Halal Certification a Bitter Pill for Pharma
Jakarta. Four months have passed since a law requiring all food and pharmaceutical products distributed in Indonesia to have halal certification was passed, but resistance to the new legislation remains strong.
The passage of the law went largely unnoticed in the dying days of the Susilo Bambang Yudhoyono presidency, as the nation was fixated on the cabinet line-up of the incoming president, Joko Widodo.
That allowed the House of Representatives to easily push through the legislation that had been held up for eight years because of a raft of contentious provisions — most of which made it into the final version of the law.
While full compliance will only become mandatory by October 2019, the affected parties have expressed their doubt as to how effectively that can be done.
“We support the spirit of the law, in that it intends to protect consumers, but it’s going to be difficult to implement,” says Parulian Simanjuntak, the executive director of the International Pharmaceutical Manufacturers Group, whose members include drug-making giants Bayer, GlaxoSmithKline, Merck and Pfizer.
Of particular concern to pharmaceutical firms, food producers and others is the sweeping definition of items subject to the new halal requirements.
The law states that “It is mandatory for products that enter, are distributed and are traded in Indonesia to be halal certified.”
It goes on to define those products as “goods and/or services comprising of food, beverages, medicines, cosmetics, chemical products, biological products, genetically engineered products, as well as items that are worn, used or made use by the public.”
Parulian says that although the law allows a five-year transitional period before enforcing compliance, the process of certifying whether a product is halal will be “very complex,” given the wide-reaching supply and production chains behind the product.
“It will be difficult to implement the law in the pharmaceutical industry because substances used come from various countries,” he says. “That will make it difficult for the government to audit the producers on the halal status of their products. They’d have to visit those countries one by one.”
Parulian says the government must amend the law to exclude pharmaceutical products from the new legislation.
“Should the government insist on enforcing it, pharmaceutical companies won’t produce medicines here anymore because they will face sanctions as stipulated in the law,” he warns. “Subsequently, the availability of medicines for the public will be affected.”
While the pharmaceutical industry has lobbied against the legislation since it was first conceived in 2006, the clerical council that has for decades been in charge of the non-mandatory halal certification for medicines, food and other items has cheered the passage of the law.
“This is a positive step taken by the government in its effort to protect the majority of the people with regard to the products they consume or use,” says Amirsyah Tambunan, the deputy secretary of the Indonesian Council of Ulema, or MUI, the highest Islamic authority in Indonesia.
“We support this legislation. People want to be assured that the products they purchase are truly halal. We don’t want questionable products to flow among the people without a legal safety net. This new system will give birth to [more] halal products, as mandated by the law.”
The MUI, which has long sought to make halal certification mandatory, stands to benefit from the new law, which it helped draft.
For one thing, the law puts the council temporarily in charge of overseeing the certification process, for which producers, importers and distributors of affected products will be charged a fee.
That role will eventually be taken over by a Halal Product Certification Agency, or BPJH, which the government must establish within three years of the passage of the law, or by October 2017.
The cost of certification is expected to vary widely, with the government setting a Rp 5 million ($400) subsidy benchmark for products made by domestic small and medium enterprises. Larger producers such as multinational drug companies will not be subsidized for their considerably higher costs.
There will also be administrative sanctions and fines, still unspecified, for companies that fail to comply once the law goes into full force in October 2019.
The government has yet to issue supporting regulations stating who will be in charge of collecting the fines — whether it will be the responsibility of the BPJH or the various ministries and government agencies also involved in the matter, such as the Trade Ministry, the Industry Ministry, the Health Ministry, the Religious Affairs Ministry, the Agriculture Ministry, and the Food and Drug Monitoring Agency, or BPOM.
Bracing for AEC
Government officials are adamant that the law will stand as it is, despite the protests from the pharmaceutical industry and others.
Legitimate businesses should have no cause for concern because the law is based on actual needs and is intended for consumer protection, says Widodo, the director general for standardization and consumer protection at the Trade Ministry.
“The law will be implemented gradually,” he says. “There will also be assistance for small and medium enterprises. We will help them so they can learn how to produce products that are compliant with Islamic law.”
The Industry Ministry similarly sees no grounds for amending the legislation, says Euis Saedah, the ministry’s director general for small and medium enterprises.
She says that among other benefits, the law will help prevent the anticipated influx of non-halal products once Indonesia’s market is fully opened up to the rest of the Association of Southeast Asian Nations at the end of this year under the Asean Economic Community, or AEC.
The AEC is also expected to see Indonesian halal products compete with those produced in Malaysia, Thailand and Singapore, whose halal food industries and certification processes are far more developed than in Indonesia, which has the world’s biggest Muslim population.
The MUI’s Amirsyah says businesses should not perceive the law as an additional burden, arguing instead that it will provide a good opportunity to distinguish Indonesian-made halal products from those of other countries.
“This is also to promote Indonesian products through halal certification,” he says, but declines to explain how.
“The most important thing is to ensure that the people of this country are well protected.”
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