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Halal MSE, the Locomotive of the National Economy in the Pagebluk Period

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  • Halal MSE, the Locomotive of the National Economy in the Pagebluk Period

By: Muti Arintawati (President Director of LPPOM MUI)

Micro and Small Enterprises (MSEs) are the group that ranks largest in the number of businesses and industries in Indonesia. Data from the Ministry of Cooperatives and Small and Medium Enterprises in 2021 shows that the number reaches 64.2 million with a contribution of 61.07 percent of Gross Domestic Product. The large contribution of MSEs shows the great potential to improve Indonesia's economic conditions after the pandemic hit.

Law Number 33 of 2014 concerning Halal Product Guarantee (JPH Law) stipulates that this business group cannot be separated from the obligation to be halal certified. MSEs even get free halal certification financing facilities, according to Article 81, paragraph 1 of PP No. 39 of 2021 concerning the Implementation of the Halal Product Guarantee Field.

The process of checking/testing the halalness of MSEs can be through the Halal Inspection Agency (LPH) channel such as the halal certification mechanism in general or through the mechanism of business actor statements with halal product process assistance (PPH) for those who meet the requirements. This is regulated in Article 79 PP No. 39/2021 and Regulation of the Minister of Religious Affairs (PMA) Number 26 of 2019 concerning the Implementation of Halal Product Guarantees.

The high number of MSE players and strong halal regulatory support are a harmonious combination that can encourage halal products to help the Indonesian economy face stagnant growth during the Pagebluk period. Even so, there are a number of challenges that must be overcome before these expectations are realized.

Government Challenges

Information on halal certification obligations has not been evenly understood by MSE actors. Moreover, free facilitation often makes MSE actors participate with a commitment, not even a few who refuse to participate even though they have been registered. The certificate becomes just a display paper without being based on the responsibility of maintaining the halalness of the product for the four-year validity period of the halal certificate. The government and all stakeholders are challenged to carry out more intensive socialization and education in order to reach all MSE actors.

The next challenge is the preparation of halal supply chain. Halal products can only be produced if halal materials are available and production facilities are free from contamination of illicit and unclean materials. The halalness of the materials produced upstream will determine the halalness of the products produced by MSEs, which are generally found in the dihilir. There are at least four things that need to be prioritized so that MSEs can easily produce halal products.

First, the priority of halal certification of critically categorized ingredients that are widely used among MSEs, such as slaughter animal products. However, the number of houses/slaughterhouses/poultry (RPH/TPH/RPU/TPU) that have been certified halal is still low, only 14.5% of the total 1,329 RPH/TPH throughout Indonesia (study by the National Committee for Sharia Economy and Finance and the Center for Halal Science Studies of IPB University in December 2021). Halal-certified RPU/TPU data is likely to be even lower because cutting the ungah only requires a small area, from the residential environment to the market.

The low yield of slaughter of animals that have not been certified halal certainly makes it difficult to trace the traceability of the halalness of the materials used by MSEs. This requires an audit to the slaughter site thus extending the certification process and also adding costs. Cooperation with local governments and the Ministry of Agriculture is very important to drive halal certification of slaughter facilities in each region.

There are also other upstream products such as sugar, oil, wheat, sauces, flour, and flavors that are very widely used by MSEs. However, this material is generally produced by large industries and currently many have been certified for 33 years that LPPOM MUI has been active, so mses are relatively easy to obtain halal materials.

The second challenge is related to the supervision of the meat distribution chain. This is very important considering that there are still many cases of beef oplosan with piggy bank meat, especially before Ramadan. The distribution of oplosan meat generally does not enter the official distribution channel, but goes directly to MSE business actors such as street vendors, stalls, and catering. Oversight should be better with strict law enforcement, to undo the intent of the perpetrators of the abuse.

Thirdly, the arrangement of the sale of repackaged additive products. Generally, this packaging no longer includes the name of the product and the manufacturer of the original raw material on the packaging. This kind of product appears because the standard packaging is generally too much in volume and relatively expensive, so retailers or distributors repackage it in small packages. Halal certificate documents are rarely provided by traders or distributors because the purchase of MSEs is only in small quantities. It needs a breakthrough to solve this problem, so that the audit process is not hampered.

