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In brief

On 2 November 2020, President Joko Widodo enacted Law No. 11 of 2020 on Job Creation (“Omnibus Law“), covering amendments to various laws and regulations in Indonesia, including on halal product assurance. Article 48 and Article 185 (b) of the Omnibus Law mandated the Government to issue new regulations to implement the amendments.

On 2 February 2021, the Government issued an implementing regulation in the form of Government Regulation No. 39 of 2021 on Halal Product Assurance (“GR 39“), which replaced the pre-existing regulations on halal product assurance in Government Regulation Number 31 of 2019 on Halal Product Assurance (“GR 31“).


Contents

  1. Key Differences
  2. Retained Features
  3. Transitional Provision

Key Differences

Although the contents of GR 39 are very similar to those of GR 31, we have identified the following notable differences:

  • More detailed provisions on halal certification process for foreign products

Under GR 39, every product that is imported, distributed and traded in Indonesian territory must obtain halal certification. The following is a list of goods that are included in the products listed in GR 31:

  1. Food
  2. Beverages
  3. Drugs
  4. Cosmetics
  5. chemical products
  6. biological products
  7. genetic engineering products
  8. worn and utilized goods that are sourced from and/or contain animal elements (i.e., (i) clothing, headgear, accessories (worn); (ii) household supplies, household equipment, worship supplies for Moslems, food and beverages packaging, stationery and office supplies; and (iii) medical devices)

Halal certification for foreign products can be obtained by an importer or its official representative, by applying in writing to the Halal Product Assurance Implementing Board (Badan Penyelenggara Jaminan Produk Halal/”BPJPH“). The following documents must be attached to the application:

  1. applicant data
  2. a copy of the foreign halal certificate of the relevant products that have been validated by an Indonesian representative abroad
  3. a list of imported goods along with the harmonized system code number
  4. a statement letter stating that the submitted documents are accurate and valid

If the applicant does not provide all of the required documents during the registration process, BPJPH may request additional documents. Under GR 39, the applicant must submit the requested documents within five business days or the application will be rejected. BPJPH will issue a halal certificate for foreign products that have passed the registration process. The importer or its official representative is obliged to include the registration number adjacent to the halal label on product packaging, or a certain part or place on products. Halal certification for foreign products must be renewed no later than three months before it expires.

  • Faster halal certification process

Under GR 39, each step of the halal certification process is now restricted to certain time limits – which are shorter than under the previous regulation, including the time limit for the verification process, inspection/examination by the halal auditors and the issuance of the halal certificate. The HPA Law does not provide a time limit for the halal auditor examination, but in GR 39 this is limited to a maximum of 15 business days.

The halal certification process may take around 20 business days from the verification to the issuance of the halal certificate (previously around 60 business days). The initial verification process only takes one business day. More significantly, the timeline for issuance of decisions of fatwa halal sittings by the Ulema Council (Majelis Ulama Indonesia or “MUI“) is shortened from 30 to three business days. The time required to issue a halal certificate is also shortened from seven to one business day from the issuance date of the fatwa halal decision by the MUI.

  • Tighter supervision on Halal Examiner Bodies (“LPH”)

BPJH can now evaluate and sanction any LPH for failure to finish the halal certification process within the time limit, i.e., three days. LPH must submit the inspection results directly to MUI instead of through BPJPH to shorten the regulatory process. However, a copy of the inspection result must be sent to BPJPH. Further, GR 39 also regulates specific sanctions that can be imposed by BPJPH against LPH. If during the inspection BPJPH finds any non-compliance, the relevant LPH may be subject to administrative sanctions in the form of: (i) written warning, (ii) administrative fines, and/or (iii) operational suspension.

  • Direct renewal process

GR 39 provides that BPJPH may directly issue renewals of halal certificates for products if business actors provide a statement letter stating that there is no change to the content of the certified product. If there are changes to the content, the business actor must submit to BPJPH documents explaining the change of content no later than three months before the certificate expires, in order for the certificate to be renewed.

  • Emphasis on electronic-based services

GR 39 emphasizes that the BPJPH will use integrated electronic-based services in implementing the halal assurance (or JPH). Further, if there is any disruption that causes the electronic-based services to be disabled, BPJPH will conduct the service manually.

This further indicates the commitment from the government to integrate all licensing processes into a unified (and hopefully simpler) electronic-based system, which presumably will be interconnected with the other government-run electronic platform for general license administration, i.e., the Online Single Submission (OSS).

Although GR 31 has already hinted at the focused use of electronic-based services, GR 39 also adds that if BPJPH has not yet implemented the electronic-based services as mandated under the regulation, BPJPH can only carry out manual services for one year after the enactment of GR 39, i.e., until 2 February 2022.

