Fair trade and fatwas: the new halal product regime

 

Negotiations for a bilateral trade agreement between Australia and Indonesia continue, with little tangible progress so far. One of the more entertaining reports emerging from recent discussions was a joke made by Indonesian Trade Minister Enggartiasto Lukita that he might require imports of Australian wine to pass halal certification (clearly, wine would be prohibited by Islamic precepts and therefore not pass).

 

“Halal wine” aside, the minister’s Australian counterpart, Steven Ciobo, has reportedly endorsed Indonesia’s new halal regime, which will require all meat sold in Indonesia to be halal certified. This new requirement is linked to the controversial 2011 suspension of Australian live beef exports to Indonesia. Live exports are designed in part to allow animals to be slaughtered by having their throats cut (before or after stunning) to comply with Islamic requirements.

 

The new halal regime was established by legislation passed in 2014, following years of debate – the bill sat with the legislature for more than eight years. In October this year, Minster of Religious Affairs Lukman Hakim Saifuddin made an important move in preparation for the implementation of the legislation by launching the Halal Product Assurance Agency (BPJPH). This new agency is a policy response primarily driven not by the rise of public piety but rather by longstanding concerns about the integrity of halal certification processes.

 

The current process began in 1989, when the Indonesian Ulama Council (MUI, Majelis Ulama Indonesia) created an institute to test food, medicines and cosmetics. A mesh of regulations and decrees emerged to add a veneer of regulation but the truth was that MUI had an unregulated monopoly over halal certification.

 

Since then, many complaints have been made to the country’s independent competition regulator, the Business Competition Supervisory Commission (KPPU), over the way MUI has exploited this monopoly. Although reliable public figures are hard to come by, MUI is thought to generate a major portion of its income from charging fees for halal certificates. A certificate for a small or medium sized business reportedly costs about Rp 3 million (about $A296) for two years.

 

Concerns about the use of the halal monopoly to generate revenue for MUI have not been limited to Indonesian producers. Australian businesses have also made allegations of corruption in MUI’s management of this “voluntary” certification procedure. One business claimed to have paid fees but not received a license to produce halal food. MUI denied the claims but it led to an exposé in Tempo Magazine. The cover featured a Warhol-style can of soup bearing, provocatively, the image of a pig and the editorial described MUI certification as being conducted in a forbidden (haram) fashion.

 

Bringing the religious approval of food and other produce under government control has been a matter of controversy for a long time. But the way the national legislature has resolved this debate will have important implications for Indonesian law and regulation.

 

Certification of halal products will now be conducted by the new BPJPH, rather than MUI. The law attacks MUI’s monopoly position further by establishing a system for the establishment and accreditation of Halal Examination Institutes (LPH). Recognised Islamic institutions can propose to establish a LPH, which will then issue reports on the status of products for which certification is being sought.

 

What MUI loses in its direct control over certification, however, it gains through the legislative recognition of its fatwas. MUI has a long history of issuing fatwa on the status of animal and food products, and under the new law, halal certificates cannot be issued for foods or other products unless they are approved at an MUI Halal Fatwa Hearing. This is not simply legislative recognition of MUI religious opinions. Rather, it establishes a procedural requirement meaning that all requests for certification must pass not just an independent examiner but also MUI’s scrutiny.

 

The new system dictates that all products entering or marketed in Indonesia must be halal compliant but it does provide an exception for non-compliant products that are labelled accordingly. The sale of “prohibited”, or un-Islamic, products will not breach the law but the predominant standard for producers, distributors and retailers will now be compliance with shari’a.

 

The new scheme also imposes criminal sanctions. Failure to “protect the halal status” of products once certified may attract criminal sanctions in the form of a custodial sentence of up to five years, or a fine of up to Rp 2 billion. Unfortunately, exactly what “failure to protect” means is not at all clear.

 

Further, at least 20 government or ministerial regulations are reportedly required for the implementation of the new framework, which will commence on 17 October 2019, five years from the passage of the legislation. Until the regulations emerge, how this system will actually operate in practice remains uncertain.

 

This is not the first national law to recognise MUI fatwas. Indonesia’s syari’a banking system already rests on the recognition of financial products and services by MUI. But the sheer scope of the halal product regime and its potential to have an impact on so many commercial and consumer transactions makes the new law a potential gamechanger for Indonesian public life.

 

It has also contributed to ongoing dialogue in Indonesia about the formal embrace of Islamic teachings by state law. Police Chief Tito Karnavian, for example, has pointed out that the fatwas are not recognised as part of the formal hierarchy of laws and regulations in Indonesia, which could complicate enforcement.

 

Despite these reservations, MUI has applauded the new regime as establishing its religious rulings as part of the official state record, asserting that under the law they become “state records with legal force, and having formal and certain legal status”.

 

Indonesian lawmakers have created a scheme that further reinforces the country’s embrace of a fusion of both secular and religious approaches to national governance. In this Janus-like state, the community and peak religious bodies have their desire for explicit recognition of religious rules and values recognised. Equally, the state remains sovereign, determining on a case-by-case basis where law should incorporate Islamic rulings.

 

In this particular reform, MUI has effectively been pardoned for its questionable record in relation to halal certification in the past. What is more, it has now been catapaulted into a truly central function, one that holds the potential to influence most areas of industry and commercial activity in the world’s largest Muslim nation. This is an unprecedented kind of status and recognition for a national religious body, and transforms the Indonesian legal and regulatory landscape.

 

It is unsurprising then to see that there is an emerging debate in Indonesia as to the role and status of MUI and its fatwas. This suggests that the current vision for MUI’s continuing monopoly role as the ultimate arbiter on matters of doctrine may not be shared by broader civil society. This is a good debate to have, as monopolies are by their nature ungoverned spaces and the methodology the new law has adopted to balance state and faith-based centres of authority may prove unsustainable.