Potential Value of Indonesia’s Halal Industry Estimated at $202 Million

JAKARTA, KOMPAS.com - Indonesia, the most populous Muslim country, has enormous potential in developing its national halal industry, but homegrown businesses have yet to position themselves for the lion's share of this market.

BNI Syariah’s president director Abdullah Firman Wibowo said the global halal industry is estimated to be worth around 30,000 trillion rupiahs ($2 trillion), while the domestic halal market has the potential value of 3,000 trillion rupiahs ($202.5 million).

However, this sector remains dominated by foreign business players. “Indonesia is only the place for consumers,” said Abdullah in a webinar on September 29.

Also read: Indonesia’s Central Bank Estimates 0.01 Inflation Rate in September

Abdullah encouraged the local stakeholders to play a significant role in the national halal industry, especially in the Islamic finance sector.

“Currently, the halal industry is a new business and a new brand,” he said.

During the Covid-19 pandemic, he learned that the role of Islamic banking in the halal industry was quite good following the continued growth in its total assets.

In June alone, he said, the total assets of Islamic banking grew 9.22 percent annually to 545.4 trillion rupiahs ($36.8 billion). This figure was higher than for conventional banking, which only grew 4.89 percent.

Also read: Jokowi Optimistic Indonesian Economy Will Grow in 2021 Despite Covid-19

“It shows that the development of Islamic banking still posts a relatively better performance compared to conventional banking amid the Covid-19 pandemic,” he said.

The growth in the performance of Islamic banking amid the pandemic was mainly driven by three things, he said.

First, awareness of the halal lifestyle has increased. Second, the government has supported the Islamic finance industry by establishing the National Committee for Sharia Economy and Finance (KNEKS), which will support the development of the halal industry.

“Third is the digital technology development,” said Abdullah.

The third point, he added, is the key to boosting Islamic financial literacy, which only reaches below 10 percent nationwide.

“This is the area where collaboration with all stakeholders is needed,” he said.

If the Islamic financial literacy grows, he is of the view that Indonesia could reach its national halal industry potential worth around 3,000 trillion rupiahs ($202.5 million) annually.

(Writer: Rully R. Ramli | Editor: Bambang P. Jatmiko)

Source: https://money.kompas.com/read/2020/09/29/173500526/potensi-industri-halal-nasional-capai-rp-3.000-triliun?page=all#page3.