  • BPJPH taking over halal auditor certification

GR 39 removes the requirement for halal auditors (i.e., the auditors from LPH who will conduct inspection) to obtain certification from MUI. LPH may also be established by an Islamic institution entity, a private university under an Islamic institution entity or an Islamic foundation entity. For areas that do not have an LPH, the certification can be carried out in collaboration with state-owned enterprises (Badan Usaha Milik Negara/”BUMN“) and the Food and Drugs Monitoring Agency (Badan Pengawas Obat dan Makanan/”BPOM“). GR 39 mandates that the mechanisms, procedures and implementation of training and competency standards for halal supervisors will be further regulated under BPJPH regulations.

  • Slight adjustment to MUI’s role

BPJPH will only need to coordinate with MUI in relation to the determination of halal status, i.e., certification of halal auditors and LPH accreditation will no longer need to be consulted with MUI. Halal product decisions can only be issued by MUI, which now makes assessments at its sole discretion and without involving relevant ministries or instances.

  • Abolition of halal certification fees for micro and small businesses

In obtaining halal certification, micro and small businesses must submit a statement about certainty of halal products based on BPJPH standards. BPJPH will only rely on the statement to issue the halal certificate, provided that the product is not at risk or uses materials that have been confirmed to be halal and the production process has been ascertained to be halal and simple. Further, under the new regulation, micro and small businesses will not have to pay any fee in relation to the halal certification process.

Retained Features

Apart from the above, the other key features in GR 31 are retained under GR 39, as summarized below (i.e., please also read our previous alert on GR 31 here):

  1. All products must be halal certified or stated as non-halal. The halal certificate is given to products that are produced using halal materials and products that fulfil the ‘halal product process’ (Proses Produk Halal or “PPH“).
  2. BPJPH still remains the primary government body that is responsible for implementing the ‘halal product assurance’ (Jaminan Produk Halal or “JPH”) stipulated under the prevailing regulations. BPJPH reserves the rights to: (i) issue and revoke the halal certification, (ii) supervise the JPH implementation and (iii) collaborate with other organizations (inside or outside the country) for the JPH implementation.
  3. Halal and non-halal locations, places and processing means must be separated from each other. The places and processes of PPH include slaughtering, processing, storing, packaging, distribution, sales and serving (penyajian).
  4. Applications for halal certificates must be made in writing, using Indonesian language, and through an electronic system (unless the system is still unavailable).
  5. LPH can be established by (i) government (i.e., ministries/agencies, local governments, state universities, state-owned enterprises, region-owned enterprises) and (ii) society (which must be filed by a legal incorporated Islamic religious institution and a private university under the auspices of a legal incorporated Islamic religious institution or a legal Islamic foundation).
  6. Halal auditors are appointed and dismissed by the LPH and can only be appointed and registered under one LPH.
  7. Business actors that apply for a halal certificate are required to have a halal supervisor (penyelia halal). Business actors are given freedom to choose and nominate their halal supervisor.
  8. In exercising its authority, BPJPH collaborates with (i) related ministries (i.e., Ministries of Industry, Trade, Health and Internal Affairs) and/or agencies, (ii) LPH and (iii) MUI.
  9. The products that are subject to the halal certification requirement are still the same:
    1. goods, i.e., food and beverages, drugs, cosmetics, chemical products, biological products, genetically engineered products, and goods that are used or utilized
    2. services, i.e., slaughtering, processing, storing, packaging, distribution, selling and/or serving
  10. The requirement for halal certification will still be done in stages. The first stage will be for food and beverages, raw materials, additional materials for foods, auxiliary materials for food and beverages, output of slaughter and slaughter services.
  11. Business actors are still required to affix halal labels on products that have received halal certificates. Halal labels can be affixed during the process of halal certificate extension.
  12. Business actors producing products from prohibited materials must still include non-halal information in the form of pictures, signs, and/or writing that are listed on (i) product packaging, (ii) a specific part of the product and/or (iii) a specific place on the product.
  13. There are no changes in the administrative sanctions from those under GR 31, i.e.: (i) written warning, (ii) administrative fines (iii) revocation of halal certificate and/or (iv) withdrawal of goods from the market. The administrative sanctions can be imposed in stages, or as an alternative and/or cumulative manner.

Transitional Provision

All existing bodies (halal auditor, supervisor, etc.) and documentation (halal certificate, halal auditor certificate) issued before GR 39 will remain in effect after the enactment of GR 39 and must conform to the provisions stipulated under GR 39.

 

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Author

Cahyani Endahayu is a partner in the Mergers & Acquisitions Practice Group. Her work includes handling the corporate/licensing, compliance and day-to-day work of several of the Firm’s major clients and providing corporate, compliance and advisory support services to other clients in relation to corporate/commercial issues. She has advised a wide range of domestic and international clients across various industry sectors, including pharmaceutical and retail/trading.

Author

Reagen Mokodompit is a Senior Associate in Baker McKenzie's Jakarta office.

Author

Arvin Afrianto is a Legal Assistant at HHP Law Firm (member of Baker & McKenzie International).