Indonesia Aims to Become a Key Player in the Global Islamic Economy, Here’s What the Dean of IPB University’s Faculty of Economics and Management Has to Say
Indonesia has great potential to become a major player in the global halal industry and Islamic economy amid global economic uncertainty. However, the potential of this country with the largest Muslim population is assessed to have not been optimally realized due to a slow start compared to neighboring countries and a lack of coordination across the entire supply chain.
The Dean of the Faculty of Economics and Management at IPB University, Prof Irfan Syauqi Beik, stated that the global halal industry is currently growing rapidly at a rate of 8 to 10 percent annually, with a value exceeding 3 trillion US dollars. Unfortunately, Indonesia’s market share in supplying the global demand for halal products remains very minimal.
“According to data from the Organization of Islamic Cooperation (OKI), 78 percent of the global halal food and beverage supply is in fact controlled by countries with Muslim minorities. OKI member states supply only 22 percent, and of that figure, Indonesia’s share stands at just 4 percent,” Prof Irfan stated during a recent CNN Business Sharia Economics segment.
According to him, establishing an integrated system and strengthening trade diplomacy are the main keys to doubling that market share. Moreover, Indonesia already has a strong legal framework, namely the Law on the National Long Term Development Plan (RPJPN), which positions the Islamic economy as one of the pillars of development for the next 20 years.
To address coordination barriers among ministries and agencies, Prof Irfan suggested strengthening the role of the National Committee on Sharia Economics and Finance (KNEKS). He urged that this agency, which is directly led by the President, be elevated from a committee to an independent structural body.
“I suggest that the KNEKS be upgraded to an agency. It will then serve as the President’s arm to monitor and ensure that all sharia economic development programs, from A to Z, are properly implemented,” he emphasized.
Furthermore, he outlined three fundamental scenarios that must be prioritized over the next five years to expand this ecosystem to a global level. First is the enhancement of halal education and literacy among the public to grow awareness. Second, improvements to the institutional ecosystem, evidence-based certification processes, and trade diplomacy. Third, the formulation of flexible yet substantive regulations.
He also emphasized the importance of combining the commercial financial sector with Islamic social finance, such as zakat and waqf, which have a potential value of up to Rp500 trillion per year.
“When religious consciousness and humanitarian consciousness are combined into an economic force, the impact will be tremendous,” he concluded. (MW) (IAAS/EXC).
