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The Indonesian House of Representatives (DPR) recently passed the Omnibus Bill on Job Creation (the “Omnibus Bill”). The stated aim of the Omnibus Bill is to bolster investment and create jobs by streamlining regulations and simplifying the licensing process to improve the ease of doing business in Indonesia.
The Omnibus Bill revises various provisions in laws across numerous sectors, including Law No. 33 Year 2014 on Halal Product Assurance (“Law 33/2014”). Law 33/2014 requires all products imported, distributed and sold as halal in Indonesian territory to be halal certified. It also provides the mechanism for halal certification.
The Omnibus Bill makes the following changes to the halal certification process:
Simplification of the Certification Process
The Omnibus Bill contains articles to speed up and simplify the issuance of halal certificates.
Businesses that want to have their products or services halal-certified must submit a written application to the halal certification body, BPJPH (Badan Penyelenggara Jaminan Produk Halal). Under the Omnibus Bill, the BPJPH must examine and verify the application within one business day. Under the previous regime, the BPJPH had 10 days to complete this step.
After verifying the application, the BPJPH will request a Halal Inspection Agency (LPH) to check the halal status of the product or service in question. The LPH will then appoint a Halal Auditor to inspect/examine the relevant product or service. The Omnibus Bill speeds up the examination process from 40-60 days to 15 days.
After the examination is completed, the LPH will submit the results of the examination and its evaluation of the halal status of the product or service directly to the Indonesian Ulema Council (Majelis Ulama Indonesia or “MUI”), with a copy sent to the BPJPH.
The MUI will then hold a Halal Fatwa Assembly, a meeting of experts and relevant officials, to determine the product’s halal status. The Omnibus Bill speeds up the time period to hold the Halal Fatwa Assembly from 30 business days to three business days.
If the MUI approves the halal status of the product or service, the BPJPH will issue a Halal Certificate within one business day (previously seven business days).
The Omnibus Bill also simplifies the Halal Certificate renewal process. The BPJPH will automatically issue renewals to companies that submit a renewal application to the BPJPH with a statement that their production process is halal and they have not changed the composition of the relevant product(s) since originally obtaining their Halal Certificate.
Halal Certification for Micro and Small Businesses
The Omnibus Bill provides that micro and small businesses that apply for halal certification do not have to pay any fees. Under Law 33/2014, micro and small businesses were still subject to halal certification fees but were allowed under the law to have payment facilitated by a third party.
The Omnibus Bill also allows micro and small businesses to appoint a Halal Supervisor (Penyelia Halal), the person at the business in charge of ensuring the production process is halal, from a Community Organization (Organisasi Kemasyarakatan).
LPH
Law 33/2014 provides that the Government and/or the public can establish an LPH, which as mentioned above assists the BPJPH in examining whether a product or service is halal. It further stipulates that if an LPH is established by the public it must be proposed by a legal Islamic religious institution. The Omnibus Bill expands this to include private universities that are under the auspices of an incorporated Islamic religious institution or a legal Islamic foundation.
The Omnibus Bill also provides that if a region, which is not defined in the Bill, does not have an LPH established by the public, legal Islamic religious institutions and/or private universities may cooperate with state-owned enterprises or the Indonesian Food and Drug Authority to assist the BPJPH in conducting halal examinations for products and services.
The Omnibus Bill also revokes the requirement that an LPH be accredited by the BPJPH and the requirement that Halal Auditors obtain certification from the MUI.
Sanctions
Law 33/2014 outlines the administrative sanctions for businesses that (i) do not abide by their obligations as Halal Certificate holders, (ii) fail to include a halal label on their products, (iii) fail to register their products as halal or (iv) fail to separate halal and non-halal production processes. In contrast, the Omnibus Bill simply says violations are subject to administrative sanctions that will be elaborated in a Government regulation that is to be issued.
Implementing Regulations
Law 33/2014 provides that details regarding Halal Supervisors, LPH, Halal Auditors, the Halal Certificate renewal process, fees, public involvement, and sanctions shall be further regulated in a ministerial regulation, which was issued in the form of Minister of Religious Affairs No. 26 Year 2019 regarding the Implementation of Halal Product Assurance.
The Omnibus Bill now provides that the above matters shall be further regulated in a Government regulation that is to be issued.
SSEK - 2020
Capital: Jakarta
Population: 259 million (2016)
Currency: Indonesian Rupiah
Nominal GDP: $936 billion USD (IMF, 2016)
GDP Per Capita: $3,620 USD at Current Prices (IMF, 2016)
GDP Growth: 5.0% (2016)
External Debt: 36.80% of GDP (BI, Q2 2016)
Ease of Doing Business: 91/190 (WB, 2017)
Corruption Index: 90/176 (TI, 2016)
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