesia such as same-day deliveries, high priority
deliveries of valuable goods as well as an economical option. They also provide international shipping.
• A significant portion of their revenue comes from eCommerce businesses. In 2016, it accounted for 60% of
revenue.
• JNE currently operates 6,000 service centres nationwide.
Revenue US$ 20 million (IDR 285 billion)85 Employees 4,500

• Founded in 2015, the company is engaged in logistics and package delivery with 2,000 drop points and 54
gateways throughout Indonesia.83
PT Global • During the COVID-19 pandemic, 50% increase in deliveries was witnessed during Ramadhan 2020 compared to
Jet Express
last year, handling up to 3 million packages each day.84
• J&T uses automated sorting warehouses in Indonesia.
• It has since expanded to a further 6 countries in South East Asian which are Malaysia, Singapore, Thailand,
Cambodia, Philippines and Vietnam. Their expansion to China is currently under review
• It received Indonesian Top Brand Award in 2018 and 2019.
GLOBAL BENCHMARK
Revenue US$ 78.82 billion (IDR 1123.69 trillion)86 Employees >400,000
DHL
• DHL serves over 220 countries, delivering 1.6 billion parcels a year.
(Germany) • The company is divided into 6 divisions dealing with different aspects of logistics such as freight or global
forwarding.
• They have a dedicated division for eCommerce solutions.
Key Learning. DHL has Innovation Centers in Chicago, Cologne, Singapore, and Dubai. Workshops, tours, and events are held in
these centers to encourage innovation in the sector. They receive over 13,000 visitors a year. Constant innovation is a must for
improving services and building better relationships with customers.

• A top global shipping brand with the world’s largest fleet of shipping vessels
• The corporation has invested in 58 terminals, including 51 container terminals, all over the world.
China Ocean • It further aims to build a world-class integrated logistics service and supply chain service ecosystem.
Shipping
Company
Key Learning. The vision of China COSCO Shipping is to undertake the mission of globalizing the Chinese economy and provide
world-leading integrated logistics and supply chain services. A vision like this would be helpful to any country or logistics company
looking to make a significant impact.

Halal Parks
SECTOR OVERVIEW
Halal parks are an important part of the Indonesian Shariah economy strategy. These parks will facilitate investment into halal
economy sectors and create a streamlined process for halal certification.
• The first industrial zone in Indonesia to receive the Halal Industrial Zone certificate from the Ministry of
Industry, enabling the creation of a complete halal ecosystem for halal industries.
Modern • It is located on 500 hectares of land and provides local and global halal food and supporting industries
Cikande Industrial a complete halal ecosystem for efficient halal production, import, domestic distribution and export to
Estate: Modern international markets.
Halal Valley
• Located in the Moderncikande Industrial Estate in Cikande (Banten), just 52 km west of Jakarta on
Java Island. The Moderncikande Industrial Estate has direct highway access through the Cikande
Toll Gate, linking Halal Valley directly to Java’s seaports, Soekarno-Hatta International Airport, and
Indonesia’s metropolis Jakarta.
• Modern Halal Valley provides also commercial space for companies active in halal business, commerce,
and Islamic banking & finance, serving Indonesia, Asia and the world.87
GLOBAL BENCHMARK
• Port Klang Free Zone (PKFZ) and Sarawak-based Regal International Group (RIG) are collaborating to
further promote two-way Halal investments between Malaysia and China.
• The industrial park has partnered with the Halal Industry Development Corporation (HDC). PKFZ Halal
Zone is supported by HDC advisory center, data warehouse, knowledge dissemination tools, and
kande business and market intelligence.
Industrial
Estate: • The halal park will feature HDC training and consultancy services in halal to support certification. Halal
Moder logistics/warehousing will also be available.
• Total investments in Malaysia’s Halal Parks amounted to US$ 2.7 billion, and employment opportunities
reached around 11,000+.
Key Learning. A halal flagship free zone can attract mainstream companies, as PKFZ received $125m (RM 500m) investment
from Cargill. Having halal certifying bodies and other services within the park will also help facilitate in drawing the attention of
mainstream companies.

GOVERNMENT AND REGULATORS

Indonesia has a well-developed ecosystem in particular in halal products regulation and Islamic Finance. With the recent
expansion of the scope of KNEKS, more ministries have now been included to contribute to the development of the shariah
economy. The key to the successful implementation of the Blueprint for the Islamic Economy and Finance is synergy between
the stakeholder in government and various other regulatory and compliance bodies.
ISLAMIC ECONOMY PROMOTION AND MARKETING SUPPORT
Indonesia Investment Ministry of Finance Ministry of Religion Ministry of Ministry of Industry

Coordinating Board Cooperatives, Small and
(BKPM) Medium enterprises
Ministry of Tourism Ministry of SOEs Coordinating Ministry of Coordinating Ministry Coordinating Ministry
and Creative Economy Economic Affairs for Maritime Affairs for Human Development
and Investment and Culture
Ministry of National Indonesian Chamber Ministry of Trade

Development of Commerce
Planning(Bappenas) and Industry
KNOWLEDGE INFRASTRUCTURE AND NETWORKING PLATFORMS
Ikatan Ahli Ekonomi Masyarakat Ekonomi Indonesia Halal Lifestyle

Islam Indonesia (IAEI) Syariah (MES) Centre
SHARIAH AND HALAL REGULATION AND COMPLIANCE GLOBAL LEADERSHIP
Majelis Ulama Indonesia Badan Penyelenggara Kemite Nasional

(MUI) Jaminan Produk Halal Ekonomi dan Kevangan
(BPJPH) Syariah (KNEKS)
ISLAMIC FINANCE REGULATORS
Bank Indonesia LPS (Lembaga Penjamin Financial Services

Simpanan) Authority

There are a number of ministerial bodies and various associations across the halal economy which affect the regulations governing
the sector. These bodies also assist in the promotion and growth of the halal economy.
INDONESIA’S SELECT KEY PLAYERS
Major Initiatives and

Sector Coordinating Authority Objectives
Accomplishments
Overall • The mandate of KNEKS was • The Indonesia Sharia Economic

Halal expanded in 2020 to include the Masterplan (MEKSI) 2019-2024
Economy entire halal economy. was designed by KNEKS. Public
Indonesia Sharia • KNEKS is a committee halal awareness campaigns
Economic Masterplan consisting of 16 head of through various communities
by National Islamic Economy ministries and institutions. In in educational institutions, local
and Finance Committee implementing the program, governments and other mass
(KNEKS) KNEKS is assisted by an organizations.
Executive Management.
Halal • The BPJPH has the task and • Cooperates with the Ministry
Products function to ensure the halal of Trade and other ministries
compliance of products regarding the export
Halal Product Assurance circulating and marketed in requirements for halal-certified
Agency (BPJPH) Indonesia. products. Also provides
mentoring programs for MSEs
• Also responsible for halal
education, literacy and halal
awareness.
Overall • The Ministry of Industry has • The Ministry of Industry

Halal the task of conducting affairs is collaborating with Bank
Economy in the field of industry in the Indonesia, KNEKS and the
Ministry of Industry government to assist the Ministry of Finance to accelerate
President in organizing the the development of the halal
government of the country industrial area and other national
priority sectors through the Halal
Industrial Estate Development
Strategy.
• Compiled a guide map for the
halal industry.
• It has also created the Halal
Industry Centre (PIH) and
Indonesia Fashion Islamic Centre
in Bandung
Tourism, • The main objective of the • The ministry backed the Modest
Modest ministry is to make Indonesia a Fund the Founder’s incubation
Fashion world-class tourism destination program
Ministry of Tourism developing world-class tourism
and Creative Economy destinations and conduct
tourism-oriented marketing.
• For the creative economy,
the ministry is tasked with
synergizing cooperation
between inventors and
investors

INDONESIA’S SELECT KEY PLAYERS
Major Initiatives and

Sector Coordinating Authority Objectives
Accomplishments
Overall • Majelis Ulama Indonesia - MUI) • The MUI works together with
Halal is Indonesia’s top Islamic BPJPH as an auditor of the halal
Economy scholars’ body. The MUI acts process as well as holding fatwa
Majelis Ulama as an interface between the assemblies to certify products as
Indonesia Indonesian government and halal
the Islamic communities.
Halal • BKPM or Indonesian • As the primary interface between

Products Investment Coordinating Board business and government, BKPM
is a Government Agency, which is mandated to boost domestic
Indonesia Investment in charge of implementing and foreign direct investment
Coordinating Board policy and service coordination through creating a conducive
(BKPM) in investment in accordance investment climate.
with the provisions of the • BKPM is an integral part of
regulations. gaining investment into halal
economy sectors
Overall • An organization of academics • IAEI aims to build networks and

Halal and practitioners to conduct cooperation in developing Islamic
Economy studies, development, economics, both nationally and
Ikatan Ahli Ekonomi Islam education and socialization of internationally.
Indonesia (IAEI) Islamic Economics. • IAEI is an important stakeholder
in the development of Islamic
economic literacy
Tourism, • A non-profit organization that • MES is an inclusive forum in

Modest aims to develop and accelerate gathering all existing resources
Fashion the implementation of the and building synergies between
Masyarakat Ekonomi Islamic economic and financial stakeholders
Syariah system in Indonesia. • MES is an important stakeholder
in the development of Islamic
economic literacy
Indonesia Halal Markets Report 2021 55

Indonesia Islamic Economy Masterplan (MEKSI)
On 14th May 2019, the Government, via National Islamic Finance Committee (KNEKS) that is headed by
the President of the Republic of Indonesia, launched the Indonesia Islamic Economy Masterplan (MEKSI).
MEKSI also contains the Indonesia Islamic Financial Architecture Masterplan (MAKSI) launched in August
2016. The strategy to strengthen Sharia finance in MEKSI refers to MAKSI, thus integrating the development
strategies for the Sharia economy and Sharia finance. Meanwhile, in line with another strategy initiated by
Bank Indonesia, the National Sharia Economic Development Strategy contained in MEKSI emphasizes halal
value chain (HVC) development for priority sectors. The halal value chain (HVC) is a series of activities that
generate value-add in each process, involving the production, distribution, and marketing of goods and/
or services to the consumer in compliance with sharia values and core principles. Through an ecosystem
approach, halal value chain development will drive productive, inclusive, and integrated end-to-end sharia
business growth. Various development efforts that lead to the formation of a halal value chain (HVC)
ecosystem have effectively elevated the position of Indonesia’s sharia economy and finance globally.
Bank Indonesia is currently implementing the Blueprint for the Sharia Economy and Finance, with its vision
of Indonesia becoming a global center of the Sharia economy and finance. The Blueprint, which was
launched in June 2017, became main reference for Indonesia Sharia Economic Masterplan by KNEKS in
2019, which aims to develop the real sector of the sharia economy, known as the halal industry.
The blueprint contains three complementary and mutually reinforcing development pillars. According
to the Shariah Economy and Finance Report 2020, the first pillar of the strategy is Sharia Economic
Empowerment based on the main strategy of halal value chain (HVC) ecosystem development. Ecosystem
development is achieved through the application of partnership-based business models. The second pillar
is Sharia Financial Market Deepening, which fundamentally aims to increase sources of sharia financing
for the economy. Islamic Social Finance (ISF) is also included incorporated. The third pillar is Strengthening
Research, Assessment, and Education, which aims to increase public literacy and understanding of the
sharia economy and finance. Under the third pillar, the education strategy is implemented formally to
enhance competencies and mold reliable, professional and competitive human resources.19
19 (2020) SHARIA ECONOMY AND FINANCE REPORT 2020. Published by Bank Indonesia : https://www.bi.go.id/en/publikasi/laporan/Pages/
Laporan-Ekonomi-dan-Keuangan-Syariah-2020.aspx


5.2. INDONESIA HALAL COMPLIANCE ECOSYSTEM
Companies intending to invest in Indonesia need to consider the importance of halal certification for their
halal products. Based on the prevailing national halal regulations, such as Government Regulation No. 39 of
2021 (GR 39/2021), all products that enter, circulate, and are sold within Indonesia must be halal certified,
if otherwise originating from haram ingredients.
Products requiring halal certification include food, beverages, pharmaceuticals, cosmetics, and consumer
goods that are worn or used, originating from animals or animal products. Services that must be halal
certified are slaughterhouses, processing, storing, packaging, distribution, and sales and marketing,
including shelf display. Halal certification is not required for haram products, with clear non-halal labeling
required on such products.
Indonesia serves as a model for a sustainable halal compliance ecosystem, where no single entity
monopolizes the regulatory system. There are three key stakeholders operating independently but in
collaboration with each other and the relevant government ministries. The key stakeholder is the Halal
Product Guarantee Agency – BPJPH, which issues halal certification and works with external auditors
(LPH), such as LPPOM, and fatwa body MUI, as part of the halal certification process.
This section describes the role of these key players in building a robust regulatory ecosystem, supporting
international trade, and the process of halal certification in Indonesia.
Key Regulatory Players
Halal Product Guarantee Agency (BPJPH). Law No. 33 of 2014 (UU 33/2014) in relation to Halal Product
Guarantee mandates the establishment of the Halal Product Guarantee Agency (Badan Penyelenggara
Jaminan Produk Halal – “BPJPH” in Indonesian abbreviation), which is authorized to issue halal product
policies and standards. Other powers of the BPJPH include issuing and revoking halal certificates and halal
labels, registering halal certificates for foreign products, accrediting the Halal Inspection Agency (Lembaga
Pemeriksa Halal – “LPH” in Indonesian abbreviation), registration of halal auditors, and cooperating with
internal and foreign institutions in implementing halal product guarantees.
Indonesian Ulema Council (MUI). Prior to October 2019 (when UU 33/2014 came into effect), halal
certification and labeling were overseen by the Indonesian Ulema Council (Majelis Ulama Indonesia – “MUI”
in Indonesian abbreviation). MUI appointed LPH, including its own Food and Drug Supervisory Agency
(LPPOM MUI), and appointed halal auditors to assess products requiring halal certification. The LPH would
issue halal certificates.
Under the new regulation, BPJPH now oversees the entire halal product assurance system (“JPH” in
Indonesian abbreviation) and issues halal certificates, including the registration of LPH for the inspection
and testing of halal product quality. BPJPH relies on MUI for the determination of halal compliance and
accreditation of LPH and its auditors. MUI holds Fatwa Assemblies to determine whether a product has
satisfied the criteria to obtain a halal certificate.
Halal Inspection Agencies (LPH). As mentioned above, the role of halal inspection agencies (LPH) is to
examine and test the halal quality of a product. The LPH appoints a halal auditor (certified by BPJPH and
MUI) who has the capacity to carry out the examination of a product’s halal quality. At the time of writing
this report, BPJPH has only accredited LPPOM MUI as the LPH until it accredits other inspection bodies
under the new law.

Halal Certification process
Indonesia’s Halal Certification Process for Domestic and International Businesses
SCHEME
Halal Comapnion
SCHEME
SELF DECLARE
Audits
Halal product
Comapnion
SELF DECLARE
MSE*
Audits product
MSE*
Self-declaration proving MSE

REGULAR SCHEME and Halal products complience
Self-declaration proving MSE
BPJPH Results sent
REGULAR SCHEME and Halal products complience
appoints a to MUI, and
Domestic Business Application LPH to audit Halal Auditor BPJPH is
submitted BPJPH
product Results sent
notified
appoints a to MUI, and
Finished Goods
Domestic Business Application LPH to audit Halal Auditor BPJPH is
submitted product notified
Halal
Importers
Finished Goods certificate LPH**
issued
Halal
Importers certificate LPH**
issuedIf there is MOU between BPJPH and The Decree made by MUI is used by BPJPH as the
foreign halal agency, BPJPH will
register foreign certificate basis for the issuance of the halal certification
If there is MOU between BPJPH and
foreign halal agency, BPJPH will The Decree made by MUI is used by BPJPH as the
If no MOU with basis for the issuance of the halal certification
foreign halal agency, register foreign certificate
BPJPH will carry
If no MOU with
assessment Raw materials/
foreign halal agency, Slaughtered Goods
BPJPH will carry
assessment Raw materials/
Importers
Slaughtered Goods
* MSE: Micro and Small-scale Enterprises
Importers ** LPH: Halal Inspection Agency. Currently
only one accredited LPH - LPPOM MUI
* MSE: Micro and Small-scale Enterprises
** LPH: Halal Inspection Agency. Currently
Source:
only oneBPJPH, as on
accredited LPH 19th October
- LPPOM MUI2021
Domestic Businesses:
The halal certification process for domestic companies willing to get their products certified consists of two
schemes – the regular scheme and the “self-declare” scheme for Micro and Small-scale Enterprises (MSE).
(1) Regular Scheme
The implementation of a regular scheme has been followed since the LPPOM MUI period. All business
actors (any person or business entity in the form of a legal entity or non-legal entity engaged in business
activities in Indonesia), both micro, small and medium enterprises (MSME) and large businesses, apply
for halal certification by submitting the required documents to BPJPH. After being reviewed by BPJPH
and declared to have met the requirements, the documents are sent to the halal inspection agency (LPH),
where the assigned halal auditor carries out the inspection. Based on the regulations, BPJPH is obliged
to cooperate with the LPH for laboratory testing requirements (if needed). The results of the inspection
are sent by the LPH directly to MUI, and BPJPH is informed. MUI will decide whether the products that
have been inspected or audited by LPH have met the halal rules or not. If the product fulfills the halal
requirements, a “Halal Decree” will be issued. Based on this Decree, BPJPH will issue a halal certificate for
the product, which will be valid for 4 years.88 Three independent parties—BPJPH, LPH and MUI—collaborate
in the process of issuing the halal certificate.

