Photo for illustrative purposes only. A woman wearing a mask picking frozen foods in a supermarket in Purwokerto, Indonesia, on June 28, 2020.

Halal Industry Islamic Finance

Indonesia Islamic economy 2021: Increasing digitalization for halal industry, work on Shariah-compliant investment bank to continue

JAKARTA – Indonesia plans to codify and digitalize data from halal certificates to better track and manage its domestic halal industry.

“We will start the codification of data from halal certificates, and synchronize these with data from the Ministry of Trade and the Coordinating Ministry of Economic Affairs,” said Afdhal Aliasar, director of halal products industry of the National Sharia Economy and Finance Committee (KNEKS), told Salaam Gateway.

The exercise that the government plans to start in 2021 will also involve the national halal certifier BPJPH, the Islamic clerical body MUI that passes fatwa for halal certificates, Customs and Clearance, and the Ministry of Industry.

“This codification will let us know the exact volume and value of Indonesian halal products and how much has been exported so we can do a better mapping for halal products export strategy going forward,” said Afdhal.

According to law, all products in Indonesia that are halal must be halal-certified. BPJPH started operating in October 2019 as the national agency managing and facilitating the full workflow of halal certification.

KNEKS also intends to work with BPJPH to build an information system that will become the core of the digitalization of related processes, such as  halal certification, MSME training and education about halal products, introducing QR Codes, and other technology for consumers to identify halal products.

“This information system will be integrated into existing halal marketplaces, halal e-money providers and other halal lifestyle apps that are used by Indonesian consumers.”

The government will accelerate the country’s halal products assurance ecosystem in “massive and innovative ways”, Afdhal added.

KNEKS has four priority areas for 2021: the development of three areas –halal products industry, Islamic financial services, and Islamic social finance—and the expansion of Islamic businesses and enterprises.

“In addition to these four priorities, Vice President Ma’ruf Amin also mandated us to develop the Shariah economy as a solution for economic recovery that is affected by the COVID-19 pandemic,” Afdhal said.

Eight focus areas for the halal product industry:

  • Develop halal industrial estates (aim is to add six halal industrial estates to the current two: Modern Land Cikande Halal Valley in Banten and Safe 'n' Lock in Sidoardjo)
  • Develop halal ports
  • Develop halal health industry
  • Increase number of halal audit/ inspection institutions
  • Increase number of halal tourism destinations
  • Improve halal slaughterhouses
  • Initiate halal certification program for export products and halal traceability
  • Implement halal-ready list (Daftar Siap Halal/ DSH) for small and micro enterprises’ halal certification program


Indonesia will continue its collaboration with the multilateral Islamic Development Bank in 2021, said Dr. Sutan Emir Hidayat, KNEKS director of Islamic economy supporting ecosystem.

The government agency has identified five areas of cooperation:

  • Working on the establishment of an Islamic Investment Bank in Indonesia
  • establishing a world class takaful operator
  • establishing a deposit insurance system for Islamic microfinance
  • technology support for BPJPH and halal assurance
  • establishing an Islamic digital ecosystem

KNEKS will run two major programs in January for the development of Islamic social finance:

  • launching an Islamic economy logo and branding, which will include branding for waqf
  • launching of an endowment fund by President Joko Widodo

Government agencies in 2021 will continue to work on completing draft laws to strengthen Islamic finance and the Islamic economy. These are already included among the House of Representative’s priority programs.

“Other programs include the simplification of Islamic universities’ majors from 16 to five: Shariah business management, Shariah economics, Shariah accounting, Shariah banking and finance, and Shariah economy law,” said Dr. Sutan.

“We will coordinate with the Ministry of Religious Affairs and Ministry of Education and Culture as well as more than 750 study programs or campuses in Indonesia regarding this,” he added.

Research in the Islamic economy will also be a focus area. KNEKS will work with the economist Prof. Mansor H. Ibrahim from Malaysia’s International Centre for Education in Islamic Finance (INCEIF) to strengthen the capacities of Indonesia’s researchers to publish their work in global journals, said Dr. Sutan.

“Next year we will also give awards to local governments that have developed Shariah economy and finance in their respective regions. These will be like the Adipura awards but developed for the Shariah economy and finance,” he said, referring to Indonesia’s environmental awards for clean and green cities.

(Reporting by Yosi Winosa; Editing by Emmy Abdul Alim

*Corrections: 1) Dr. Sutan Emir Hidayat's job title is changed to director of Islamic economy supporting ecosystem as he is no longer the director for education and research at the KNEKS. 2) The launch of branding for waqf is under the bigger umbrella of the launch of the Islamic economy logo and branding.

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