Jakarta. Indonesia is racing to become a global halal industry hub by 2029, leveraging its status as the world’s largest Muslim-majority nation. But officials warn the country is starting late — and must urgently improve certification capacity, infrastructure, and sharia-compliant financing if it hopes to compete with established players such as Malaysia and Saudi Arabia.

Chuzaemi Abidin, a deputy at Halal Product Guarantee Agency (BPJPH), acknowledged that Indonesia is still catching up in building its sharia economy.

“We may be too late compared with others who have developed this sector for decades,” Chuzaemi said, noting that Indonesia only enacted its halal certification law in 2014, despite hosting the world’s largest Muslim population. BPJPH itself became a standalone agency only in late 2024.

So far, around 3 million Indonesian enterprises are halal-certified — a small fraction of the country’s roughly 64 million micro, small, and medium enterprises. About 11.5 million products have received halal certification nationwide.

Budget constraints mean BPJPH can provide free certification to just 1.35 million businesses in 2026. Companies that apply independently must pay Rp 230,000 ($13.68), while the agency is also encouraging large corporations and regional governments to help subsidize smaller firms.

“We need to catch up, but our halal standards are actually stronger than many overseas,” Chuzaemi said. “They want mutual recognition agreements with us. They must adopt our standards — otherwise we won’t sign.”

Such mutual recognition agreements (MRAs) allow Indonesia and partner countries to accept each other’s halal certificates, streamlining exports. BPJPH has signed MRAs with 106 foreign halal certifiers to date. However, Chuzaemi cautioned that these agreements could also open the door to a surge of imported halal products, intensifying competition at home.

To ensure local businesses are not left behind, he said Indonesia must accelerate certification for small enterprises while also improving packaging quality and export readiness. Halal certification is set to become mandatory starting Oct. 18.

Meanwhile, Bank Syariah Indonesia (BSI) estimates Indonesia’s halal exports will reach $73.9 billion in 2026, with food and beverage products accounting for the largest share. Exports of halal food and beverages could climb to $30.42 billion this year alone.

Despite the promising outlook, BSI chief economist Banjaran Surya Indrastomo said financing remains a key bottleneck.

“Many businesses struggle more with operating expenses than capital expenditure,” Banjaran said, urging sharia banks to offer more flexible products, including ijarah — Islamic leasing arrangements for property, vehicles, or commercial assets.