5 INDONESIA HALAL COMPLIANCE ECOSYSTEM
While previously, this entire process took around 97 days to complete from the time of application to the
issuance of halal certification, it is now estimated to take just 21 days for the process.89
(2)“Self-Declare” Scheme
For micro and small-scale business actor (MSE), the “Self-Declare” expedited the halal certification process.
Under the GR 39/2021 regulation, the self-declare scheme allows MSE to submit a self-declaration to the
BPJPH that proves they are an MSE (as determined under prevailing laws) and confirm the certainty of halal
products based on BPJPH standards.
Under the new regulation, MSE can self-declare after receiving a confirmation from the “halal companion.”
The halal companion could be a non-government organization, the representative of an Islam organization,
higher education, or ministry/another organization that collaborates with these institutions. The task of
the halal companion is to ensure that the production process carried out by MSE is in accordance with the
halal standards.
After validating the documents that have been prepared by the applicant, these institutions declare
the contract of halal (The Halal Oath). Documents are submitted to BPJPH, who will carry out the halal
assessment and issue the halal certificate.
Moreover, under the new regulation, MSE will not be required to pay any halal certification fee.
The MSE must be able to prove that:

• products do not contain or are at risk of containing materials deemed non-halal; and
• its production process is determined to be halal.
International Businesses:
There are two halal product certification schemes from foreign companies. The scheme can be grouped by
product category as regulated in GR 39/2021:
(1) Final product categories
Applicable for food & beverage, cosmetics, medicine and other consumer products. For these categories,
halal certification must be submitted directly to BPJPH with the same procedure as for domestic products
with the regular scheme. This scheme includes the involvement of LPH in the product inspection process.
(2) Raw materials, additives, auxiliary materials, and slaughtered goods product categories
For these categories, if there is a Memorandum of Understanding (MoU) between countries followed by
a Mutual Recognition Agreement (MRA) between BPJPH and the relevant state halal authority agency,
then the halal certificate from that country can be directly registered with BPJPH. Importers or official
representatives of foreign companies in Indonesia can submit applications for the registration process. In
this case, the halal certificate from the respective foreign agency is recognized in Indonesia, and the halal
logo can be used immediately. This applies reciprocally. However, if there is no MRA between BPJPH and a
foreign halal certification agency, a direct assessment will be carried out by BPJPH.

INDONESIA HALAL COMPLIANCE ECOSYSTEM
Export Support
The central and local government of Indonesia play an important role in the development of the halal
industry, especially in their role as regulators in setting and supervising halal standards, facilitators in
providing supporting infrastructure (such as fiscal and non-fiscal policies), and promoters of halal trade
domestically and internationally.
BPJPH plays a major role in supporting companies to export and expand their reach internationally.
Currently, in collaboration with several ministries, this support is available to MSEs. For instance, BPJPH
is collaborating with the Ministry of Trade to help companies learn export requirements for halal-certified
products. Special technical awareness and mentoring programs are organized for prospective exporters of
halal products. This will add value through quality products and increase consumer trust, both for domestic
needs and export purposes.

Halal Product Guarantee
Law No. 33 of 2014 (UU 33/2014) in relation to the Halal Product Guarantee (HPG) mandates all products
distributed in the territory of the Republic of Indonesia obtain halal certification starting from 17th October
2019, except for products that are described as non-halal on their packaging. This mandatory halal
certification aims to provide greater public convenience and assurance concerning the availability of halal
products and to increase value-add for businesses producing and selling halal products domestically and
internationally.
Amendments were made to Law No. 11 of 2020 on Job Creation (Omnibus Law) on 2nd November 2020.
One of the implementing regulations of the Omnibus Law is Government Regulation No. 39 of 2021 on Halal
Product Assurance (GR 39/2021), which replaced Government Regulation Number 31 of 2019 on Halal
Product Assurance (GR 31/2019) (issued on 2nd February 2021). It includes details on the halal compliance
process for products sold in Indonesia. Another implementing regulation detailing the certification process
and timeline is the Ministry of Religious Affairs Regulation No. 26 Year 2019 (MORA Reg 26/2019).
Business owners who fail to label their non-halal products will be imposed with administrative sanctions
in the form of a verbal warning, followed by a written warning, and finally, an administrative fee will be
imposed successively.
The law covers products and/or services related to food, beverages, drugs, cosmetics, chemicals, biological
products, genetically engineered products as well as consumer goods that are worn, used, or utilized by the
public. Halal certification for all products that are halal became mandatory in Indonesia from October 2019
(for food and beverages); however, they are phased out by categories to be implemented progressively.
This grace period differs for each category. For example, food and beverage business owners have a 5-year
grace period to comply with the mandatory halal certification, starting 17th October 2019 and ending 17th
October 2024. Below is a table compiled from the regulations, listing the commencing date and deadline to
comply with mandatory halal certification by category.
HALAL COMPLIANCE GRACE PERIOD BY CATEGORIES
Categories Commencing Date Deadline
Food and beverages 17th October 2019 17th October 2024
Traditional medicines and health supplements 17th October 2021 17th October 2026
Over the Counter Medicine 17th October 2021 17th October 2029
Prescription drugs (except psychotropic) 17th October 2021 17th October 2034
Cosmetics, chemical products and genetically

17th October 2021 17th October 2026
engineered products
Wearable items (clothing, headcovers and accessories) 17th October 2021 17th October 2026
Household medical supply, household equipment,

17th October 2021 17th October 2026
Muslim praying attributes, stationery and office supplies
Medical Equipment classified in Risk Category A 17th October 2021 17th October 2026
Medical Equipment classified in Risk Category B 17th October 2021 17th October 2029
Medical Equipment classified in Risk Category C 17th October 2021 17th October 2034
Source: Ministry of Religious Affairs Regulation No. 26 Year 2019 (MORA Reg 26/2019), Articles 31-33

5.3. DOMESTIC CONSUMER DRIVERS
Consumer drivers are those circumstances that directly affect the consumption market. For Indonesia,
the most stand-out feature is its large population. It is the 4th most populous nation on Earth and has the
largest population of Muslims.
World’s largest Muslim population
Indonesia is home to the world’s largest Muslim population. Muslims make up 87.2% of the country’s total
population. In a Pew Research survey, 98% of Indonesians surveyed believe religion is very important, with
the remaining 2% believing that it is somewhat important. Since 2006, this figure has only grown. God
and prayer play critical roles in the lives of almost all of those surveyed.90 The government has permitted
specific regions to adopt Shariah, such as Aceh, where the hijab is obligatory for Muslim women by law.91
With religion playing such an important role, the country’s consumers will also value making purchases in
line with their faith. Consumer spend on halal food is already the highest in the world. Lifestyle sectors such
as modest clothing have significant potential, especially since Indonesia is already a successful producer
of clothing in general and a popular tourist destination.
Growth in Income
Although the World Bank downgraded Indonesia to low-middle income status as the gross national
income per capita decreased from US$4,050 in 2019 to US$3,870 in 2020, the Presidential Special Staff for
Economic Affairs believes that Indonesia can return to its upper-middle-income status in one to two years,
if annual economic growth reaches 5-6% and the population rises by 1.2% per year.92 The World Bank’s
chief economist for East Asia and Pacific Region believes that Indonesia can grow close to 5% in 2022,
especially with a successful vaccine rollout program.93
In 2019, half of the consumption basket of the Indonesian consumer consisted of food. As income grows,
non-food categories will make up a larger proportion of this basket. A rise in spending on housing and
household facilities can be attributed to greater urbanization. Within the food categories, the proportion of
spending on prepared food and beverages is also forecasted to increase by 2030. This is due to lifestyle
changes that have people eating out more and seeking more convenience and packaged foods. This is also
linked to the higher urbanization levels.94
High proliferation of social media

61.8% of the population is active on social media. This increased 6.3% between January 2020 and January
2021. 36% of time spent on the internet is spent on social media. 65.1% of users used social media as
their main source to research brands. Those of ages 18 to 34 make up the largest demographic of those
on social media. These are the top 4 social media platforms and the percentage of internet users between
16-64 who have used each one in the past month:
YouTube: 93.8% WhatsApp: 87.7% Instagram: 86.6% Facebook: 85.5%
Given Indonesia’s high social media penetration rates, these channels offer immense growth potential for
many consumer companies. Many consumers are already on social media but do not see it as a place
to make purchases. Businesses should therefore focus on building their presences, establishing their
credibility, and scaling up their marketing efforts on these platforms to drive greater interest and sales.95

Tech-savvy population
Indonesia’s tech-savvy population pushed its internet economy to grow over 10% to reach a Gross
Merchandise Value (GMV) of $44 billion in 2020, the largest in Southeast Asia. The digital economy
contributed 4% of the country’s GDP in 2020.96 About 73.7%97 of the population have access to the
internet, which significantly exceeds the global level of 59.5%. There are 345.3 million mobile connections,
translating to 1.2 mobile connections per person in Indonesia.
Around 87.1% of users had made a purchase online. Millennials and Gen-Z’s make up 53% of the Indonesian
population. This has also contributed to the acceleration of the growth of the digital economy in the country.
Increased health consciousness
Since the beginning of the COVID-19 pandemic, surveys have found that consumers are most conscious
about personal hygiene and general health. A survey carried out by Bank DBS Indonesia found that more
than half of those surveyed would continue to use vitamins and supplements post-pandemic.
The consumer’s increased awareness of health is also changing their preference for grocery shopping.
Prior to COVID-19, 68% of consumers preferred purchasing packaged and fresh food from traditional
markets. This preference has now decreased to 59%. A survey by Deloitte found that 40% of respondents
have become much more conscious of the source of origin of their food and the nutritional value due to the
pandemic.98 This shift in perception offers halal food and pharmaceutical manufacturers many potential
opportunities to introduce new products and meet this emerging demand.

5.4. IMPACT OF THE COVID-19 PANDEMIC ON INDONESIA’S HALAL ECONOMY
The COVID-19 pandemic led to the first negative growth in GDP that Indonesia has experienced since
1998. The Central Statistics Agency (BPS) reported GDP growth for 2020 in Indonesia at -5.4%.99 In a
survey conducted by McKinsey & Company throughout 2020, 53% of respondents felt optimistic about
the recovery of Indonesia’s economy post-COVID and believed it would rebound within 2-3 months.100 To
decrease the spread of the virus, the government introduced large-scale social restrictions (PSBB) and
restrictions on community activities (PPKM) which had significant impacts on the lives of citizens and, in
turn, the economy at large.
Impact on Indonesia’s Economy (GDP) – V-Shaped Recovery
The COVID-19 pandemic led to the first recession in Indonesia in over 20 years. The economy contracted by
5.4% in 2020. This was driven by drops in private consumption (-1.5%) and investment (-1.6%), which were
partially offset by growth in net exports (1.1%). According to the World Bank, the economy is expected to
start rebounding in 2021 and to gradually strengthen in 2022. Growth is projected to reach 4.4% in 2021.
Growth could accelerate to 5.0% in 2022, driven by reduced uncertainty and improved confidence, provided
that the vaccine rollout reaches a critical mass of the population starting in the fourth quarter of 2021.101
2019 2020 2021 (f)

12%
10%
8%
6%
4%
2%
0%
-2%
-3.2%
-4%
-5.4%
-6% -5.6%
-8%
OIC World Indonesia
Source: IMF, GDP current prices (April 2021)
There are 63 million MSMEs in Indonesia that contribute 60% to the country’s GDP and are responsible
for 97% of employment.102 MSMEs were more negatively affected than large enterprises, experiencing
between a 35-45% drop in sales, compared to a 25% drop in sales experienced by large enterprises.103 This
amounts to almost $100 million in revenue.104 Since most halal economy lifestyle sector players would
qualify as an MSME, this would directly impact the halal economy.

Consumer Spending Habits
A survey carried out by McKinsey & Co. periodically throughout 2020 on the effects of COVID-19 on
consumers found that household income and savings have decreased for 60% of consumers in Indonesia.
This has led to consumers becoming more mindful of how they spend and save money Spending patterns
have shifted as consumers prioritized essential products such as groceries and healthcare products over
other lifestyle segment products. For categories such as footwear, apparel, accessories and jewelry, over
50% of consumers surveyed have decreased spend. Other categories where a vast majority, often over
50%, of consumers had decreased spend include hotel or resort stays, domestic flights, and eating at
restaurants.
More people expect to make a portion of their purchases online post-COVID-19 than before. The figure
below shows the product categories growing the most in consumer purchases during the pandemic.105
Figure: % growth in Indonesian customers purchasing category online
OTC medicines Groceries Furnishing Vitamins/ Personal

83% 68% and appliances supplements care products
61% 55% 39%
Skin care Consumer Accesories Fitness &

& makeup electronics 25% wellness
Books, magazines, 38% 35% 25%
Snacks
74% newspapers
63%
Footwear Food delivery
38% Apparel
32%
23%
Entertainment
at home
13%
Source: McKinsey survey, 2020
Supply Chain and Production
One of the Government’s strategies in suppressing the spread of Covid-19 is to establish a Large-Scale
Social Restriction ( PSBB ) policy . With the implementation of the PSBB, both the supply chain and
production were disrupted as the rules placed limitations on the movement of people and goods. Some
industries were forced to close completely, while others were allowed to operate since different PSBB rules
apply to different parts of the country. The food industry was given priority to operate to prevent a food
security crisis. However, this still caused a disruption in the overall food value chain as priority was given to
food end-product producers and didn’t necessarily consider other value chain players such as agriculture
and food ingredients. The transportation bans in April and May 2020 also led to a delay in food supply
chains.106

The manufacturing sector is one of the largest contributors to Indonesia’s GDP. The food and beverages
sector of manufacturing saw slight positive growth and the chemicals, pharmaceutical, and traditional
medicine subsector saw significant growth, becoming the 2nd largest contributor after food and beverages.
Manufacturing in textile and apparel witnessed the largest decrease in growth. 107
Trade and FDI
Foreign Direct Investment (FDI) into Indonesia increased by US$6.1 billion in June 2021 from the previous
quarter.108 FDI decreased by 23% between 2019 and 2020.109 Most investors currently involved in projects
in Indonesia have postponed their projects but have not pulled out completely. An example of a project
that has been delayed is the Jakarta-Bandung high-speed railway project, which is a joint project between
Indonesian and Chinese railway companies.110 Interestingly, domestic investment, which makes up 53% of
total investment in the country, increased by 9.3% quarter-on-quarter between January and March 2021.111
The Omnibus Bill (became law in October 2020) included FDI-related reforms that cut the number
of business lines subject to FDI restrictions dramatically from 528 to 215, including in areas critical to
industrial upgrading such as e-commerce.
In Indonesia, trade was limited by the PSBB, which restricted trade with certain countries. Exports
experienced a significant decrease between March 2020 to May 2020112 but, most recently between April
2020 and March 2021, showed steady growth from US$12.2 billion to US$18.4 billion.113 Imports showed
a similar trend in the early months of the pandemic, especially since the restrictions on Chinese trade were
particularly strong during this time. China is the largest import partner of Indonesia.114
Support Services: Tourism and Islamic Finance
The role and urgency of Islamic social finance (ISF) during the Covid-19 pandemic have become more
tangible. Strategically, zakat, infaq and sadaqah (ZIS)support the government’s social protection programs
to overcome the social impact of Covid-19. and provide the healthcare services required to contain
Covid-19. In addition, instruments that integrate commercial and social finance, such as cash waqf-linked
sukuk, support the development of public healthcare infrastructure.115
Globally, travel services were down by 63% in 2020 and are not expected to recover until the pandemic
settles down.116 By the first half of 2020, with restrictions on foreign visitors entering Indonesia, the number
of arrivals decreased by 60%, and 90% of those employed in the sector have been placed on unpaid leave
indefinitely.117
While the relaxation of PSBB rules allowed for domestic tourism to resume for some time, it declined again
when COVID-19 cases increased significantly due to the delta variant. With about 28.5% of the population
has been vaccinated as of October 2021,118 growth in contact-intensive services sectors is expected to
gradually increase.

