Submission Statement: Indonesia will in the coming days introduce some of the world’s most sweeping rules on halal certification, requiring businesses selling everything from clothing to cosmetics and toilet paper to demonstrate their products are permissible under Islam.
From Sunday, the country will require most consumer goods — including tools and office supplies — to be certified as part of efforts to ensure transparency for customers often faced with confusing labels. Products not certified as halal will bear a non-halal label, potentially deterring customers.
The rules are expected to wreak havoc on the flow of goods into Indonesia, which manufacturers view as an attractive market due to its 280mn-strong population, the majority of whom are Muslim. Global brands such as Pepsi, Coca-Cola, P&G, Uniqlo, Nestlé and Unilever are expected to be affected.
Indonesia’s halal rules, which will apply to imported and locally made goods, are the strictest among Muslim countries, which typically mandate halal certification for food and beverages. Even more conservative Islamic countries such as Saudi Arabia and Malaysia do not demand certification for items such as clothing.
The rule, first flagged as far back as 2014, mandates manufacturers to obtain the certification prior to entering Indonesia from foreign bodies that are approved by Indonesia’s national halal agency. It also requires companies to have a “halal supervisor” of Muslim faith.
Manufacturers are struggling due to a lack of adequate certifying bodies in foreign countries, traceability constraints and the difficulty in overhauling supply chains, according to business groups and foreign governments.
The EU has warned Indonesia of “serious supply chain disruptions”, according to people familiar with the matter. Brussels has cited the complexity of tracing the halal status of ingredients in cosmetics, pharmaceuticals and chemicals in particular, saying it was “practically unfeasible”, the people said.
While food and beverage companies are typically equipped to meet halal regulations in Muslim countries, other industries are not. The EU has fewer than 10 certifying bodies for cosmetics, the bloc says.
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