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NEWS UPDATES 27 August 2009

New halal bill upsets Indonesian firms

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Three key Indonesian industries — food and beverages, cosmetics and pharmacy — are bracing for hefty additional costs and to risk losing trillions of rupiah in margins if the nation presses ahead with new halal certification procedures under a new bill, the Jakarta Post quoted industry associations as saying.

Under the new halal certification bill, halal certificates and labels will be compulsory — as opposed to voluntary — for these three sectors, not only for all ingredients but also for all equipment used during the production process, meaning new costs.

The Indonesian Food and Beverage Association (Gapmmi) argues although certification and labeling fees were only Rp 1 million for small and medium enterprises (UMKM) and 2 million rupiah for big firms, the bill will have a long-run impact.

Gapmmi regulation director Franky Sibarani said Tuesday that these three sectors use a significant amount of imported materials in their production processes. 

“Small and medium enterprises will bear very high production costs as certifications and labels require special product treatment during [the] production process ranging from materials to equipment,” said Franky.

“Every [item of] material and equipment has to be verified whether it fits the halal category,” he said, adding that a food and beverage product could have 15 ingredients; every cosmetic and pharmacy product could have 50 to 100 ingredients which were mostly imported.

The consequences, he said, if authorities found forbidden imported materials in a product, would be that the producer would have to check their compatibility with sources in their country of origin.

“If the materials were imported from Europe for instance, their producer would have to send an officer to Europe to check their compatibility,” he said. “If we used equipment for non-halal products, we would no longer be able to use it for processing halal products,” he said, indicating producers might need to invest in new production facilities.

To verify products’ halal status, companies will have also to hire experts as internal auditors to make sure that materials and equipment are halal.

GP Farmasi Indonesia is also against the draft, saying that medicines have functions to improve people’s lives. Their reactions to human bodies depend on individual‘s health condition and cannot be replaced with other “halal” materials.

Until recently, there were 8,000 food and beverage products certified as halal, although not so many pharmacy and cosmetic products have similar certificates.

The Indonesian Chamber of Commerce and Industry (Kadin) urged the government and the House of Representatives to reexamine the bill, which was submitted to the House of Representatives last February.

Total annual sales of food and beverage products account for 447 trillion rupiah, the cosmetics industry 40 trillion rupiah, and pharmacy sales are 30 trillion rupiah.


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