INDONESIA HALAL MARKET TRADE
6 & INVESTMENT OPPORTUNITY
By implementing a comprehensive halal economy strategy that builds on Indonesia’s existing capabilities,
Indonesia can substantially boost its production of products linked to the halal economy and contribute an
additional $5.1 billion to the economy.
This section examines Indonesia’s halal trade and investment opportunities through boosting exports in
the OIC and non-OIC markets, substituting imports of key categories by domestic production, and through
incremental FDI opportunity.
HALAL TRADE & INVESTMENT OPPORTUNITY IMPACT ON GDP
OIC EXPORT OPPORTUNITY $1.95 $1.63 NON-OIC EXPORT OPPORTUNITY

BILLION BILLION
$3.6 BILLION
$2.00 EXPORT OPPORTUNITY
$1.30
IMPACT $0.20 $0.10
+
FOOD FASHION COSMETICS PHARMA
$8.00
$1 BILLION
IMPORT SUBSTITUTION
OPPORTUNITY IMPACT $1.20 $0.90
+
FOOD PHARMA COSMETICS
$3.13
$1.91
$0.5 BILLION
FDI OPPORTUNITY IMPACT
$0.31 $0.11 $0.03 $0.02
=
FINANCE FOOD TOURISM COSMETICS MEDIA PHARMA
$5.1 BILLION INCREASE IN GDP


6.1. INDONESIA TRADE OPPORTUNITY
Indonesia was among the top global exporters of halal products (food, fashion, pharmaceutical and
cosmetics) to the OIC countries in 2020, yet it represents 3% of total halal product trade value. This implies
a tremendous opportunity for growth. With $8.6 billion exports of halal products (including those not
requiring halal compliance, such as fresh vegetables), Indonesia is the 9th largest exporter globally and 2nd
largest exporter among the OIC countries. Of the $8.6 billion exports, $8 billion are products exported to
OIC that require some level of mandatory halal certification.
The export destinations for Indonesia’s halal product exports are mainly the OIC member countries, but
even the non-OIC countries source halal products from Indonesia, mainly the Eastern European markets.
An estimated $0.22 billion of halal products (requiring some level of mandatory halal certification) were
exported by 10 non-Muslim countries with the highest Muslim spend.20
This section provides the export opportunity for Indonesia – which product categories are ripe for export
growth, and what is the impact of incremental trade capture opportunity from the OIC and non-OIC trade
on Indonesia’s economy. The 57 OIC countries and top 10 non-OIC countries are collectively referred to as
“halal consumer markets” or “halal markets” in this sub-section.
Prioritization of sectors & geographies for export
Current state: Of the $8 billion halal products (food, fashion, pharmaceuticals, cosmetics) exports by
Indonesia to the top halal consumer markets in 2020, about 74% of exports were of animal or vegetable
fats and oils, accounting for $6 billion exports, with palm oil covering more than 80% of the category. But
other products also make an important contribution to the export earnings. These include natural resources
such as are processed food and beverages, forestry products, coffee, tea, palm products and fish. Exports
of other fashion products (apparel and footwear), pharmaceuticals and cosmetics cover about 7.5% of total
exports to halal consumer markets.
Indonesia’s Exports of Halal Products to Halal Consumer Markets* in 2020

(US$ billion, % of total halal product exports)
$0.14 $0.09 $8.23

$0.38
1%
$7.61 2%
97%
of exports
93% 5% are to OIC
Food Fashion Cosmetics Pharmaceuticals Total Halal

Products
* Halal products include food, fashion, pharmaceuticals and cosmetics products. Halal consumer markets include 57 OIC countries
and 10 non-OIC countries with high Muslim spend on halal products. See methodology section for details.
20 10 Non-OIC countries that have the highest Muslim spend (80% of the total Muslim consumption of halal products by non-OIC countries).
Countries include India, Russia, United States, China, France, Germany, United Kingdom, Italy, Ethiopia, Israel. See methodology section for details.

6 INDONESIA HALAL MARKET TRADE & INVESTMENT OPPORTUNITY
Export growth categories: Below are the top 10 prioritized export growth categories, led by animal or
vegetable fats and oils. The other most attractive export sectors are medicament; preparations of meat and
fish; coffee, tea, mate and spices; sugar and sugar confectionery.
These categories are scored and ranked by 5 metrics: products most imported by the halal consumer
markets, fastest-growing categories over the past 5 years, most exported by Indonesia, requiring some
degree of halal compliance, and OIC-trade intersection opportunity – halal trade flowing over Indonesia
with potential to capture halal products’ trade (refer to methodology section for details).
Top 10 Prioritized Export Categories for Indonesia
INDONESIA PRIORITIZED
Sector Trade Code (HS Code) Simplified Name FINAL SCORE
Food '15 Animal or vegetable fats and oils 0.74
Pharma '3004 Medicaments (for retail sale) 0.55
Preparations of meat, fish or other

Food '16 0.55
aquatic invertebrates
Food '09 Coffee, tea, maté and spices 0.55
Food '17 Sugars and sugar confectionery 0.54
Food '04 Dairy products 0.53
Fashion ‘62 Apparel (not knitted/crocheted) 0.51
Food '19 Cereal, pasta & bakery products 0.51
Food '02 Meat and edible meat offal 0.50
Cosmetics '3306 Oral care 0.49
Note: Full list of rankings and methodology in appendix
International Competitiveness
The OIC countries are the major destination markets for Indonesia’s halal products export. With a rich
profile of natural resources such as palm oil, Indonesia is the largest global supplier of animal or vegetable
fats and oil to the OIC countries, exporting 33% of the global exports to OIC.
But in regard to the other prioritized export categories, other countries lead the export market to the OIC. It
is key for Indonesia to assess these export markets and ascertain their competitive edge in the halal trade
market. This will help Indonesia identify the gaps in its trade and production capabilities.

INDONESIA HALAL MARKET TRADE & INVESTMENT OPPORTUNITY
Prioritized Export Categories and Top Global Exporters
Trade Code Prioritized Export Categories Current Export Value % of Total Exports
Sector Top 3 Exporters to OIC
(HS Code) (Simplified Name) (US$ Billions) to OIC
Indonesia $5.78 32.8%

Food '15 Animal or vegetable fats and oils Malaysia $3.47 19.7%
Russia $1.56 8.8%
Germany $3.67 13.7%

France $3.23 12.0%
Pharma '3004 Medicaments (for retail sale)
India $2.63 9.8%
Indonesia (51st exporter) $0.03 0.1%
Thailand $0.67 28.1%

Preparations of meat, fish or other China $0.32 13.2%
Food '16
aquatic invertebrates Morocco $0.14 5.9%
Indonesia (5th exporter) $0.13 5.4%
India $1.31 16.5%

China $1.15 14.5%
Food '09 Coffee, tea, maté and spices
Kenya $1.01 12.8%
Brazil $5.77 45.2%

India $2.07 16.3%
Food '17 Sugars and sugar confectionery
Thailand $0.83 6.5%
New Zealand $2.89 20.9%

Netherlands $1.08 7.8%
Food '04 Dairy products
Saudi Arabia $1.04 7.5%
China $4.18 42.2%

India $1.31 13.2%
Fashion ‘62 Apparel (not knitted/crocheted)
Turkey $0.83 8.3%
Turkey $1.13 10.9%

France $0.71 6.8%
Food '19 Cereal, pasta & bakery products
Netherlands $0.67 6.4%
Brazil $3.54
33.0%
India $1.81
Food '02 Meat and edible meat offal 16.9%
Australia $1.33
12.4%
Indonesia (84th exporter) ($0.1 million)
China $0.21 25.7%

Egypt $0.07 8.9%
Cosmetics '3306 Oral care
Thailand $0.07 8.1%

Export Opportunity Impact
Opportunity Area 1: OIC Incremental Trade Opportunity
The OIC countries imported $202 billion in halal products (requiring some degree of halal compliance) for food,
fashion, pharmaceuticals and cosmetics in 2020. Indonesia’s exports to the OIC countries totaled $8 billion,
4% of total exports. Hence, excluding Indonesia’s exports, the OIC imported $194 billion in halal products.
Indonesia is well-positioned to boost annual exports to the OIC by $1.95 billion. With a dedicated strategy
that supports halal economy activity, Indonesia can substantially boost its penetration of the broader $194
billion in exports to other member countries of the OIC by an incremental $1 billion (5%), $1.95 billion (10%)
or $2.93 (15%) billion per annum.
CURRENT
CURRENT TOTAL
INDONESIA 5% Capture 10% Capture 15% Capture
OIC IMPORTS POTENTIAL
EXPORTS TO OIC
Sectors OF HALAL
FOR HALAL
VALUE OF of Global Halal of Global Halal of Global Halal
PRODUCTS*, CAPTURE VIA Trade Trade Trade
PRODUCTS*,
2020 INDONESIA**
2020
US$ Billions US$ Billions US$ Billions US$ Billions US$ Billions US$ Billions
$202.11 $8.00 $19.51 $0.98 $1.95 $2.93
*Halal products exclude categories that are inherently halal (such as fresh vegetables) and categories identified haram.
**See methodology section for details on potential value of capture estimation.
Opportunity Area 2: Non-OIC Incremental Trade Opportunity
Indonesia is also well-positioned to boost annual exports of final products to non-OIC countries by
$1.63 billion (10%).
The top 5 non-OIC countries across each of the 22 final consumer product categories imported $17 billion
of halal products across food, fashion, pharmaceuticals and cosmetic products in 2020. The import values
were adjusted based on Muslim spend in these countries (see methodology section for details). Indonesia
exported $0.64 billion (4%) of halal products to these non-OIC countries to meet end consumer demands.
Indonesia can substantially boost its penetration by an incremental $0.82 billion (5%), $1.63 billion (10%) or
$2.45 (15%) billion per annum.
CURRENT
CURRENT INDONESIA TOTAL
NON-OIC
EXPORTS TO POTENTIAL
IMPORTS OF 5% Capture of 10% Capture of 15% Capture of
Sectors FINAL HALAL
NON-OIC FOR FINAL VALUE OF
Global Halal Trade Global Halal Trade Global Halal Trade
HALAL PRODUCTS*, CAPTURE VIA
PRODUCTS*,
2020 INDONESIA**
2020
US$ Billions US$ Billions US$ Billions US$ Billions US$ Billions US$ Billions
$16.94 $0.64 $16.30 $0.82 $1.63 $2.45
*22 final halal products are identified from a list of 33 categories, excluding raw materials and intermediary products, and includes categories that
require some degree of halal compliance.
**See methodology section for details on potential value of capture estimation.

With $1.95 billion incremental OIC exports, and $1.63 billion incremental non-OIC exports, Indonesia can
boost its exports and the economy by a total $3.6 billion. The top 10 prioritized export categories cover
51.3% of the estimated export opportunity impact.
Summarizing OIC and Non-OIC Incremental Export Opportunity Impact on Indonesia’s GDP
OIC IMPORTS NON-OIC IMPORTS
$202 BLN $17 BLN
Indonesia’s export Indonesia’s export

$8 BLN $0.64 BLN
5% 10% 15% Indonesia’s

5% 10% 15%
incremental trade
$0.98 BLN $1.95 BLN $2.93 BLN capture impact $0.82 BLN $1.63 BLN $2.45 BLN
on GDP
Reasonable Reasonable
export capture export capture
(10% capture)
$3.6 BLN
EXPORT OPPORTUNITY IMPACT ON GDP

Prioritized Export Categories and Contribution to Incremental Export Opportunity
Export Opportunity
Trade Code Prioritized Export Categories % of $3.6 Billion Export
Sector to OIC & Non-OIC
(HS Code) (Simplified Name) Opportunity Impact
(US$ Billion)
Fashion ‘62 Apparel (not knitted/crocheted) $0.44 12.3%
Food '04 Dairy products $0.31 8.7%
Food '15 Animal or vegetable fats and oils $0.31 8.6%
Food '02 Meat and edible meat offal $0.19 5.4%
Food '19 Cereal, pasta & bakery products $0.14 4.0%
Food '09 Coffee, tea, maté and spices $0.13 3.6%
Food '17 Sugars and sugar confectionery $0.12 3.2%
Preparations of meat, fish or other

Food '16 $0.10 2.7%
aquatic invertebrates
Pharma '3004 Medicaments (for retail sale) $0.08 2.2%
Cosmetics '3306 Oral care $0.02 0.7%
Others $1.75 48.7%

6.2. INDONESIA DOMESTIC PRODUCTION OPPORTUNITY
Unlike many OIC countries, Indonesia is a net exporter of halal products in aggregate. In 2020, Indonesia
exported a total of $46.7 billion halal products (food, fashion, pharmaceuticals, cosmetics) globally, and
imported $14.5 billion halal products, hence a net exporter for halal products, with net exports totaling
$32 billion in 2020. Nonetheless, Indonesia is still import-dependent for many halal products that could
be replaced by domestic production. These products include ingredients for food, pharmaceuticals and
cosmetics, dairy products, animal feed, and several processed foods and beverages. For this reason,
Indonesia is aiming to develop strategies to increase domestic production efforts for import substations,
in addition to increasing global exports of halal products.
This section discusses the product categories that Indonesia heavily relies on for imports to meet its
consumer demands but which have the potential to be replaced by domestic production. The impact on
GDP of substituting such imports with local production is also estimated in the section.
Import-Dependency and Domestic Production
In terms of halal economy sectors, Indonesia is a net exporter of halal food and fashion products, with
net exports of $22.5 billion and $10.5 billion, respectively. However, Indonesia is still a net importer of
pharmaceutical and cosmetic products, with net imports of $0.56 billion and $0.35 billion, respectively.
Indonesia’s Trade by Halal Economy Sectors, 2020

US$ Billion
Net Exporter
$14.51
$11.0
$1.2
* Includes trade of halal food

products requiring some degree
of halal compliance.
$46.70 $33.5 $11.8

Net Importer
$1.2 $1.1
$0.6 $0.8
Total Halal Products Food* Fashion Pharma Cosmetics
Exports US$ billion (2020) Imports US$ billion (2020)
The table below shows 17 halal product categories (food, fashion, pharmaceuticals, cosmetics) that
were import-dependent in 2020. Most of these categories can be substituted by domestic production as
Indonesia has the pertinent natural resources and capabilities.
Source: ITC Trademap, DinarStandard synthesis and analysis Indonesia Halal Markets Report 2021/2022 75
Indonesia’s Import-Dependent Halal Product Categories
Total Indonesia Exports Total Indonesia’s Imports Trade Balance (Exports

