Halal Product Assurance Law

On 17th 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, the majority of whom are Muslim. Please click here for our client alert on the Halal Product Assurance Law.

The Halal Product Assurance Law needs around 20 implementing regulations which must be issued within 2 years after 17th October 2014. The Halal certification obligation under the Halal Product Assurance Law will become mandatory 5 years after 17th October 2014.

Halal Implementing Regulation

Status

In early June 2016, the Indonesian Ministry of Religious Affairs ("MORA") released an update of the draft government regulation that will become an implementing regulation of the Halal Product Assurance Law, which will apply to all products that are imported to, and distributed and traded in Indonesia. The main concept of the draft government regulation is in-line with the Halal Product Assurance Law. That is, the Halal certification for products subject to the government regulation (when issued) is mandatory, not voluntary.

Up to date, the draft government regulation is still being discussed, and it is still not clear when it will be issued (but the mandatory Halal certification concept remains the same). Therefore, it remains to be seen how the Halal requirement under the Halal Product Assurance Law would be implemented. At this stage, many companies are taking a wait-and-see approach and doing collective lobbying efforts in discussions and public hearings with the government to have more beneficial provisions stipulated in the draft government regulation of the Halal Product Assurance Law. For example, they are trying to lobby to limit the definition of "products" and extend the deadline to have the products certified as Halal – please see further explanations below.

Key Points

We set out below some of the key points of the September draft government regulation we obtained.

1. Products
   
   The draft government regulation specifies goods and services that require Halal certification, i.e., goods and services related to food, beverages, medicine, cosmetics, chemical products, biological products, genetically-modified products, and associated products (barang gunaan) that are worn or used by society.
   
   
2. Halal Certification
   
   All of the products that are distributed and traded in Indonesia must have a Halal certificate issued by the Halal Product Assurance Implementing Board ("BPJPH"), a body under the MORA. We are not aware if the MORA has established the BPJPH. In-line with the Halal Product Assurance Law, the Halal certificate must be obtained within five years after the issuance of the Halal Product Assurance Law.
   
   However, before the obligation to have a Halal certificate comes into force, the types of products that must have a Halal certificate will be regulated gradually.
   
   However, the legal department of the MORA has commented on these provisions, e.g.,
   1. The type of products should include services as well.
   2. New provisions should be included to explain why Halal certification is needed gradually.
   3. The gradual Halal certification should be implemented in three stages based on priority orders, i.e.,:
   1. First stage: food and beverages
   2. Second stage: associated products and services
   3. Third stage: medicine, cosmetics, chemical products, biological products and genetically-modified products
   The draft government regulation refers to the implementation and type of products that must have a Halal certificate which will be further regulated in a regulation issued by the MORA; it is still unclear how the certification will be conducted (noting we are getting closer to the 5-year deadline).
   
   
3. Halal Audit Institution
   
   The Halal Product Assurance Law introduces a new institution, known as Halal Audit Institution (Lembaga Pemeriksa Halal or "LPH"), which conducts the inspection and/or testing of whether or not a product is Halal.
   
   The draft government regulation explains who can establish an LPH, the requirements for the establishment of an LPH and the procedures to establish an LPH. It also explains that more detailed provisions on licensing for the establishment of an LPH will be regulated in a regulation issued by the MORA.
   
   
4. Halal Auditor
   
   Halal auditors are individuals who have the capability to conduct inspection of whether a product is Halal. An LPH must have at least three Halal auditors.
   The draft government regulation explains who can appoint/remove a Halal auditor, the requirements on who can be a Halal auditor, the certification requirements for a Halal auditor and the registration requirements for a Halal auditor. 
   
   
5. Cooperation between BPJPH and Other Bodies
   
   The draft government regulation allows the BPJPH (in conducting its authority, e.g. supervising the implementation of the Halal certification, registering Halal auditors and certifying LPHs) to cooperate with ministries/government bodies other than the MORA (e.g. the Ministry of Agriculture and the Food and Drug Supervisory Agency), the Indonesian Ulema Council (Majelis Ulama Indonesia), LPHs and international Halal agencies. This is not a surprise to us as the BPJPH is a new body, while Halal would involve many sectors.
   
   
6. Overseas Halal Certification Registration
   
   The draft government regulation regulates that if the Halal products have obtained a Halal certificate from foreign institutions that cooperate with the BPJH, the Halal products are not required to have a Halal certificate from the BPJPH, but they still need to be registered at the BPJPH before they can be distributed in Indonesia.
   
   
7. Sanction
   
   Under the draft government regulation, business actors who distribute and trade products that need to be Halal certified, but are not, will be imposed with the following sanctions:
   1. Verbal warning
   2. Written warning
   3. Administrative penalty
   The BPJPH may announce products that do not have a Halal certificate. The draft government regulation explains that the provisions on sanctions will be further regulated in a regulation issued by the MORA.

As mentioned above, at this stage, many companies are taking a wait-and-see approach and are doing collective lobbying efforts in discussions and public hearings with the government to have more beneficial provisions stipulated in the draft government regulation of the Halal Product Assurance Law. We will provide another alert if we have any updates on the status of the draft government regulation.

Hadiputranto, Hadinoto & Partners, Member of Baker & McKenzie International - 7th november 2016

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Useful Documents

Halal Product Assurance Law