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Indonesia – Halal Product Assurance Law.

8 January, 2015

 


On 17 October 2014, the Indonesian Parliament issued Law No. 33 of 2014 on Halal Product Assurance (“Halal Product Assurance Law“). The intention is to provide protection and assurance of halal products consumed by Indonesian citizens, a majority of whom are Moslem. There is no definition of “halal” in the new law. But generally “halal” would mean permitted or lawful in Islam. Before the issuance of the Halal Product Assurance Law, halal registration is applied voluntarily and held by the Indonesian Ulema Council (Majelis Ulama Indonesia).

 
The Halal Product Assurance Law needs around 20 implementing regulations which must be issued within 2 years after 17 October 2014. The halal certification obligation under the Halal Product Assurance Law will become mandatory 5 years after 17 October 2014. It will be interesting to see how the Indonesian Government will structure this halal certification obligation and related procedures under the required implementing regulations as quite a number of parties would be involved, including (i) the Indonesian Ulema Council, (ii) a new body that will be established to issue halal certification (to be known as the Halal Product Assurance Implementing Board, or Badan Penyelenggara Jaminan Produk Halal, abbreviated as “BPJPH“), and (iii) new institutions that can be established by the Indonesian Government or Islamic religious institutions that have obtained legal entity status (to be known as a Halal Audit Institution, or Lembaga Pemeriksa Halal, abbreviated as “LPH“).

 
We set out below some of the key issues under the Halal Product Assurance Law. It remains to be seen whether those issues will be clarified in the implementing regulations.

 
Definition Of Products

 
The Halal Product Assurance Law provides a vague definition of which “products” require halal certificates. The way “products” are defined under the Halal Product Assurance Law leaves open the interpretation that they might also include non-food and beverage products (such as clothing) and services (such as consultancy services). FYI, under the Halal Product Assurance Law, “products” are defined as goods and/or services related to food, beverages, medicines, cosmetics, chemical products, biological products, genetically modified products as well as goods that are consumed, used, and utilized by the community.

 
Halal Vs Not Halal

 
Halal certification is mandatory for “products” that fall under the Halal Product Assurance Law. It is not clear whether the products that have not obtained halal certification would be deemed “not halal”.

 

BPJPH & Relation With Others

 
The Halal Product Assurance Law requires BPJPH, which is under the Ministry of Religion Affairs, to be established within 3 years after 17 October 2014. It is still not clear how BPJPH will be established, including who the members will be. It is also not clear how the relations between BPJPH, the Indonesian Ulema Council and LPHs will be structured.

 
Procedures For Halal Certification Issuance

 
Products that will be distributed and traded in Indonesia must obtain a halal certificate. As mentioned above, the Halal Product Assurance Law provides a vague definition of which “products” require halal certifications.

 
Applications for halal certificates should be submitted to BPJPH. BPJPH will then issue a halal certificate for the product after:

 
(i) an appointed LPH examines the product; and

 
(ii) the Indonesian Ulema Council issues a halal recommendation for the product.

 
It appears to us that the procedures for the issuance of halal certificates might involve some back and forth between BPJPH, LPH and the Indonesian Ulema Council. Also, would the Indonesian Ulema Council issue a halal recommendation for a product if its own personnel do not do the examination? As mentioned above, an LPH can be established by the Indonesian Government or Islamic religious institutions that have obtained legal entity status.

 
Sanctions

 
The Halal Product Assurance Law includes administrative sanctions (such as for not affixing halal labels in accordance with the Halal Product Assurance Law) and criminal sanctions (such as for a holder of halal certification that cannot maintain the “halal” of the relevant product). However, the Halal Product Assurance Law does not set out any sanctions for businesses that do not apply for halal certification for their products (if the products are subject to the Halal Product Assurance Law regime).

 

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For further information, please contact:

 

Mochamad Fachri, Partner, Hadiputranto, Hadinoto & Partners
mochamad.fachri@bakernet.com

 
Cahyani Endahayu, Partner, Hadiputranto, Hadinoto & Partners
cahyani.endahayu@bakernet.com

 
Preti Suralaga, Hadiputranto, Hadinoto & Partners
preti.suralaga@bakernet.com

 

Hadiputranto, Hadinoto & Partners Corporate/M&A Practice Profile in Indonesia

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