No. Sector HS CODE Simplified Name of Halal Products, 2020 of Halal Products, 2020 less Imports) 2020
US$ 000 US$ 000 US$ 000
1 Food '17 Sugars and sugar confectionery 307,224 2,276,076 ($1,968,852)
2 Food '23 Animal fodder 983,388 2,910,776 ($1,927,388)
3 Food '02 Meat and edible meat offal 14,174 707,781 ($693,607)
4 Food '04 Dairy products 597,180 1,156,623 ($559,443)
5 Food 01 Live animals 4,918 471,010 ($466,092)
6 Cosmetics '3302 Odoriferous substances 189,630 460,615 ($270,985)
7 Pharma '3002 Vaccines 78,395 341,017 ($262,622)
8 Pharma '3004 Medicaments (for retail sale) 472,015 709,669 ($237,654)
9 Food '11 Products of the milling industry 96,478 286,048 ($189,570)
10 Cosmetics '3304 Makeup & skincare 109,872 257,134 ($147,262)
11 Food '05 Other products of animal origin 19,819 81,221 ($61,402)
12 Pharma '3005 Adhesive dressings 5,024 39,234 ($34,210)
13 Cosmetics '3303 Perfumes 122,172 143,388 ($21,216)
14 Pharma '3006 Pharmaceutical preparations 21,253 36,653 ($15,400)
15 Pharma '3003 Medicaments (not for retail sale) 15,784 27,163 ($11,379)
16 Cosmetics '3307 Personal care 32,571 38,650 ($6,079)
17 Food '22 Beverages and vinegar 92,923 94,653 ($1,730)

Domestic production: Indonesia’s domestic production capacity is a key area to develop import
substitution strategies. Current estimates show that in the year 2020, Indonesia’s halal food production
reached $214 billion, which includes production in agriculture, fisheries and processed food that comply
with shariah principles. Production in modest fashion reached $15.8 billion and the Muslim-friendly tourism
sector produced $49 billion in products that comply with shariah principles, from transport services,
accommodations and restaurants (Source: Bank Indonesia estimates).
Domestic industry interviews validated the ability and opportunity to substitute major parts of current halal
product imports. Below are summarized insights from interviews (see methodology section for interviewees):
Food import substitution: While in aggregate, Indonesia is a net exporter of halal food products, there are
several product categories that are import-dependent and can be substituted by domestic production.
These imported products largely comprise raw materials and processed food. Almost all sugar is imported
by Indonesia as ingredients. While about 80% of dairy is imported, it is difficult to self-suffice for milk powder
due to limited resources. And the same is the case with the import of corn for poultry feed. Other types of
processed food that Indonesia can self-suffice in include snacks, meat, and ingredients such as flavors and
preservatives.
Pharmaceutical/cosmetics import substitution: Most of the raw materials for pharmaceuticals and
cosmetics are imported. Intermediate products, such as polysilane, which is an imported raw material for
cosmetics, are domestically available. There is also a huge opportunity in producing packaging materials
that are also largely imported.
Fashion import substitution: Fabric and fiber production has potential for import substitution, although
Indonesia lacks the technology and a sufficient number of skilled people. Indonesia has a competitive
advantage in producing and exporting synthetic fiber but largely imports cotton, which is not feasible to
grow in the country either.
Import Substitution Opportunity Impact
The 17 import-dependent halal product categories accounted for around $10.06 billion imports in 2020.
These cover 70% of imports of all halal products (food, fashion, pharmaceuticals, cosmetics). Through
decisive import substitution strategies, if Indonesia can reasonably substitute 10% of these imports with
domestic production, it will increase the GDP by almost $1 billion. Other scenarios include 5% and 15%
import substitution, which impact GDP by $0.5 billion and $1.5 billion, respectively.
TOTAL INDONESIA
5% Import 10% Import 15% Import
Prioritized Categories for Import Substitution IMPORTS, 2020
Substitution Substitution Substitution
US$ 000
Sectors HS Code Trade Category (Simplified Name) US$ Billions US$ Billions US$ Billions US$ Billions
$10.04 $0.50 $1.00 $1.51

Summarizing Import Opportunity Impact on Indonesia’s GDP
FOOD PHARMA COSMETICS
$8 BLN $1.2 BLN $0.9 BLN

Imported value
(US$ billion)
Prioritized Sugar, animal fodder, meat, Vaccines, medicaments Odoriferous substances,

categories for dairy, live animals, malt/ (for retail and raw materials), makeup & skincare ingredients,
import starch, beverages, products adhesive dressings, pharma perfumes, personal care
substitution of animal origin preparations ingredients
Total imports by 17 categories
$10.04 BLN
5% 10% 15%
$0.5 BLN $1 BLN $1.5 BLN
Reasonable export capture
$1 BLN
IMPORT-SUBSTITUTION OPPORTUNITY IMPACT ON GDP


6.3. INDONESIA INVESTMENT OPPORTUNITY
Globally, investments in the halal economy reached $11.8 billion in 2019/20,21 with Indonesia recording the
highest share of global investments at 43% ($5.01 billion). Of the 156 global investments, 38 were deals
from Indonesia in various halal products and lifestyle sectors, 24 belonging to Islamic finance and halal
food deals. These investments include the relevant mergers & acquisitions (M&A), private equity (PE), and
venture capital (VC) transactions in 2019/20.
Indonesia’s Current Halal Investments by Sectors 2019/20 (US$ Million)
No. of transactions
#14 #10 #4 #2 #6 #2
$3,000
$2,500
$2,000
$1,500
$1,000
$500
$0
Islamic Halal Travel & Halal Media Halal
Finance Food Tourism Cosmetics Pharma
Source: DinarStandard synthesis and analysis
Indonesia has become a lucrative economy for halal investments. With the 4th largest population in the
world and the largest Muslim population, estimated at 229.6 million Muslims in 2020, Indonesia also
represents the largest market for Muslim spend globally across the halal economy sectors, with a combined
$184 billion across halal products and lifestyle sectors.
Indonesia, with $199.5 billion in Islamic finance assets, is a global leader in Muslim financial inclusion.
In 2020, Indonesia was the largest issuer of sovereign sukuk in the international market, totaling $20.65
billion. The agriculture sector is also ripe for investments, as respondents of a business survey carried out
by Bank Indonesia showed that investment activity in agriculture increased during the first half of 2020, and
they are optimistic that investments will increase in the first quarter of 2021.119
21 Investments from August 1st, 2019, through July 31st, 2020.

FDI opportunity impact
With a positive outlook of investments in Indonesia and its large global share, this report assesses the
impact of increasing investments in halal products and lifestyle sectors on the economy. In an ideal
situation, if investments in each sector could increase by 10%, it could potentially impact the GDP by
$0.5 billion and raise Indonesia’s global share of investments to 45%. Other feasible scenarios are an
increase of 5% and 15%, increasing GDP by $0.25 billion and $0.75 billion, raising the global share to 43%
and 49%, respectively.22
Summarizing FDI Opportunity Impact on Indonesia’s GDP
FDI OPPORTUNITY IMPACT ON GDP $0.5 BLN
$5.01 43% $5.51 47%
TOTAL INVESTMENTS
$2.85 47%
ISLAMIC FINANCE
$1.74 35%
HALAL FOOD
10%
INCREASE IN
$0.28 82%
INVESTMENT
TRAVEL & TOURISM VALUES
$0.10 79%
HALAL COSMETICS
$0.03 23%
MEDIA
$0.02 14%
HALAL PHARMA
10% Investment Increase Opportunity Global Investments Indonesia Investments
Investments in period Aug 2019 – Jul 2020, all values are in US$ billion
Modest fashion investments are insignificant and do not contribute majorly to the total investments, hence omitted.
Source: DinarStandard synthesis and analysis
22 Full table with impact of different scenarios in appendix.

INDONESIA HALAL MARKET
7 OPPORTUNITY ASSESSMENT
This section introduces a comprehensive framework that identifies the essential building blocks for a
successful halal economy strategy and assesses Indonesia’s current performance against key criteria, with
benchmarking against leading countries in the halal economy.
Essential Building Blocks for the Halal Economy
The National Halal Economy framework by DinarStandard is a tool that links a nation’s halal economy to
economic growth, an important foundation for any successful macroeconomic halal economy strategy.
The framework looks at all applicable factors, spanning the size of addressable demand, domestic and
global competitiveness, and the current and potential capture of trade, to identify prioritized opportunities
to address in a comprehensive strategy.
NATIONAL HALAL ECONOMY FRAMEWORK

Alignment of essential pillars for an evolved halal economy proposition to derive economic growth
OPPORTUNITY SCOPE AND REALIZATION
GLOBALLY DIFERENTIATED PROPOSITION DOMESTIC PROPOSITION
Trade opportunity capture Domestic demand
Global champions Domestic halal economy landscape
Foreign investment
ENABLING PILLARS
GOVERNMENT COMMITMENT PRODUCTION CAPABILITIES OPERATIONAL SUPPORT ECOSYSTEM
Halal link to national Convergence with Islamic

Raw material access
economic agenda finance
Halal suppliers Dedicated, supportive

Regulatory support
investments
Support infrastructure R&D Talent development
Source: DinarStandard National Halal Economy Framework

The framework incorporates two fundamental premises, five pillars and 14 sub-pillars that underline
success and leadership in the halal economy. Its application can help countries identify their areas of
strength, and areas of development, in building scaled propositions that address the core global halal
economy opportunity. The two core areas can be summarized as follows:
1. Opportunity Scope and Realization: There is a sufficiently sizeable halal economy opportunity that is
being fully addressed by a country’s natural and productive resources.
Pillar 1: Globally Differentiated Proposition: Identifies the robust capture of substantial international
trade opportunities in the halal economy. Identifies global champions with a unique, differentiated
proposition.
Pillar 2: Domestic Proposition: Identifies opportunities from domestic demand for halal products,
domestic halal industry and ecosystem landscape and foreign investment.
2. Enabling Pillars: There exists a meaningful mix of enabling pillars in place to support the development
of multiple scaled, domestic and global champions addressing the global halal economy opportunity.
Pillar 3: Government Commitment: Identifies halal link to national economic agenda, regulatory support
to the halal economy, related support infrastructure.
Pillar 4: Production Capabilities: Identifies access to raw materials, halal suppliers, and R&D facilities to
support halal economy advancement.
Pillar 5: Operational Support Ecosystem: Identifies convergence with Islamic finance, dedicated
investment opportunities, and talent development for the halal economy.

7 INDONESIA HALAL MARKET OPPORTUNITY ASSESSMENT
Summary Assessment of Indonesia’s Halal Market Performance
Against the above framework, Indonesia has achieved through 2020 a strong foundation for its halal economy
strategy and macro-economic impact with many areas of improvements needed as well. Collectively, the
required improvements would drive enabling and achieving the economic impact estimates.

Alignment of essential pillars for an evolved halal economy proposition to derive economic growth
OPPORTUNITY SCOPE AND REALIZATION
GLOBALLY DIFERENTIATED PROPOSITION DOMESTIC PROPOSITION
Trade opportunity capture Domestic demand
Global champions Domestic halal economy landscape
Foreign investment
ENABLING PILLARS
Halal link to national Convergence with

Raw material access
economic agenda Islamic finance
Halal suppliers Dedicated, supportive

Regulatory support
investments
Support infrastructure R&D Talent development
Strong Performance Limited Performance Weak Performance

INDONESIA HALAL MARKET OPPORTUNITY ASSESSMENT
7.1. GLOBAL PROPOSITION
As identified in the opportunity section, the potential incremental value of exports of $3.6 billion and FDI of
$0.5 billion can be achieved by addressing key internal and external challenges, with a focused effort on
prioritized growth opportunity sectors and markets by leveraging Indonesia’s core market competencies.
CORE COMPETENCIES INTERNAL CHALLENGES
1. Largest halal consumer market in the world. Indonesia 1. Trade barriers hinder export. Even through free
represents the largest market for Muslim spend trade agreements (such as ASEAN), some countries
globally across the halal economy sectors, with a have special safeguard or nationalist protectionism
combined $184 billion across halal products and mechanisms. There is also tariff discrimination, for
lifestyle sectors (9.7% of global halal economy spend). instance, cocoa derivatives from Europe to Africa cost
0%, but for Indonesia, 6-9% tariffs are charged.
2. Indonesia is already the largest exporter among OIC.
With $8.6 billion exports of halal products, Indonesia 2. COVID-19 pressured existing logistics crises. Due to
is the 9th largest exporter globally and 2nd largest COVID-19, there was a worldwide container shortage
exporter among the OIC countries. which led to container tariffs increasing by 3-4 times in
Indonesia.
One of the major global destinations for Muslim-friendly
travel. The largest issuer of sovereign and green sukuk, 3. Limited expansion of local champions going global.
with tremendous momentum in Islamic fintech. Domestics champions global reach and exposure are
limited compared to other halal economy companies.
3. Domestic champions that are thriving, with the
potential to grow as global leaders.
4. Collaboration between ministries supports exports.

The Ministry of Trade, BPJPH, the Ministry of Finance,
the Ministry of Foreign Affairs and Indonesian
representatives work together to encourage the export
of Indonesian halal products
EXTERNAL CHALLENGES GROWTH OPPORTUNITIES
1. Existing halal economy leaders as identified by the 1. Prioritized export categories (as discussed in the
Global Islamic Economy Indicator (GIEI) Ranking 2021. opportunity section). A large proportion of these is
processed food products. This indicates a significant
2. New energy and focus by various markets. These are opportunity for Indonesian food processors. Since
all not necessarily challenges but also opportunities for these processors already have to comply with
partnerships and joint collaborations. comprehensive halal certification rules, this would
position them well when entering the global market for
3. Quality or standard label requirements in the halal food.
destination country. Some countries require
personalized labeling, adding to cost. For instance,
starting January 2022, China will require F&B imported
product labels to be in Mandarin. Other countries have
high food safety standards which makes it difficult for
small companies exporting.

Highlighted analysis:
Prioritized export categories: The diagram below shows the top 10 export categories for Indonesia as
discussed in the opportunity section and the top consumer markets for these products.
Top 10 Prioritized Export Categories and Markets for Indonesia
Export Opportunity Top Non-OIC Import

Trade Code Prioritized Export Categories Top OIC Import
Sector to OIC & Non-OIC Markets with Large
(HS Code) (Simplified Name) Markets
(US$ Billion) Muslim Consumption
1. United Arab Emirates 1. Germany

Apparel
Fashion 62 $0.44 2. Saudi Arabia 2. France
(not knitted/crocheted)
3. Turkey 3. United States
1. Pakistan 1. India
Animal or vegetable fats
Food ’15 $0.31 2. Malaysia 2. Netherlands
and oils
4. Turkey 4. China
1. Germany
1. Saudi Arabia
2. France
Food ’04 Dairy products $0.31 2. United Arab Emirates
3. Netherlands
3. Turkey
1. United Arab Emirates 1. China

Meat and edible
Food ’02 $0.19 2. Saudi Arabia 2. Germany
meat offal
3. Egypt 3. United States
1. Saudi Arabia 1. France

Cereal, pasta & bakery
Food ’19 $0.14 2. United Arab Emirates 2. Germany
products
3. Malaysia 3. United Kingdom
1. Saudi Arabia 1. United States

Coffee, tea, maté
Food ’09 $0.13 2. Pakistan 2. Germany
and spices
3. Malaysia 3. France
1. Indonesia 1. United States

Sugars and sugar
Food ’17 $0.12 2. Malaysia 2. China
confectionery
3. Nigeria 3. Germany
Preparations of meat, 1. Saudi Arabia 1. United Kingdom

Food ’16 fish or other aquatic $0.10 2. United Arab Emirates 2. Germany
invertebrates 3. Egypt 3. France
1. Saudi Arabia 1. Singapore

Medicaments
Pharma '3004 $0.08 2. Turkey 2. China
(for retail sale)
3. Egypt 3. Hong Kong, China
1. United Arab Emirates 1. Germany

Cosmetics '3306 Oral care $0.02 2. Saudi Arabia 2. United Kingdom
3. Malaysia 3. United States

Domestic champions that are thriving, with potential to grow as global leaders: The 2021 Forbes Global
2000 list of public companies listed just 6 Indonesian companies, almost all of which are banks. No halal
economy players were listed.
Companies on the 2021 Forbes Global 2000 Companies List
14
12
10
4
8
2 1
6 3 3
4
2
7
5 5
2 4
0
Saudi Arabia UAE Malaysia Indonesia
Banks Halal Economy Players Other
Source: Forbes Global 2000 Companies List, 2021

7.2. DOMESTIC PROPOSITION
As identified in the opportunity section, the domestic production opportunity, whereby select import
categories are substituted, can realistically boost Indonesia’s GDP by $1 billion a year. This can even lead
to increased exports and investments into Indonesia. Key internal and external challenges need to be
addressed, with a focused effort on Indonesia’s core competencies and growth opportunities.
1. Hosts the largest Muslim population. Indonesia has 1. Limited number of scaled participants.
the 4th largest population and the largest Muslim Pharmaceutical and modest fashion sectors are
population in the world, with 229.6 million Muslims key areas where further investment could help build
in 2020 (est.). scalable companies addressing a robust domestic
demand.
5. The largest halal consumer market in the world.
Indonesia represents the largest market for Muslim 2. Need for “Made in Indonesia” proposition. This could
spend globally across the halal economy sectors: give Indonesian companies a competitive edge to
largest for the food sector, 2nd largest for cosmetics promote domestically produced goods in the country
and media, and among the top 10 in pharmaceutical, and internationally.
travel and fashion sectors.
2. Increased halal awareness among consumers.

