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🇮🇩 Indonesia /Economy & Trade

Revising Indonesia's Halal Industry Strategy

From Republika · () Indonesian

Translated from Indonesian, summarized and contextualized by DistantNews.

At a glance

Analysis Named sources Context piece
  • Indonesia's position in the global halal economy needs critical re-evaluation, despite its large Muslim population.
  • While excelling in areas like modest fashion and tourism, Indonesia lags behind Malaysia in key sectors like halal food and Islamic finance.
  • The country relies on community creativity rather than strong state policy for its successes, and imports more halal products than it exports.

Indonesia, the world's most populous Muslim nation, finds itself in a paradoxical position within the global halal economy. While a recent meeting between Indonesian and Malaysian officials signals a desire for collaboration, it also highlights a stark reality: after two decades, Indonesia is still learning from Malaysia, a country with a significantly smaller Muslim population that has consistently led the global halal economy.

after more than two decades, Indonesia still has to 'learn to collaborate' with Malaysia, a country whose Muslim population is not even a tenth of ours, yet has topped the global halal economy rankings for eleven consecutive years.

— Ahmad Dumyathi BashoriThe author reflects on the implications of a meeting between Indonesian and Malaysian officials regarding halal industry collaboration.

The State of the Global Islamic Economy (SGIE) 2024/2025 report places Indonesia third overall, a seemingly proud achievement. However, a closer look reveals significant weaknesses. The halal food sector, which should be a national strength, ranks fourth globally, far behind Malaysia. Islamic finance, crucial for supporting the ecosystem, struggles with a domestic market share below 11%, while Malaysia boasts 40%. Compounding this, the top five global halal product exporters are not Muslim-majority countries, with China, India, Brazil, Russia, and the United States leading the pack. Muslim nations, including Indonesia, are primarily major importers of halal products.

The question that should arise from the negotiation table is not just 'what can we do together,' but: why has Malaysia left us so far behind, and what is actually wrong with our strategy all this time?

— Ahmad Dumyathi BashoriThe author questions the underlying reasons for Indonesia's lag in the halal economy compared to Malaysia.

This situation points to a critical flaw in Indonesia's strategy: success is driven by organic community creativity in sectors like modest fashion, Muslim-friendly tourism, and halal pharmaceuticals, rather than robust state policy. These areas, where Indonesia ranks highly, have flourished independently. Conversely, sectors requiring strong government architecture, such as food and finance, remain underdeveloped. The narrative that a large Muslim population automatically translates to global halal production leadership is a misconception that must be confronted. Without honest acknowledgment of these strategic gaps, Indonesia's efforts risk building impressive structures on fragile foundations.

The predicate 'largest Muslim country' does not automatically become 'largest halal producer', and as long as we do not honestly admit this, all the strategies we devise will only become magnificent buildings on a fragile foundation.

— Ahmad Dumyathi BashoriThe author argues for a more honest assessment of Indonesia's position in the global halal market.
DistantNews Editorial

Originally published by Republika in Indonesian. Translated, summarized, and contextualized by our editorial team with added local perspective. Read our editorial standards.

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