Source: Tempo

Kawaguchiko, Japan – The Indonesian Chamber of Commerce and Industry (KADIN) has expressed confidence in the face of potential challenges posed by new United States import tariff policies targeting the Indonesian halal industry. Rather than viewing these tariffs as a threat, KADIN sees an opportunity to strengthen Indonesia’s domestic halal market.

Focusing on Domestic Potential

“Indonesia is targeted as a market by the US. So we need to focus on how we can compete domestically,” stated Isnaeni Iskandar, Deputy Head of Literacy, Advocacy, and Cooperation Agency at KADIN, during an online discussion titled ‘The Effects of Trump-Nomics and the Fate of the Halal Industry’ hosted by the Center for Sharia Economics and Business at the University of Indonesia’s Faculty of Economics and Business on April 16, 2025.

Iskandar highlighted Indonesia’s substantial internal market as a significant advantage. She noted that current shipping costs between islands remain high, but addressing these logistical challenges could narrow price disparities between products in Java and other regions. Additionally, she advocated for reducing halal certification costs to ease financial pressure on entrepreneurs entering the sector.

Regional Opportunities in ASEAN and Beyond

Beyond domestic markets, Iskandar identified promising opportunities within the ASEAN region for Indonesian halal products.

“That is quite good for me to strengthen our market in neighboring countries, or to be added with Japan and Korea. So their halal commodities can also develop there,” she explained, suggesting a regional strategy could offset potential losses in the American market.

Ministry Expert Expresses Concerns

While KADIN maintains an optimistic outlook, some government officials have voiced concerns about potential negative impacts from the tariffs. Detri Fitria, Young Expert Industry Builder at the Ministry of Industry’s Halal Industry Center, warned that Trump’s tariff policies could reduce exports of halal commodities to the United States.

Fitria cautioned that decreased exports could undermine Indonesia’s competitive position and potentially lead to workforce reductions. “Ultimately, if demand has decreased, then production will be adjusted by the industry. The ultimate effect is layoffs,” Fitria said during the same discussion.

Economic Significance of the Halal Sector

The concerns reflect the considerable economic importance of Indonesia’s halal industry. According to Fitria, the halal value chain sector—which encompasses halal agricultural products, food and beverages, Muslim fashion, and Muslim-friendly tourism—contributed 25 percent to Indonesia’s national economic growth of 5.03 percent in 2024.

This substantial contribution to the economy underscores why both government officials and business leaders are closely monitoring the potential impact of international trade policies on this vital sector.

Strategic Response

The contrasting perspectives from KADIN and the Ministry of Industry highlight two potential approaches to addressing the tariff challenge: focusing on developing alternative markets and strengthening domestic consumption to reduce dependence on US exports.

As Indonesia navigates these new trade challenges, the country’s response will likely involve balancing immediate economic concerns with long-term strategies to build resilience in its halal industry, potentially transforming external pressure into an opportunity for domestic and regional market development.

Original Articles:

en.tempo.co. (n.d.). Kadin Indonesia Unfazed by Trump’s Tariffs on Halal Industry. Retrieved April 18, 2025, from https://en.tempo.co/read/1997661/kadin-indonesia-unfazed-by-trumps-tariffs-on-halal-industry