A Pew Research survey on religious perceptions
around the globe found that 98% of Indonesians
believe religion is very important.
3. Distribution channels in the domestic market are

increasing and diversifying. E-commerce is most
prominent for fashion and CPG, while traditional
markets work well for F&B and other products.
1. Higher food prices threaten import-dependent 1. Collaboration among industry players. Industry bodies
products. In August 2021, global food prices increased such as retail industry body APRINDO are actively
near the highest in a decade. World food prices have working to educate suppliers to the retail industry on
rallied about 33% in the past year, increasing inflation halal practices and halal law in general. This will go
risks and shipping costs. far in helping micro and small enterprises scale their
business.
2. Logistics is a key concern to foreign investors. They
are concerned that Indonesia cannot be integrated 2. FDI in the pharmaceutical sector. FDI investment is
into its supply chains without efficient logistics. The expected to enter the pharmaceutical sector, which is
33 provinces of Indonesia are geographically widely currently experiencing high growth, driven by the use
spread, which leads to expensive domestic transport of medical equipment, vaccines and medicines used
and logistics. This leads to decreased domestic during the pandemic.
and foreign investment in these regions. Most food
industries are based on Java island, but the raw 3. Special Economic Zones (SEZ) and halal parks
materials are from off the island, entailing a need for could spur investment growth. Indonesia has started
proper logistics infrastructure. investing in halal industrial parks with the added
benefits of SEZs to attract investments. It may also
3. Limited Special Economic Zones (SEZ) to attract spur on R&D in halal products and help Indonesia
foreign investments. Although the number of SEZs in become a key halal economy. The ‘Halal Modern
Indonesia has increased in recent years (15 SEZ), it is Valley’ in the Modern Cikande Industrial Estate is the
less in comparison to other halal economies. first industrial zone in Indonesia to receive the Halal
Industrial Zone certificate from the Ministry of Industry.

Domestic landscape and champions: Indonesia has a well-developed landscape of players, with room for
further consolidation and scaling.
Indonesia is an advancing producer of halal products – across food, pharmaceutical and cosmetics products,
with several scaled industry participants. However, there is plenty of room for further consolidation, as well
as to promote the growth of small enterprises.
Make Up of Manufacturing Industry
Media and Rec

(Printing and Reprodution of Recording Media)
Pharmaceuticals
Clothing and Textile
Food and Beverage
0% 20% 40% 60% 80% 100%
% of Medium Large Enterprises (2019) % of Micro and Small Enterprises (2019)
Source: BPS Statistics Indonesia
Micro and Small Enterprises (MSE) dominate the business landscape of Indonesia. In the food and
beverage industry, micro and small enterprises employ 75.8% of all labor. However, in the pharmaceutical
industry, this is the opposite, with 79.1% of labor being employed in medium to large enterprises. There
is a limited number of scaled participants, in particular in pharmaceutical products and especially in
modest fashion, areas where further investment could help build scalable companies addressing a robust
domestic demand.
Industry bodies such as retail industry body APRINDO are actively working to educate suppliers to the retail
industry on halal practices and halal law in general. This will go far in helping micro and small enterprises
scale their business.

7.3. GOVERNMENT COMMITMENT
Government, as a key ecosystem player, can provide industry players with regulatory and infrastructure
support to enable companies to build on their core competencies and overcome internal and external
challenges. National economic agendas linked to the halal economy can provide the industry with a
direction for domestic and international growth.
1. Halal economy linked to national economic agendas. 1. Alignment of government policies. The policies of the
Bank Indonesia’s initiatives to integrate Shariah central and regional governments are still not aligned
economic and Shariah financial development have to meet halal industry-related regulations.
accelerated to the national level. The government has
also put in place the relevant regulation to expand the 2. Lack of cooperation between key stakeholders.
scope of KNEKS and establish the BPJPH. There is a Closer cooperation is needed between halal
clear synergy between the various ministerial bodies certification institutions, producers, scholars,
and other Shariah economy organizations. researchers, and the government to efficiently meet
consumer demands.
2. Reformed halal regulatory ecosystem. With the new
halal regulation reforms (namely GR 39/2021), three
bodies—BPJPH, MUI and LPH—work independently and
collaborate, removing any conflicts of interest.
3. BPJPH (halal regulator) collaborates with relevant

ministries to support the export proposition. The
government is also providing financial incentives
that can be used to encourage investment and boost
exports of halal products.
4. Investing in transportation infrastructures such as

railways and ports. Indonesia has planned to spend
$430 billion on infrastructure between 2020 to 2024,
higher than the $359 billion invested between 2015-2019.
5. The Indonesian Investment Authority (INA), Indonesia’s

new sovereign wealth fund. Initially, the government
provided funding with $1.1 billion in 2020 and placed
another $5.4 billion into it from the 2021 budget.
1. Limited global recognition for halal products. 1. Well-defined halal certification process for
Indonesian halal product certification is still not widely importers. Foreign companies importing products
recognized in the global market. with an international halal certification require MOU
between BPJPH and the foreign halal certification body
2. Technical regulatory problems with the certification to use certification in Indonesia. This opens doors for
process hinder global reach. With the new halal collaboration with international halal agencies.
regulations, Indonesia may be able to advance its
regulatory system. 2. Partnering with international halal bodies. Indonesia
has become a member of SMIIC (as of Nov 2019).
3. Scope for improving ease of doing business. Indonesia also supported the establishment of the
Indonesia has been ranked 73rd overall in the 2020 International Halal Authority Board (IHAB), which
Doing Business rankings and is ranked 11th among consists of 84 members from 46 countries where
OIC countries. Indonesia acts as Deputy Chair.

Halal economy business incentivization: The government is providing financial incentives that can be
used to encourage investment and boost exports of halal products. The incentives have been delegated
to the Investment Coordinating Board (BKPM) so that it can directly grant them to increase investment in
priority areas.120 Apart from the aforementioned Omnibus Law being passed, Indonesia has also taken
other steps to improve the experience of doing business in the country, including introducing an online
platform for business licensing. An online tax filing and payment system for the major taxes was also
introduced. Trading across borders was also made easier by improving the online processing of export
customs declarations.121
While Indonesia has sought to incentivize investment, a greater focus is needed in particular on sectors
linked to the halal economy, notably food and beverage, pharmaceutical products and apparel. The US’s
R&D tax policy is a good example of a tax incentive that promotes R&D, specifically in the textile and
apparel industry.122

7.4. PRODUCTION CAPABILITIES
Indonesia has a strong agricultural sector which contributes considerably to the GDP. However, production
in halal economy-related categories, like live animals, can be improved. Halal ingredients manufacturing
requires greater investment in R&D. Some multinational companies have a presence in the country, but the
demand is still exceeded by the supply.
1. Rich in natural resources such as palm oil. Indonesia 1. Lack of R&D and testing facilities for ingredients for
is the largest exporter of palm oil to the rest of the halal products – food, pharmaceuticals and cosmetics.
world, exporting 26 million tons valued at $17.4 billion
– 31% of the global exports in 2020.123 2. Lack of skilled workers & technology in producing
raw materials, leading to inefficiencies in production.
2. Competency in production and export of raw
materials such as synthetic fiber for fashion products 3. Lack of value-added commodities and
and ingredients for nutraceuticals. competitiveness in meeting export markets and
import substitution.
4. Limited integration of upstream and downstream

industries in the fashion sector. Standardization in the
quality and quantity of key materials and supporting
materials for the fashion sector is also an issue.
1. Other leading halal economy producers such as 1. Leading agriculture production. Indonesia generated
Malaysia, Thailand and Australia. the 3rd largest amount in primary value add across
agriculture, fishing and forestry at $145 billion in
2. Competitive pricing of halal products by non-OIC 2020. Indonesia is followed by Nigeria, Pakistan and
exporters. Indonesia may find it difficult to compete Turkey.124
with exporter’s prices.
2. There is plenty of room for Indonesia to further
reduce its reliance on imports, especially in
categories valued at $10 billion in 2020 (as discussed
in the opportunity section). These commodities include
sugar products, animal fodder (corn), meat and dairy
products.

7.5. OPERATIONAL SUPPORT ECOSYSTEM
Shariah economy education is one of the three major pillars of the Bank Indonesia Sharia Economic and
Financial Development Policy Blueprint. They have made significant strides in this area. Islamic finance
literacy and penetration is growing but at a slower pace than global halal economies, and it needs to
expedite. Halal industry training can be further propagated to improve the efficiency of the overall halal
certification process and also help grow the shariah economy as a whole.
1. In the last three years, there has been an increase 1. Low penetration of the Islamic banking sector. Public
in public financial understanding by 8.33%.125 awareness to use Islamic bank products is still low and
Islamic finance has also seen growth due to increasing needs to advance.
awareness among the younger population and a more
orchestrated approach to socialization programs by all 2. Gap in meeting the needs of the industry remains.
stakeholders. A gap between the needs of halal economy businesses
in the real sector and Islamic financing capacity
2. A leading Islamic fintech player. Indonesia placed available remains. Islamic financial institutions do not
fourth on the Global Islamic Fintech (GIFT) Index in have a specific financing target for the halal industry,
2020, totaling $2.9 billion fintech market size (based including halal tourism.
on transaction volume).126
3. Limited Islamic finance experts. There is also a gap
in Islamic finance experts in Indonesia.
1. Existing halal economy fintech leaders. Indonesia 1. Halal Industrial Estates/Parks, encouraged by the
has not been identified as the leading halal economy government, will enable the development of the halal
fintech leader in the Global Islamic Fintech (GIFT) industry in Indonesia, which is very large but has not
Index, 2020. been realized optimally.
2. Indonesia was the largest issuer of sovereign

sukuk globally in 2020 ($20.65 billion). Indonesia
dominated 22.18% of all sovereign sukuk, well above
Saudi Arabia and the UAE.
3. Indonesia is the 2nd largest venture capital (VC)

market in Southeast Asia, after Singapore. Over
the 2019/2020 period, Indonesia ranked ahead of all
countries with 38 investment transactions.

Summary Assessment of Indonesia’s Halal Market Performance
OPPORTUNITY SCOPE
Pillar Sub-Pillar Assessment and Conclusions
Incremental and substantial $3.6 billion export opportunity: Indonesia exported $8.6
Trade
billion to the OIC markets across halal products in 2020 but lags behind the non-OIC leader
opportunity
China ($25.4 billion). Can increase halal products exports by prioritizing high-value and
capture
Globally proximate trade relationships supplying to the OIC and non-OIC markets.
Differentiated
Proposition Global Scope for leading Indonesian multinationals: Indonesian players in the food and beverage
champions and pharmaceutical sectors have the potential to expand globally.
Overall Limited: There’s substantial room to strengthen exports across the halal economy.
Large Muslim Very strong: Largest Muslim population in the world and largest Muslim consumer spend
population across halal economy sectors, totaling $184.04 billion.
Existence
Very strong: Robust Islamic values held by Indonesia’s Muslims.
of demand
Evolved domestic Sizeable $0.4 billion import substitution opportunity: Well-developed domestic companies
Domestic halal economy exist but could better meet domestic demand, replacing imports in prioritized sub-sectors in
Proposition landscape food, pharmaceuticals and cosmetics
Foreign Strong: The country has the potential to capture 50% of global investments into halal
investment economy sectors.
Strong: By substituting imports and consolidating domestic companies, the domestic

Overall proposition can become very strong. There is potential to attract more FDI and channel
it into Islamic economy sectors.

ENABLING PILLARS
Pillar Sub-Pillar Assessment and Conclusions
Halal link
Strong: BI’s Blueprint for the Islamic Economy and Finance and KNEKS’ Indonesia
to national
Islamic Economic Masterplan are well-linked to the overall economic strategy of the
economic
country and cover all sectors of the Islamic economy.
agenda
Strong and
Strong: Regulations that have been put in place have strengthened the halal economy
efficient
and provided for more certification processes. However, the influence on international
Government regulatory
halal regulation is still limited.
Commitment support
Adequate
Limited: Lack of targeted sector incentives and limited involvement of government
support
funds in halal.
infrastructure
Strong: A comprehensive strategy has been designed, and good regulations have been
Overall put in place. Incentive schemes should be designed to promote investment in the halal
economy.
Raw material Improving: Largest agriculture sector in the OIC but with
access substantial room for development, particularly in livestock farming.
Halal suppliers Limited: Lack of halal ingredients suppliers.

Production
Ecosystem
R&D Limited: Limited evidence of R&D in the halal economy.
Overall Limited: Focus needed on intermediate suppliers.
Convergence Strong: Growing sector with good growth prospects. More conventional banks have
with Islamic also started offering Shariah-compliant products with the increase in awareness
finance among the population.
Dedicated,
Moderate: Domestic investment in halal economy segments is limited. There are not
Operational supportive
many incubator programs available for the halal economy sectors.
support investments
ecosystem Strong: BI has supported many educational initiatives, particularly in the Islamic
Talent
finance sector and collaborations with universities. More training can be conducted for
development
those involved in the halal certification process.
Strong: Education on Islamic finance is widely available and of a high standard. Further
Overall
work can be done on creating awareness around other halal economy sectors.

PROMOTION STRATEGY FOR
8 INDONESIAN HALAL TRADE & INVESTMENT
With the identified halal economy goals, the following section presents key strategic objectives per pillar and
related seventeen strategic priorities for stakeholders to ensure that Indonesia’s halal economy opportunity
can be fully realized.
The Halal Economy Strategy: Laying the Groundwork
Indonesia’s halal economy can be an engine of economic growth and give the country substantial
influence across the Muslim world.
Indonesia’s halal economy strategy needs to be comprehensive with a clearer focus on boosting GDP and
creating a world-leading infrastructure that goes beyond the accomplishments of halal economy leaders.
While each country will have its own variant of a halal economy strategy, Indonesia is in a unique and
differentiated position compared to its peers – it has the largest Muslim population in the world and the
largest agriculture sector in the OIC, with several scaled consumer goods companies already addressing
robust domestic demand. To realize its full potential and underpinning Indonesia’s halal strategy are
two clear objectives and five supporting pillars, which correspond closely to the national halal economy
framework introduced in the previous section.
Goal 1: Boost GDP by $5.1 billion through incremental exports, FDI and import substitution.
Pillar 1: Globally Differentiated Proposition: Indonesia is poised to capture a larger share of halal
economy trade through a strategic targeting of top importers and with a focus on product categories
that align closely with the halal economy.
Pillar 2: Domestic Proposition: Indonesia has the strength to collaborate with key local stakeholders—
government, industry and investors—to promote halal trade and build on market intelligence.
Goal 2: Develop enabling pillars that will help the full economic potential of the halal economy materialize.
Pillar 3: Government Commitment: Indonesia has the opportunity to leverage special economic zones
and halal industrial hubs to attract foreign investment. Ease of regulations, trade agreements, and the
dedicated halal fund can support the export opportunity proposition.
Pillar 4: Production Capabilities: Support the development of various intermediate suppliers and
processes to enhance the efficient operation of domestic halal economy propositions.
Pillar 5: Operational Support Ecosystem: Create the necessary supporting ecosystem for domestic
companies to thrive and become global success stories, with the development of clear investment
propositions, supported by a clear commitment towards creating world-class education programs.