Fourth, encourage the certification of animal-based product processing services, especially meat milling facilities. In general, facility owners only provide meat milling services, while meat is carried by each customer by themselves without any business providing grinding services to ensure the halalness of the meat. There is no guarantee that illicit meat will not infiltrate meats ground in the same facility? How many MSEs who use meat milling services will be contaminated with their products if the critical point here is not ascertained their halalness? It needs counseling and a movement for certification of meat milling services to meet the needs of halal ground beef. District/city governments can have a big role in making this happen.

Challenges on the Halal Inspection Side

In the umk halal certification process, the examination is carried out by the LPH auditor or PPH companion for the self-declare path. In essence, both of them have the same task, which is to conduct an audit. In MUI terminology, auditors are deputies and witnesses of the clergy. Auditors become representatives and witnesses of scholars to ensure that all materials used in halal production have met halal requirements, the production facilities used are free from contamination of illicit and unclean materials and ensure that business actors understand their obligations and know how to maintain the continuity of halal production after the halal certificate is obtained.

Mistakes made by auditors in understanding the facts and data found will result in incorrect conclusions of audit results, so the MUI Fatwa Commission will determine fatwas based on incorrect data. Of course, this will result in an invalid halal certificate. The domino effect that harms Muslim consumers must be accounted for before the law and in the hereafter.

Therefore, LPH and PPH Assistance Institutions have a great challenge to provide assurance that the auditors and PPH assistants under their institutions have sufficient competence. The competencies that must be possessed at least include knowledge of halal fatwas that underlie halal certification standards, knowledge of the critical point of material purity and how to prove its halalness, skills in collecting data and information and no less important is the attitude to prioritize truth and honesty in doing their work.

Institutions must have a program that can continuously ensure that PPH auditors and assistants meet the required qualifications and can continue to maintain them. The competence of the auditor becomes a non-negotiable condition. The validity of the audit results must be based on the auditor's ability to analyze data and facts cannot be based solely on assumptions and prejudices.

MSEs Don't Need to Worry about halal certification costs

So far, the facilitation of financing for halal certification of MSEs has been running, where the source of funds can come from ministries and government institutions at various levels, as well as sources of funds from the private sector and community organizations.

In 2020 BPJPH collaborated with LPPOM MUI for certification of 3,251 MSEs, and in 2021 BPJPH launched the SEHATI 2021 free halal certification program in collaboration with three Halal Inspection Agencies (LPH), namely LPPOM MUI, Sucofindo and Surveyor Indonesia certified 2,563 MSEs.

In addition to collaboration with LPH, in 2021 BPJPH also launched a MSE certification program through self-declare with a target of 15,000 MSEs. To support this, BPJPH prepared 2,795 PPH assistants for MSEs who have been and are being trained. They are participants who have and are participating in PPH companion training carried out by BPJPH in collaboration with religious organizations and universities.

Looking at the data on the number of MSEs that have been certified halal through the BPJPH facilitation program in the last two years plus the number of MSEs outside the BPJH facilitation program recorded at LPPOM MUI as many as 4,807 in 2020 and 6,663 in 2021, the target that must be pursued to meet the staging deadline in 2024 for food and beverage products is still far away.

With the start of the free certification program for MSEs, of course, it is hoped that it can speed up the MSE certification process. Cost barriers that have been considered to be the main obstacles in halal certification of MSEs can be overcome. However, the acceleration of UMK halal certification is not only determined by the cost factor.

The sincerity of business actors and the provision of halal infrastructure by the government will be the main determining factors for the success of the halal certification process. If all these challenges can be passed properly, then Muslims get the peace of mind from the abundance of halal products. In addition, halal MSE players can become the locomotive of the Indonesian economy, even potentially mastering the global halal industry. (*)

*This article has been released in Kontan Newspaper on Saturday, January 15, 2021.

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