Do Not Let Halal Certification Become a High-Cost Economy
Halal certification is entering a new phase in Indonesia. After years of being understood primarily as a consumer protection instrument and a religious obligation, halal has now become part of trade infrastructure. Food and beverage products, cosmetics, natural medicines, health supplements, chemical products, and various consumer goods will increasingly be bound by the halal product assurance regime.
A critical milestone is 18 October 2026, when the next stage of mandatory halal certification comes into effect. Its scope targets not only domestic products, including MSMEs, but also foreign products entering and traded within Indonesia. At this juncture, an economic question must be raised: halal certification, which should create added value, must not transform into a source of high economic costs.
Ultimately, halal is not merely a matter of labelling. It involves pricing, competitiveness, trade flows, logistics costs, investment, service speed, and the ability of businesses, especially MSMEs, to enter the market. There is no reason to pit consumer protection against business interests; both must progress together. The market potential is vast. The State of the Global Islamic Economy 2025/26 report estimates that global Muslim consumer spending across six Islamic economic sectors reached US$2.60 trillion in 2024 and is projected to rise to US$3.56 trillion by 2029.
Indonesia holds a strategic position. Bank Indonesia noted that the halal value chain grew by 6.21% in 2025, with its contribution to the national economy increasing. This data suggests that halal certification should be positioned as an economic driver, helping Indonesian products gain trust, expand markets, enter global supply chains, and improve market access.
The problem arises when every regulatory obligation creates a new layer of cost. If certification requires administrative fees, inspections, testing, assistance, changes in production processes, raw material adjustments, and recurring compliance costs, then all these expenses will eventually be reflected in the price structure. For large companies, this may be absorbed through economies of scale, but for MSMEs, the story is different.
Therefore, the measure of success for halal policy should not merely be the number of certificates issued. We must also ask: how much cost must businesses bear to obtain and maintain these certificates? How long is the process? How many inspections are conducted? And is the cost proportionate to the economic benefit?
Criticising the potential for a high-cost economy does not mean denying the government’s various breakthroughs. In 2026, BPJPH is providing 1.35 million free halal certificates for MSMEs through the SEHATI programme. BPJPH data also shows the ecosystem is expanding; as of 7 September 2026, over 4.4 million halal certificates have been issued, covering approximately 14.6 million products, mostly from MSMEs.
However, free certification does not automatically mean compliance costs are zero. Businesses may still face indirect costs, such as time spent managing documents, preparing raw material data, adjusting production processes, maintaining ingredient consistency, and meeting various administrative requirements. In other words, regulatory costs are not just the rupiah paid to certification bodies; they also include costs of time, transaction costs, information costs, and opportunity costs. This is what is often overlooked in the halal certification discourse.
The issue of a high-cost economy becomes even more relevant when looking at the Halal Product Assurance Agency Regulation Number 4 of 2026 regarding the Assurance of Conformity for Foreign Halal Products Entering Indonesia. This regulation was established on 7 August 2026.
In principle, the substance is understandable. Halal certificates should not remain mere administrative documents. The government needs to ensure that products actually shipped to Indonesia match the products that have obtained certification. Consequently, the new regulation introduces a Halal Product Assurance mechanism, which includes administrative verification and limited physical conformity inspections. Inspections are conducted in the loading country and/or the country of origin before products are shipped to Indonesia.
Importers must ensure various information, including product identity, certificate or registration number, HS code, quantity or volume, production code, production date, product unit, halal label or non-halal notation, and trade documents. The results are recorded in a Halal Product Assurance Report (LPPH), which becomes part of the customs documentation. This mechanism is integrated with electronic systems and the Indonesia National Single Window.
From a consumer protection standpoint, this mechanism has strong rationality. However, from an economic perspective, a question cannot be ignored: will this mechanism serve as a layer of certainty or rather a new layer of cost? This is where the design of implementation becomes crucial. BPJPH Regulation No. 4/2026 establishes a more detailed mechanism for imported products. Based on available technical explanations, the related LPPH applies to a single shipment or entry according to the data listed. For importers with high shipment frequencies, the characteristics of this per-shipment requirement need careful consideration.