Establishing the halal economy as an engine of Indonesia’s macroeconomic growth and leading
influence across the Muslim world
GOAL 1:
BOOST GDP BY $5.1 BILLION THROUGH INCREMENTAL EXPORTS, FDI AND IMPORT SUBSTITUTION
GLOBALLY DIFFERENTIATED PROPOSITION DOMESTIC PROPOSITION
STRATEGIC PRIORITIES STRATEGIC PRIORITIES

Target export markets; Trade promotion through events;
Value-added product development; Invest in infrastructure;
Global networking through embassies; Market intelligence;
Promote halal lifestyle Attract international investors
STAKEHOLDERS STAKEHOLDERS
Government; Government;
Large & Medium Corporates; Industry Associations;
Industry Associations Large & Medium Corporates;
Investors
GOAL 2:
DEVELOP ENABLING PILLARS THAT WILL HELP THE FULL ECONOMIC POTENTIAL OF THE HALAL ECONOMY MATERIALIZE
STRATEGIC PRIORITIES STRATEGIC PRIORITIES STRATEGIC PRIORITIES

Ease regulations; Investment in high-tech and Streamline Islamic finance rules;
Trade agreements; upstream industry; Fintech for individual’s
Dedicated halal fund; Strengthening halal supplier investment;
Halal industrial hubs base Triple-helix model for talent pool
STAKEHOLDERS STAKEHOLDERS STAKEHOLDERS

Government; Government; Government;
Investors Industry Associations; Industry Associations;
Large & Medium Corporates; Large & Medium Corporates;
Investors Investors

8 PROMOTION STRATEGY FOR INDONESIAN HALAL TRADE & INVESTMENT
GLOBALLY DIFFERENTIATED PROPOSITION
Key stakeholders and strategic priorities for the globally differentiated proposition
STRATEGIC Target export Value-added product Global networking Promote halal

PRIORITIES markets development through embassies lifestyle
STAKEHOLDERS Government; Large & Medium Corporates; Industry Associations
1. Companies scale up export-driven marketing that will allow Indonesia to become a top halal economy
exporter.
Domestic companies (led by large corporates) should leverage the target market priorities identified in this
report and chart international paths that span high-value OIC and non-OIC countries with large Muslim
populations.
There are several steps to further activate and grow export propositions – the most important of which
would be expanded international marketing budgets and strategies. Attending regular global trade events
focused on the halal economy or related sector events in target markets (e.g., the GulfFood annual event
or others in target markets), along with on-the-ground marketing presence and awareness building, will be
crucial to securing a global footprint and building essential relationships.
To achieve the $3.6 billion incremental export opportunity, select target markets to export prioritized halal
categories (food, pharma, fashion, cosmetics) include:
• OIC markets: Pakistan, Malaysia, Turkey, UAE, Saudi Arabia and Egypt.
• Non-OIC markets: India, Netherlands, China, Germany, France, United States, Singapore and Hong
Kong.
2. Companies focus on value-add product development for exports.
Existing domestic leaders across food, fashion, pharmaceutical and cosmetics halal products are well-
positioned to evolve their product offerings to address high-value categories, as highlighted in the previous
section.
Top export potential categories under each halal product sector include:
• Animal or vegetable fats and oils ($0.31 billion opportunity)

• Apparel (not knitted/crocheted) ($0.44 billion opportunity)
• Medicaments (for retail sale) ($0.08 billion opportunity)
• Oral care ($0.02 billion opportunity)
Indonesian companies should also assess the global players in the halal economy to leverage their own
competitive advantages for international reach.

PROMOTION STRATEGY FOR INDONESIAN HALAL TRADE & INVESTMENT
Some global halal economy players to assess include (detailed benchmark players and profiles discussed
in earlier sections):
• Danone, France (Dairy)
• BASF, Germany (Ingredients)
• Modanisa, Turkey (Fashion)
• Noor Vitamins, United States (Nutraceuticals)
3. Government to closely work with the industry to network with international partners.
Indonesia’s halal economy companies require the express support of the government’s export division,
supported by Indonesia’s embassies around the world, helping companies establish important meetings
with distributors in high-priority countries, and educating the world about Indonesia’s production capabilities.
This has been practiced by Indonesia but needs to be done more aggressively. Indonesian representatives/
embassies need to collaborate to provide companies with better networking options. It is costly for
companies to look for buyers abroad and so they need the government’s support. The government’s close
collaboration with the industry is key to finding international partners and expanding global reach.
4. Industry Associations driving ‘halal lifestyle’ as a key differentiator for the ‘Proudly Made in Indonesia’
initiative.
An industry association-led platform to engage large Indonesian brands to galvanize the ‘Made in Indonesia’
brand, especially with ‘halal lifestyle’ as a key differentiator, further across OIC and Non-OIC halal markets.
This could also be supported or led by a government agency(s).


DOMESTIC PROPOSITION
Key stakeholders and strategic priorities for domestic proposition
STRATEGIC Trade promotion Invest in Market intelligence Attract international

PRIORITIES through events infrastructure investors
STAKEHOLDERS Government; Industry Associations; Large & Medium Corporates; Investors
1. Government and/or industry associations expand trade promotion for local industry activation.
Local companies need trade promotion to connect with local players and better understand the market.
Apart from networking locally, connecting with international players is also crucial for companies to
expand their global reach. The government must work with credible partners, such as the IHLC, to convene
important B2B and B2C events supported by dedicated media. An example of such media is the creation of
the Salaam Gateway, a platform co-owned by DinarStandard, which has played an important role in raising
awareness of the halal economy.
2. Government to invest in infrastructure to resolve intra-logistics issues.
Such logistics issues within the country not only lead to unfulfillment of demand but cause a barrier to
foreign investment. Most food industries are on Java island, but raw materials are available off the island,
requiring robust infrastructure for timely delivery and production. The government must help resolve
logistics issues with the country by investing in better infrastructure and road construction.
3. Government and/or industry associations to expand actionable market intelligence for local industry
players.
There is a need for market intelligence that the Indonesian Trade Promotion Centre (ITPC) or the Ministry of
Trade is able to provide the local companies with. Such market intelligence includes the study of consumers’
demands. An independent study is needed to survey Muslim consumers in Indonesia and in target trade
markets across the OIC and non-OIC to determine the gaps in their needs. Providing access to data is a
critical step in raising awareness of the opportunity.
4. Government and local companies to expose the halal market opportunity to international investors.
Given Indonesia’s growing prominence for international investors, its domestic halal market opportunity, as
well as regional reach, should be promoted to international investors. Indonesia’s recent Sovereign Wealth
Fund, active private equity, and venture capital space should all be exposed to the halal market opportunity.
Success cases, such as GoTo and their likes, would help build confidence among investors.

GOVERNMENT COMMITMENT
Key stakeholders and strategic priorities for government commitment
STRATEGIC
PRIORITIES Ease regulations Trade agreements Dedicated halal fund Halal industrial hubs
STAKEHOLDERS Government; Investors
1. Government to further ease halal regulations to facilitate exports.
COVID-19 resulted in a decrease in sales due to PSBB policy (Large-Scale Social Restriction). International
sales only came from loyal international customers. It also caused delays in receiving raw materials from
China and India. The government needs to rethink its strategy for export and import control that will have a
direct impact on the halal economy as well.
2. Governments to increase trade agreements to remove trade barriers and ease exports.
Trade agreements with export markets can help reduce tax. Recently, agreements that benefited the
industry include the Indonesia-Australia IA-CEPA agreement, and similar arrangements are in talks with the
UAE. Governments need to increase negotiation with target export markets for tariff relaxation or free trade
agreements (FTA) to facilitate exports.
3. Government to establish or support dedicated halal economy fund(s) to attract foreign investment.
The government must provide direct financial support to the industry and determine how best this can be
done through Indonesia’s new sovereign wealth fund (PIP) that can play a transformational role in hastening
the development of the halal economy. One of the ways is through establishing a dedicated halal fund to
direct foreign investments into halal economy companies, as well as providing capital to private equity
managers with a clear mandate.
4. Government to increase and support the development of halal industrial hubs.
Indonesia has 15 special economic zones (SEZ) and 3 halal industrial parks still in the development phase.
These industrial hubs bring great opportunities for foreign investment, and the government should help
expedite their production and promotion. Building halal industrial areas and halal hubs in various regions
in accordance with the comparative advantages of each superior region can prove to be a useful strategy.

PRODUCTION CAPABILITIES
Key stakeholders and strategic priorities for production capabilities
STRATEGIC Investment in high-tech Strengthening halal supplier base

PRIORITIES and upstream industry
1. Industry to attract investments in high technology and upstream industries.
Indonesia needs to increase production competitiveness through adopting high-tech for production and
sourcing cheaper raw materials of high quality. This can be efficiently achieved through collaboration with
countries with advanced technology and encouraging investments in upstream (salt, sugar, starch/corn)
and downstream industries as well. Key global partners must be encouraged and facilitated to explore
Indonesia’s vast natural resources.
2. Government to support strengthening halal supplier base.
The BPJPH regulation coming to full enforcement will broaden the valuable halal supplier base.
Government agencies should support their preparedness for domestic and international competitiveness
and investments. Currently, BPJPH, along with other ministries, is supporting SMEs with trade development
and awareness programs, part of which also helps connect with suppliers domestically and internationally.
These programs need to extend to large companies as well to support their trade and investment
propositions.

OPERATIONAL SUPPORT ECOSYSTEM
Key stakeholders and strategic priorities for operational support ecosystem
STRATEGIC Streamline Islamic Fintech for individual’s Triple-helix model for Streamline Islamic
PRIORITIES finance rules investment talent pool finance rules
1. Government and industry to further streamline Islamic finance regulations to enable effective
convergence with halal economy development.
It is imperative for the Islamic finance industry to respond to the diverse needs of the halal economy
companies. The Islamic finance ecosystem needs to be strengthened as the fundamental part of the
halal value chain. Several legal and regulatory issues need to be addressed in order to accelerate Islamic
finance development in Indonesia. Among the issues are regulation disharmony, overlapping in the rules
and authorities, and legal gaps. Several legal gaps, namely the guaranteed act for Shariah contracts, the
bankruptcy act, could be addressed respectively. Currently, the respective law has been proposed by the
House of Representatives and listed at the National Legislation Program.
2. Industry to utilize benefits of fintech platforms that connect with potential individuals willing to invest.
The emergence of fintech platforms such as Ethis Ventures and Launchgood enable consumers as
individuals to invest directly in halal economy propositions – an important node of development for
Indonesia is supporting crowdfunding efforts as a way to generate wealth for households. ALAMI is one
of the leading fintech case studies in Indonesia, and several other fintech platforms should be supported.
3. Government, industry and academia (triple-helix model) to work together to fill the gaps in halal
economy and finance experts.
There is a mismatch between industrial needs (demand) and the availability of human resources (supply)
produced by universities in Indonesia. The government needs to initiate a roadmap of the human resources
(HR) development in the halal economy and finance sector and set that roadmap as a national priority
program. Government, industry and academia can work together to match human resource development
and talent management through formal and non-formal education, whether organized by educational
institutions, training institutions or institutions providing certification.


ACKNOWLEDGEMENT
Supported by: REPORT TEAM
Sapta Nirwandar
Senior Advisor, IHLC
M. Anwar Bashori
BANK INDONESIA is the central bank of Indonesia. The
Senior Advisor, Bank Indonesia
development of sharia economy and finance is part of
Indonesia’s economic transformation in achieving high, inclusive
Dr. Jardine A. Husman
and sustainable economic growth. To that end, the policy
Lead Economist, Bank Indonesia
of developing Islamic economics and finance is one of the
supporting policies in Bank Indonesia’s policy mix in achieving
Rafi-uddin Shikoh
its goal of achieving and maintaining the stability of the rupiah
Lead Strategy Consultant,
value. Bank Indonesia together with relevant stakeholders and DinarStandard
other authorities in synergizing national policies in the KNEKS
platform, encouraging the development of the Indonesian Islamic Iman Ali Liaqat
economy and finance as a new source of growth. Lead Author, DinarStandard
Aaliya Mia
Senior Analyst, DinarStandard
Produced by:
Dr. Mohamed Ali

Halal Industry Expert Advisor,
DinarStandard
Based in Indonesia, IHLC is a leading consultancy group that Diana Yumanita

advises organisations on how to flourish in the Islamic Economy. Halal Industry Economist,
Our expertise covers: Food, Finance, Lifestyle, Media, and Bank Indonesia
Pharmaceuticals. Our main vision is Building the engine of the
Global Halal Economy. Since 2015, we have been actively involved Indrajaya
in both national and international global halal networks. Our Islamic Finance Senior Analyst,
vast networks comprise of international government agencies,
Bank Indonesia
ministries, academia, public and private companies, and investors
Jhordy Kashoogie Nazar
across different sectors.
Islamic Finance Analyst,
Bank Indonesia
Jetti R. Hadi
Advisory Team, IHLC
DINARSTANDARD™ is a growth strategy and execution
management firm, empowering organizations for profitable and
Fahamah Syarifa
Report Coordinator, IHLC
responsible global impact. DinarStandard specializes in the global
halal/ethical economy, government innovation, and social impact
Mirza Zuhaib Baig
space. Led by its original research and foresight since 2008,
Project Coordinator,
DinarStandard has supported halal markets’ growth strategies for
DinarStandard
over 30 government entities, investment institutions, businesses,
and multi-laterals from over 12 countries worldwide. It is also
Bobby Naedi Sopyan
the author of the annual global halal markets reference report, Project Coordinator, IHLC
the State of the Global Islamic Economy (SGIE) Report, being
published annually since 2013. Its unique value-proposition is Astrid Tambunan
rooted in delivering original facts and foresight-driven client Project Coordinator, IHLC
impact, grounded in excellence and ethics.

REPORT PURPOSE AND METHODOLOGY
CONTEXT
The halal economy has emerged as a promising driver of growth, at a microeconomic level, for leading
multinationals, entrepreneurs and investors around the world that have sought to strategically differentiate
themselves and address the unique, faith-based needs of the world’s 1.9 billion Muslim consumers. The
halal economy opportunity is also of macroeconomic importance for Muslim and non-Muslim countries
alike, with a clear link to GDP growth.
Indonesia is the 4th largest country by population and hosts the largest Muslim population worldwide. With
a rising Muslim population, Indonesia is also seeing a burgeoning demand for halal products (food, fashion,
pharmaceuticals, cosmetics) and halal services (finance, media, travel).
Indonesia has substantial potential but is yet to address a clear halal economy proposition. Now is the time
for Indonesia to address the multi-billion-dollar halal economy opportunity and take its leadership position
in a fast-growing, under-addressed global business proposition that can drive substantial GDP growth.
PURPOSE
The purpose of this report is to provide information and promote trade and investment opportunities for
national and global halal industry players, as well as a reference in formulating development strategies.
Objectives of the report include:
• Determine the scale and growth drivers of consumer demand for halal products and services globally
and in Indonesia
• Benchmark Indonesia’s current halal market business landscape with global players
• Ascertain the halal economy export, import substitution and investment opportunity that is addressable
by Indonesia
• Prioritize and quantify clear halal market opportunity areas per sector
• Present strategy recommendations to realize promotion for Indonesia’s trade and investment
opportunities

METHODOLOGY
Primary & Secondary Research
Interviews and focus group discussion:
M. Anwar Bashori, Executive Director/Head of Sharia Economic and Finance Department, Bank Indonesia
(DEKS-BI)
Putu Rahwidhiyasa, Director of Sharia Business and Entrepreneurship, National Committee of Sharia
Economy and Finance, KNEKS
Government Ignatius Warsito, Director of Industrial Area, Ministry of Industry

& Regulators Ratna Utarianingrum, Director, Ministry of Industry
Mastuki , Plt. Head of the Halal Product Assurance Agency (BPJPH)
Gunawan Yasni, Overseas Regional Coordinator, Sharia Economic Society (Masyarakat Ekonomi Syariah, MES)
Arifin and Joni Sarjonu, Managers of Sharia Economic Agency, Indonesian Chamber of Commerce and
Industry (KADIN)
Adhi S. Lukman, Chairman of Food and Beverage Association (GAPMMI)

Roy Mandey, Chairman Retailer Association, VP Commissioner Matahari, Hypermart
Dicky Saelan, Managing Director Foods, PT Sreeya Sewu
Bryan E. Tilaar, President Director, Martha Tilaar
Maspiyono Handoyo, Regional Managing Director, PT. Mayora Indah
Aman Suparman, CEO, and General Chairman of producers’ association (APPHI) and Helma Agustiawan,
International and Partnership Director, PT. Soka Cipta Niaga
Amalia Sarah, CMO Paragon, PT. Paragon Technology & Innovation
Halal Lifestyle
& Products Dia Demona, Managing Director, Aleza
Pandu Rosadi, Founder & CEO, Ria Miranda
Nina Septiana, Founder, Nina Nugroho
Siriz Tentani, CEO, Si. Se. Sa.
Vivi Zubedi, CEO, vivi zubedi
Jawhara Syar’i
Istafiana Candarini, CEO and Director, Kami Idea
Wignyo Rahadi, CEO and Owner, Tenungaya
Adiwarman Karim, Head of Commission and National Syaria Board member, Bank Syariah Indonesia
Service Wahyu Hidayatullah, Sales and Marketing Manager, Modern Halal Valley
Enablers Dima Djani, CEO, ALAMI
Radhiyaksa Daulay, CEO, Rhadana Hotel

Secondary resources:
The following secondary sources were used to support the preparation of this report, including but not
limited to:
• Indonesia National Statistics Bureau • Deloitte

and databases • Bank DBS
• Bank Indonesia (BI) • Organization for Economic Cooperation
• Business Monitor International (“BMI”) and Development (OECD)
• ITC Trademap • Food & Agriculture Organization (“FAO”) of the UN
• Pew Research Center • PwC
• World Bank Group • Nielsen
• McKinsey & Company • Salaam Gateway
• COMCEC • Thomson Reuters
• E-marketer • Santander Trade Portal
• Euromonitor • UNWTO
• Ken Research • EU-Indonesia Business Network (EIBN)
Market Sizing & Projections
Muslim consumer spend estimates and analysis, carried out by DinarStandard, leveraged the World Bank’s
ICP 2017 consumer data as a baseline reference. Projections were baselined using the IMF Outlook from
April 2020. For detailed methodology on market sizing, please refer to the State of the Global Islamic
Economy Report 2020/21 on SalaamGateway.com.
Trade & Investment
All trade data has been sourced from ITC Trademap, and using DinarStandard’s synthesis and analysis.
Prioritized categories for export: 33 categories from food, fashion, pharmaceuticals and cosmetics were
ranked based on 5 weighted metrics. Any categories identified as haram, or not requiring any level of halal
certification have been excluded. Metrics for ranking include: (1) Indonesia Intersection score [30%], (2) OIC
+ 10 Non-OIC Imports Growth Rank Score [17.5%], (3) OIC + 10 Non-OIC Import Value Rank Score [17.5%],
(4) Indonesia Export Value Rank Score [17.5%], (5) Halal Compliance Score [17.5%].
Imports of 10 Non-OIC countries that have the highest Muslim spend were added. These make-up 80%
of the total Muslim consumption of halal products by non-OIC countries (food, fashion, pharmaceutical
and cosmetics). Countries include India, Russia, United States, China, France, Germany, United Kingdom,
Italy, Ethiopia, Israel. Their halal economy imports were calculated by multiplying the imports with Muslim
multiplier (this multiplier accounts for the Muslim population in a country and their economic wellbeing,
source: DinarStandard proprietary)

Indonesia Intersection score: Geographic intersection of halal trade flow with Indonesia. The closer
Indonesia lies geographically to the trade flow, the stronger the opportunity to capture higher exports. The
scores are 1 (strong opportunity), 0.5 (moderate opportunity), 0 (weak opportunity).
Impact assessment: OIC export opportunity: There is a significant amount of halal economy trade that is
flowing over or in proximity to Indonesia that is not being captured by Indonesia yet. For example, Indonesia
geographically intersects China’s export of coffee, tea, mate & spices to Pakistan, and can potentially gain
some benefit from the trade. Such area of trade opportunity is the OIC intersection trade opportunity for
Indonesia. More than 800 key trade relationships have been examined across 33 halal product categories,
to estimate the OIC incremental trade opportunity (see methodology section for details).
Three scenarios have been calculated (5%, 10% and 15%) to ascertain the incremental trade opportunity for
Indonesia, with 10% being a reasonable market capture.
Impact assessment: Non-OIC export opportunity: Gathered top 5 non-OIC importers across each of the 22
final consumer product categories and calculated their halal economy imports. Deducted Indonesia’s halal
economy exports to these countries to calculate untapped export opportunity.
Three scenarios have been calculated (5%, 10% and 15%) to ascertain the incremental trade opportunity for
Indonesia, with 10% being a reasonable market capture.
Impact assessment: import substitution opportunity: Net importing categories in Indonesia’s halal economy
sectors. Validated from expert insights. Three scenarios have been calculated (5%, 10% and 15%) to
ascertain import substitution of these categories on the GDP, with 10% being a reasonable market capture.
Impact assessment: FDI opportunity:

Using DinarStanadard’s extensive database of halal economy investments made in the OIC and Islamic
economy-specific investments outside the OIC over the period August 1st, 2019, through July 31st, 2020,
covering the food, pharmaceuticals, cosmetics, Islamic finance, media and recreation, apparel, and travel
sectors. Data is compiled based on research carried out across multiple databases including Zephyr,
CapitalIQ, and Crunchbase. Financial services companies operating in both conventional and Islamic
finance were also assumed to belong to the Islamic finance category. Indonesia specific investments was
pulled from this database to derive potential opportunity.
Three scenarios have been calculated (5%, 10% and 15%) to ascertain the incremental investment
opportunity for Indonesia, with 10% being a reasonable market capture.

APPENDIX
1. Export Categories Ranking
WEIGHT 30% 17.5% 17.5% 17.5% 17.5%
OIC + 10
OIC + 10 Indonesia
Indonesia Indonesia Non-OIC Halal
Trade Non-OIC Export
Rank Sector Simplified Name prioritized Intersection Imports Compliance
Code Import Value Value Rank
final score score Growth Rank Score
Rank Score Score
Score
1 Food '15 Animal or vegetable fats and oils 0.74 0.67 0.49 0.59 1.00 1.00
2 Pharma '3004 Medicaments (for retail sale) 0.55 0.33 0.59 1.00 0.01 1.00
Preparations of meat, fish or other aquatic

3 Food '16 0.55 0.83 0.62 0.09 0.02 1.00
invertebrates
4 Food '09 Coffee, tea, maté and spices 0.55 0.71 0.62 0.26 0.05 1.00
5 Food '17 Sugars and sugar confectionery 0.54 0.63 0.60 0.39 0.01 1.00
6 Food '04 Dairy products 0.53 0.67 0.45 0.45 0.00 1.00
7 Fashion 62 Apparel (not knitted/crocheted) 0.51 1.00 0.30 0.39 0.03 0.50
8 Food '19 Cereal, pasta & bakery products 0.51 0.50 0.66 0.34 0.04 1.00
9 Food '02 Meat and edible meat offal 0.50 0.67 0.38 0.35 0.00 1.00
10 Cosmetics '3306 Oral care 0.49 0.75 0.51 0.02 0.00 1.00
11 Pharma '3005 Adhesive dressings 0.49 0.67 0.62 0.01 0.00 1.00
12 Fashion 64 Footwear 0.48 0.88 0.45 0.28 0.02 0.50
13 Fashion 61 Apparel (knitted/crocheted) 0.48 0.75 0.54 0.40 0.02 0.50
14 Cosmetics '3301 Essential oils 0.48 0.67 0.57 0.01 0.00 1.00
15 Food '23 Animal fodder 0.47 0.50 0.46 0.34 0.01 1.00
16 Food '20 Preparations of vegetables, fruit, nuts 0.46 0.58 0.44 0.17 0.00 1.00
17 Pharma '3002 Vaccines 0.45 0.08 1.00 0.40 0.00 1.00
18 Food '18 Cocoa and cocoa preparations 0.44 0.46 0.54 0.17 0.04 1.00
19 Food '21 Soups, sauces & other processed foods 0.44 0.33 0.57 0.31 0.05 1.00
20 Pharma '3001 Dried glands and other organs 0.42 0.25 1.00 0.00 0.00 1.00
21 Food '13 Vegetable saps and extracts 0.40 0.67 0.64 0.01 0.00 0.50
22 Cosmetics '3304 Makeup & skincare 0.40 0.42 0.47 0.11 0.00 1.00
23 Cosmetics '3307 Personal care 0.40 0.50 0.37 0.03 0.00 1.00
24 Food '03 Fish and other aquatic invertebrates 0.37 0.50 0.51 0.22 0.03 0.50
25 Cosmetics '3305 Haircare 0.35 0.33 0.37 0.05 0.01 1.00
26 Food '11 Products of the milling industry 0.35 0.50 0.50 0.12 0.00 0.50
27 Cosmetics '3302 Odoriferous substances 0.33 0.00 0.73 0.12 0.01 1.00
28 Pharma '3006 Pharmaceutical preparations 0.31 0.17 0.47 0.02 0.00 1.00
29 Food '22 Beverages and vinegar 0.30 0.08 0.46 0.09 0.00 1.00
30 Food '05 Other products of animal origin 0.28 0.33 0.54 0.00 0.00 0.50
31 Pharma '3003 Medicaments (not for retail sale) 0.28 0.33 0.00 0.03 0.00 1.00
32 Food 01 Live animals 0.27 0.00 0.40 0.12 0.00 1.00
33 Cosmetics '3303 Perfumes 0.25 0.00 0.36 0.05 0.00 1.00

2. FDI Opportunity Impact
Sector (2019/20) IMPACT OF INCREASES IN INVESTMENTS
Global Indonesia
investments investments Global % 5% Global % 10% Global % 15% Global %
US$ bil US$ bil
Islamic Finance $6.11 $2.85 47% $2.99 49% $3.13 51% $3.27 54%
Halal Food $4.93 $1.74 35% $1.83 37% $1.91 39% $2.00 41%
Travel & Tourism $0.34 $0.28 82% $0.29 86% $0.31 90% $0.32 95%
Halal Cosmetics $0.12 $0.10 79% $0.10 83% $0.11 86% $0.11 90%
Media $0.12 $0.03 23% $0.03 24% $0.03 25% $0.03 26%
Halal Pharma $0.16 $0.02 14% $0.02 14% $0.02 15% $0.02 16%
Modest Fashion* $0.00 $0.00 0%
$11.78 $5.01 43% $5.26 45% $5.51 47% $5.76 49%
Increase in
GDP US$ $0.25 $0.50 $0.75
billion
*Global modest fashion investments are insignificant and do not contribute majorly to the total investments. Value of Indonesia’s investments in
modest fashion sector are not disclosed.

ENDNOTES
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29 (2017) Danone Retrieved from Forbes , https://www.forbes.com/companies/danone/?sh=29d5fd5c7193
30 Werber C. (2019). Danone is showing multinationals the way to a less destructive form of capitalism.Retrieved from
Quartz: https://qz.com/work/1739547/danone-ceo-emmanuel-faber-is-building-the-worlds-largest-b-corp/
31 (2021) About B Crops Retrieved from Certified B Corporation: https://bcorporation.net/about-b-corps
32 (2017) Danone Retrieved from Forbes , https://www.forbes.com/companies/danone/?sh=29d5fd5c7193
33 BPS, Indonesia: https://www.bps.go.id/indicator/9/200/1/number-of-establishment-of-large-and-medium-
manufacturing-isic-2009-.html
34 BPS, Indonesia: https://www.bps.go.id/indicator/9/730/1/total-workers-of-large-and-medium-manufacturing-by-
subsector-kbli-2009-.html
35 BPS, Indonesia: https://www.bps.go.id/indicator/170/448/1/workers-engaged-industry-by-2-digit-isic.html
36 About PBRX.. Published by PT. Pan Brothers Tbk: https://www.panbrotherstbk.com/AboutUs/pbrx
37 Interview with Pak Pandu Rosadi, CEO Ria Miranda
38 Ell K. (2021). American Eagle Outfitters Logs $121 Million Profit; Acquires Logistics Company. Published by Fairchild
Media WWD: https://www.aeo-inc.com/2021/09/02/wwd-american-eagle-outfitters-logs-121-million-profit-acquires-
logistics-company/
39 (2021) Bio Farma Company Profile. Retrieved from Datanyze:
https://www.datanyze.com/companies/bio-farma/372538165
40 (2021) Bio Farma Indonesia Profile. Retrieved from RocketReach:
https://rocketreach.co/bio-farma-indonesia-profile_b5e0f88df42e69b4
41 (2021) Sino Biopharmaceutical. Retrieved from Forbes :
https://www.forbes.com/companies/sino-biopharmaceutical/?sh=6d865f84b720
42 (2021).Pharma 50: The 50 largest pharmaceutical companies in the world. Published by Drug Discovery & Development:
https://www.drugdiscoverytrends.com/pharma-50-the-50-largest-pharmaceutical-companies-in-the-world/
43 (2021) Sino Biopharmaceutical. Retrieved from Forbes:
https://www.forbes.com/companies/sino-biopharmaceutical/?sh=6d865f84b720
44 Incyte Pharmaceuticals Profile. Retrieved from LinkedIn: https://www.linkedin.com/company/incyte/
45 Rustandi C. (2020). Indonesian Cosmetic Brand Wardah Beats Pandemic Odds with Rp 22.9B in Exports. Published by KOMPAS:
https://go.kompas.com/read/2020/10/31/002507574/indonesian-cosmetic-brand-wardah-beats-pandemic-odds-with-
rp-229b-in-exports?page=all
46 (2021) Paragon Technology And Innovation Information Profile.Retrieved from RocketReach:
https://rocketreach.co/paragon-technology-and-innovation-profile_b5a43c12f663ed06
47 Rustandi C. (2020). Indonesian Cosmetic Brand Wardah Beats Pandemic Odds with Rp 22.9B in Exports. Published by KOMPAS:
https://go.kompas.com/read/2020/10/31/002507574/indonesian-cosmetic-brand-wardah-beats-pandemic-odds-with-
rp-229b-in-exports?page=all
48 (2021).Pharma 50: The 50 largest pharmaceutical companies in the world. Published by Drug Discovery & Development:
https://www.drugdiscoverytrends.com/pharma-50-the-50-largest-pharmaceutical-companies-in-the-world/
49 (2020) Ramayana Lestari Sentosa. Retrieved from Indonesia Investments:
https://www.indonesia-investments.com/business/indonesian-companies/ramayana-lestari-sentosa/item428
50 (2021) Walgreens Boots Alliance - Home Page. Retrieved from Walgreens Boots Alliance:
https://investor.walgreensbootsalliance.com/home/default.aspx
51 Exchange rate as of 9 September 2021
52 WBA, Annual Report 2020
53 (2021) Macy’s Home Page. Retrieved from Macy’s inc: https://www.macysinc.com/
54 (2021)Financial Information- Sales Data . Retrieved from Macy’s inc:
https://www.macysinc.com/investors/financial-information/sales-data
55 (2021) INDONESIA COURIER, EXPRESS, AND PARCEL (CEP) MARKET - GROWTH, TRENDS, COVID-19 IMPACT, AND
FORECASTS (2021 - 2026). Published by Mordor Intelligence:
https://www.mordorintelligence.com/industry-reports/indonesia-courier-express-and-parcel-cep-market
56 Winosa Y. (2021). Indonesia F&B Companies Optimistic about sales during second COVID-19 Ramadan despite mudik
ban. Published by Salaam Gateway: https://www.salaamgateway.com/story/indonesia-fb-companies-optimistic-about-
sales-during-second-covid-19-ramadan-despite-mudik-ban
57 Permatasari S. & Dahrul F. (2021). Bukalapak Jumps 25% in Debut After Indonesia’s Biggest IPO. Published by Salaam
Gateway: https://www.salaamgateway.com/story/bukalapak-jumps-25-in-debut-after-indonesias-biggest-ipo

ENDNOTES
58 Singh M. (2021). Gojek and Tokopedia merge to form GoToGroup. Retrieved from Join TechChrunch+:
https://techcrunch.com/2021/05/16/gojek-and-tokopedia-merge-to-form-goto-group/
59 Singh M. (2021). Gojek and Tokopedia merge to form GoToGroup. Retrieved from Join TechChrunch+:
https://techcrunch.com/2021/05/16/gojek-and-tokopedia-merge-to-form-goto-group/
60 (2011) HIJUP- About Us. Retrieved from HIJUP: https://www.hijup.com/en/pages/about
61 (2021) HIJUP overview, Competitors, Revenue, News & Insights. Retrieved from Owler:
https://www.owler.com/company/hijup
62 (2021) HIJUP overview, Competitors, Revenue, News & Insights. Retrieved from Owler:
https://www.owler.com/company/hijup
63 (2021) HappyFresh Profile. Retrieved from Crunchbase : https://www.crunchbase.com/organization/happyfresh
64 Niessner J. (2021) . Indonesia grocery platform HappyFresh closes $65m Series D. Published by AVCJ:
https://www.avcj.com/avcj/news/3024613/indonesia-grocery-platform-happyfresh-closes-usd65m-series-d
65 (2021) HappyFresh Profile- Overview. Retrieved from Owler: https://www.owler.com/company/happyfresh
66 (2021) HappyFresh Profile- Overview. Retrieved from Owler: https://www.owler.com/company/happyfresh
67 Scott M. (2016) In Shadow of Amazon, European Challenger Looks to China for Inspiration. Published by The NewYork
Times: https://www.nytimes.com/2016/12/16/technology/amazon-zalando-eu-online-shopping.html
68 (2021). Online fashion retailer Zalando launches platforms in Slovenia, Slovakia and Lithuania. Published by bne
IntelliNews:
https://www.intellinews.com/online-fashion-retailer-zalando-launches-platforms-in-slovenia-slovakia-and-lithuania-212178/
69 (2021) ANATWINE & TRADEBYTE ARE JOINING FORCES. Published by Tradebyte:
https://www.tradebyte.com/en/anatwine-becomes-tradebyte-uk/
70 Mguire J.(2021). Top Performing Artificial Intelligence Companies of 2021. Retrieved from Datamation:
https://www.datamation.com/artificial-intelligence/ai-companies/
71 McLaughlin B. (2018) This Week In China Tech: Alibaba Invests 1 Trillion Yuan And China Battles Against Google’s
AlphaGo. Published by Forbes: https://www.forbes.com/sites/baymclaughlin/2018/05/09/this-week-in-china-tech-
alibaba-invests-1-trillion-yuan-and-china-battles-against-googles-alphago/?sh=69c471966978
72 (2020) Gordon Food Service. Retrieved from Forbes:
https://www.forbes.com/companies/gordon-food-service/?sh=7245f45f6011
73 (2020)Gordon Food Service. Retrieved from Forbes:
https://www.forbes.com/companies/gordon-food-service/?sh=7245f45f6011
74 Winosa Y. (2021) indonesia Islamic banks outgrew conventional peers in 2020. Published by Salaam Gateway:
75 Winosa Y. (2021) Indonesia eyes bigger Islamic finance market share after launch of social security agency’s Shariah
service. Published by
Salaam Gateway: https://www.salaamgateway.com/story/indonesia-eyes-bigger-islamic-finance-market-share-after-
launch-of-social-security-agencys-shariah-s
76 https://www.aa.com.tr/en/asia-pacific/indonesia-begins-merger-of-3-state-owned-islamic-banks/2079910
77 Ibid.
78 (2021) The Strength Of Bank Syariah Indonesia Before Launching February 1: Have 14.9 Million Customers And 20
Thousand Employees. Retrieved from VOI:
https://voi.id/en/berita/27629/mengintip-kekuatan-bank-syariah-indonesia-sebelum-launching-1-februari-mendatang
79 (2021) The Strength Of Bank Syariah Indonesia Before Launching February 1: Have 14.9 Million Customers And 20
Thousand Employees. Retrieved from VOI:
https://voi.id/en/berita/27629/mengintip-kekuatan-bank-syariah-indonesia-sebelum-launching-1-februari-mendatang
80 Kastrenakes J,(2021).Netflix subscriber growth is stalling as it runs low on hits. Published by THE VERGE.:
https://www.theverge.com/2021/4/20/22394425/netflix-subscriber-growth-stalls-2021
81 (2021) JNE EXPRESS’S Homepage- Overview. Retrieved from Owler: https://www.owler.com/company/jne1
82 (2021) JNE EXPRESS’S Homepage- Overview. Retrieved from Owler: https://www.owler.com/company/jne1
83 (2019) Empat Tahun Berkiprah, J&T Express Torehkan Segudang Prestasi. Published by KOMPAS:
https://biz.kompas.com/read/2019/12/31/123111528/empat-tahun-berkiprah-jt-express-torehkan-segudang-prestasi
84 IrmaJunida A & Cindyara A. (2020) Delivery company records 3 mln shipments during Ramadan. Published by Antara
news ws: https://en.antaranews.com/news/149784/delivery-company-records-3-mln-shipments-during-ramadhan
85 (2021) J&T Express Homepage. Retrieved from Owler : https://www.owler.com/company/j-t-express
86 Harry R (2021) DHL achieves record earnings for full-year 2020. Published by Aircargo News:
https://www.aircargonews.net/business/dhl-achieves-record-earnings-for-full-year-2020/

87 Salama (2020) Indonesia: Modern Halal Valley receives Halal Industrial Zone certificate from the Ministry of Industry
Published by Halal Focus:
https://halalfocus.net/indonesia-modern-halal-valley-receives-halal-industrial-zone-certificate-from-the-ministry-of-industry/
88 (2021) The Implementing Regulation of the Omnibus Law on Job Creation: Government Regulation No. 39 of 2021
on its Implementation in Halal Product Guarantee Sector Published by Advisory: https://www.makarim.com/storage/
uploads/51af2fe3-22e8-4b54-af90-de56d2996f05/Mar-2021---Issue-4---Halal-Product-Guarantee-Sector.pdf
89 Winosa Y (2021) Indonesia to revise Halal Product Guarantee Law in October to speed up certification process. Published
by Salaam Gateway: https://www.salaamgateway.com/story/indonesia-to-revise-halal-product-guarantee-law-in-
october-to-speed-up-certification-process
90 Tamir C, Connaughton A & Salazar A (2020) People’s thoughts on whether belief in God is necessary to be moral vary by
economic development, education and age. Published by Pew Research Center:
https://www.pewresearch.org/global/2020/07/20/the-global-god-divide/
91 Iswara A (2020) indonesia ranks among most religious countries in Pew study Published by The jakarta post:
https://www.thejakartapost.com/news/2020/07/30/indonesia-ranks-among-most-religious-countries-in-pew-study.html
92 Pribadi I & Katriana (2021) Possible for Indonesia to regain upper-middle income status: official . Published by Antara
News: https://en.antaranews.com/news/178666/possible-for-indonesia-to-regain-upper-middle-income-status-official
93 Bhawna P (2021) World Bank Optimistic Towards Indonesia’s Economic Growth Retrieved by TEMPO.CO:
https://en.tempo.co/read/1511261/world-bank-optimistic-towards-indonesias-economic-growth
94 (2020) COVID-19 accelerating shifts in Indonesian consumer behaviour. Retrieved by DBS SME Banking:
https://www.dbs.com/in/sme/aics/templatedata/article/generic/data/en/GR/092020/200922_insights_id_consumer.xml#
95 (2021) Deloitte Consumer Insights Adapting to the new normal in Indonesia. Retrieved by Deloitte: https://www2.deloitte.
com/content/dam/Deloitte/sg/Documents/consumer-business/sea-cb-deloitte-consumer-insights-id-2021-update.pdf
96 Aggarwal N (2021) Indonesia’s digital economy grows to US$44 billion Published by The Business times:
https://www.businesstimes.com.sg/hub/indonesia-76th-independence-day/indonesias-digital-economy-grows-to-us44-billion
97 Indonesia Internet Service Provider Association (APJII)
98 (2021) Deloitte Consumer Insights Adapting to the new normal in Indonesia. Retrieved by Deloitte: https://www2.deloitte.
com/content/dam/Deloitte/sg/Documents/consumer-business/sea-cb-deloitte-consumer-insights-id-2021-update.pdf
99 Julita L (2021) Pertunbuhan Ekonomi 2020- 2,07%, Terburuk Sejak Krismon 98 . Published by CNBC Indonesia:
https://www.cnbcindonesia.com/news/20210205065151-4-221193/pertumbuhan-ekonomi-2020-207-terburuk-sejak-
krismon-98
100 (2020) Survey: Indonesian consumer sentiment during the coronavirus crisis. Published by McKinsey Company:
https://www.mckinsey.com/business-functions/marketing-and-sales/our-insights/survey-indonesian-consumer-
sentiment-during-the-coronavirus-crisis
101 (2021) Boosting the Recovery. Retrieved from The World Bank:
https://openknowledge.worldbank.org/bitstream/handle/10986/35762/160410.pdf
102 Agarwal R, Santoso A, Tan K & Wilbow P (2021) Ten ideas to unlock Indonesia’s growth after COVID-19 Published by
McKinsey & Company:
https://www.mckinsey.com/featured-insights/asia-pacific/ten-ideas-to-unlock-indonesias-growth-after-covid-19
103 (2021) Boosting the Recovery . Retrieved from The World Bank:
https://openknowledge.worldbank.org/bitstream/handle/10986/35762/160410.pdf
McKinsey & Company:
105 (2020) Survey: Indonesian consumer sentiment during the coronavirus crisis. Published by McKinsey Company :
https://www.mckinsey.com/business-functions/marketing-and-sales/our-insights/survey-indonesian-consumer-
sentiment-during-the-coronavirus-crisis
106 Patunru A, Octania G & Audrine P (2020) Policy Brief | Mitigating Food Supply Chain Disruptions Amid Covid-19. Retrieved
from CIPS: https://www.cips-indonesia.org/post/policy-brief-mitigating-food-supply-chain-disruptions-amid-covid-19
107 (2021) The Great Escape: Covid-19 in the Short-Term and Middle-Income Trap in the Long-Term Retrieved from LPEM FEB UI:
https://www.lpem.org/wp-content/uploads/2020/11/IEO2021-EN.pdf
108 (2019)Indonesia Foreign Direct Investment: % of GDP Retrieved from CEIC:
https://www.ceicdata.com/en/indicator/indonesia/foreign-direct-investment--of-nominal-gdp
109 Bank Indonesia, Direct Investment Flows in Indonesia By Economic Sectors
110 Fathur rahman D. (2020) Foreign investment falls as COVID-19 pandemic hits major investors Published by The Jakarta
Post: https://www.thejakartapost.com/news/2020/04/21/foreign-investment-falls-as-covid-19-pandemic-hits-major-
investors.html
111 Ibid.

ENDNOTES
112 Rohmi M, Jaya T & Syamsiah N (2021) The Effects Pandemic Covid-19 on Indonesia Foreign Trade .Published by UNTAR:
https://ecojoin.org/index.php/EJE/article/view/750/730
113 (2020) Indonesia Total Exports Retrieved from CEIC: https://www.ceicdata.com/en/indicator/indonesia/total-exports
114 Rohmi M, Jaya T & Syamsiah N (2021) The Effects Pandemic Covid-19 on Indonesia Foreign Trade. Published by UNTAR:
https://ecojoin.org/index.php/EJE/article/view/750/730
116 (2021) World trade primed for strong but uneven recovery after COVID-19 pandemic shock Retrieved from World Trade
McKinsey & Company:
118 (2021) Indonesia- The latest Coronavirus count Retrieved from Reuters:
https://graphics.reuters.com/world-coronavirus-tracker-and-maps/countries-and-territories/indonesia/
120 Sumbar A (2020). Indonesia aims to turn into global halal hub by 2024. Retrieved from Antara News:
https://en.antaranews.com/news/162028/indonesia-aims-to-turn-into-global-halal-hub-by-2024
121 (2021) Doing Business - Business Reforms in Indonesia Published by The World Bank:
https://www.doingbusiness.org/en/reforms/overview/economy/indonesia
122 (2021) RESEARCH AND DEVELOPMENT TAX INCENTIVES FOR THE APPAREL AND TEXTILES INDUSTRY Retrieved from
Alliantgroup: https://www.alliantgroup.com/manufacturing/apparel-and-textiles/
123 ITC Trademap. Exports of palm oil (HS code 1511) (2020 estimates). Retrieved on 21st October 2021.
124 (2020) Agriculture, forestry, and fishing, value added (current US$) - World Bank national accounts data, and OECD
National Accounts data files. Published by The World Bank: https://data.worldbank.org/indicator/NV.AGR.TOTL.CD
125 Interview with Putu Rahwidhiyasa, Business Director of Shariah Entrepreneurship, KNEKS
126 (2021) Global Islamic Fintech Report 2021 Published by Salaam Gateway:
https://www.salaamgateway.com/specialcoverage/islamic-fintech-2021
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INDONESIA HALAL

MARKETS REPORT 2021/2022

Supported by: Produced by:

3 INDONESIA HALAL MARKET OVERVIEW . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10

4 THE GLOBAL HALAL MARKET TRADE & INVESTMENT OPPORTUNITY . . . . . . . . . . . . . . . . . . . . . . 12

5 INDONESIA CURRENT HALAL MARKET LANDSCAPE .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38

6 INDONESIA HALAL MARKET TRADE & INVESTMENT OPPORTUNITY . . . . . . . . . . . . . . . . . . . . . . . 68

6.1. Indonesia Trade Opportunity 69

7 INDONESIA HALAL MARKET OPPORTUNITY ASSESSMENT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 82

8 PROMOTION STRATEGY FOR INDONESIAN HALAL TRADE & INVESTMENT . . . . . . . . . . . . . . 96

REPORT PURPOSE AND METHODOLOGY.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 106

Indonesia Halal Markets Report 2021/2022 3

Assalamu’alaikum Warahmatullahi Wabarakaatuh

Wassalamu’alaikum Warahmatullahi Wabarakaatuh

Jakarta, 27th October 2021

4 Indonesia Halal Markets Report 2021/2022

Assalamualaikum Warohmatullahi Wabarokatuh

Wassalamualaikum Warohmatullahi Wabarokatuh

Wallahu Muwafiq Ila Aqwaamithoriq

Sapta Nirwandar Rafiuddin Shikoh

Indonesia Halal Markets Report 2021/2022 5

Indonesia Halal Markets Report 2021/2022 7

The substantial global opportunity that is awaiting Indonesia’s leadership:

Indonesia’s tremendous potential in the domestic halal economy:

The under-addressed export opportunity:

8 Indonesia Halal Markets Report 2021/2022

The strategic path forward:

Indonesia Halal Markets Report 2021/2022 9

FOOD 135.00 14.64% -6.44%

3 AREAS FASHION 15.60 8.34% -4.99%

OF OPPORTUNITY WITHIN PHARMA 5.13 5.83% -4.29%

1. EXPORT GROWTH COSMETICS 4.19 12.62% 0.71%

Assets, US$ billion 2020

ISLAMIC FINANCE 119.5 20.5%

INDONESIA’S SELECT CORE COMPETENCIES TO LEVERAGE AND CHALLENGES

CORE COMPETENCIES CHALLENGE

LARGEST HALAL CONSUMER MARKET IN THE WORLD BEHIND ON EXPORT

11.34% of global halal

NO GLOBAL CHAMPIONS IN 2021 FORBES GLOBAL

Saudi Arabia and UAE lead ranking with halal

10 Indonesia Halal Markets Report 2021/2022

HALAL TRADE & INVESTMENT OPPORTUNITY

Animal or 1. Pakistan 1. India

$0.5 BILLION Medicaments

Oral care 1. UAE 1. Germany

DEVISING INDONESIA’S HALAL ECONOMY STRATEGIES AND KEY TRADING

NATIONAL HALAL ESTABLISHING THE HALAL ECONOMY AS AN ENGINE OF

GLOBALLY DIFFERENTIATED DOMESTIC GOVERNMENT PRODUCTION OPERATIONAL

STRATEGIC STRATEGIC STRATEGIC STRATEGIC STRATEGIC

STAKEHOLDERS STAKEHOLDERS STAKEHOLDERS STAKEHOLDERS STAKEHOLDERS

Indonesia Halal Markets Report 2021/2022 11

4.1. THE GLOBAL HALAL ECONOMY OPPORTUNITY

Defining the Global Halal Economy

The Muslim Consumer:

12 Indonesia Halal Markets Report 2021/2022

FOR MANY... ISLAM: ... TOUCHES MANY ... VALUES WITH

Select Qur’anic verses with regards to halal consumption are as follows:

Indonesia Halal Markets Report 2021/2022 13

Defining the Global Halal Economy: