New food labelling requirements were introduced in 1999 and are the responsibility of the Food and Drug Control Body (Badan POM or BPOM).
Labelling requirements are designed to ensure that the consumer can be accurately informed about the ingredients in processed food and its status as a halal or non-halal product. Post market control is maintained through sampling and testing food products. Where discrepancies occur there are powers to reprimand, order withdrawal of products from sale, or prosecute through the courts.
Key points of the current labelling requirements include:
- All packaged food products distributed in Indonesia must be labelled exclusively in Bahasa Indonesia language, Arabic numbers and Latin letters.
- The use of any other language, number and letters is permitted only where there are no substitute Indonesian words or if there is a difficulty in finding Indonesian words with a similar meaning; such approval must be obtained from the Indonesian Attorney-General.39
- The use of stickers was authorised temporarily (until new legislation was enacted).
- Specific wording regarding content is required for labels of certain food items including milk products, baby food, alcoholic beverages, and halal food.
- If the product is halal, it must be certified by an approved authority (see halal certification section below for details).
- The expiration date of perishable food items must be shown (and products must be landed in Indonesia with at least 2/3 of their stated shelf life remaining).
- Food additives must be identified.
- The name and address details of the importer must be stated.
- There are specific requirements for labelling of products with GMO content greater than 5% and also for irradiated products.
- SNI marks must be shown when relevant compulsory standards exist (these apply to sugar, salt and wheat flour).
Non-compliance with labelling regulations can result in a fine of up to A$400 000.
Ecolabelling on the way
The Indonesian government is planning to implement a national eco-labelling program for domestic agricultural and manufactured food products. A coalition of government agencies, industry and consumer bodies have reached agreement on a standard to be used to certify and label environmentally friendly products.
The scheme, which will be voluntary, will reportedly be based on the ISO 14 000 standard on environmental management systems and is expected to commence some time in 2004.
Overseas brand registration: the ML system
Under the Consumer Protection Law (No. 8 of 1999), a registration system covers all processed food products. Its key elements are:
- Details of products, including their ingredients, must be submitted to BPOM, together with samples and evidence of testing by authorities in the country of origin
- Upon approval, a registration number is issued (for imports the ML number, which must be printed on food package labels)
- Products must be re-registered every five years
- The ML numbers are importer specific.
Strict implementation of the registration requirements since 2003 has increased exporters’ costs. Previously, firms could land small quantities to test in the market and apply for registration subsequent to importation. This is no longer possible. Products must be registered with BPOM before clearance through Customs and carry the appropriate sticker. Importers, distributors or retailers dealing in unregistered products are in breach of the regulations and subject to penalty.
Importers are hesitant to register every product they would like to trial in the market because of the cost of registration. The time it takes to register goods is also significant—up to six months, although some cases can take longer.
The ML system: an Australian consolidator’s perspective
The CEO of one large Australian consolidator active in the Indonesian market sees the cumbersome nature of the ML system as the major market access issue facing Australian exporters. It is costly and time-consuming (six months) to register each product: ‘I have over 500 lines, and not all of them are going to take in the market.’ Some exporters will simply shift their focus to elsewhere in South East Asia. Those who persevere face additional cost and uncertainty.
The Indonesian authorities do not require halal certification for all imported foodstuffs. But while certification is not compulsory, 88% of the Indonesian population is Muslim and the Indonesian Islamic Council (MUI) prefers all food products to be halal accredited.
Halal is an Arabic word meaning lawful or permitted. The opposite of halal is haram, which means unlawful or prohibited. Halal and haram are universal terms that apply to all facets of life. However, in Indonesia, these terms are used only in relation to food products, meat products, cosmetics, personal care products, food ingredients, and food contact materials.
While many products are clearly halal or haram, there are some that are not clear. Where more information is needed to categorise a product as halal or haram they are often referred to as mashbooh, which means doubtful or questionable.
All foods are considered halal except the following, which are haram:
- Swine/pork and its by-products
- Animals improperly slaughtered or dead before processing
- Animals killed in the name of anyone other than Allah (God)
- Alcohol and intoxicants
- Carnivorous animals, birds of prey and land animals without external ears
- Blood and blood by-products
- Foods contaminated with any of the above products
The following Australian Islamic Councils are approved by the MUI and may issue halal certificates:
- The Islamic Coordinating Council of Victoria Inc (ICCV)
- The Australian Federation of Islamic Council Inc (AFIC) and
- The Supreme Islamic Council of Halal Meat in Australia Inc (SICHMA).
The Indonesian Government requires that all beef exports to Indonesia must have a halal certificate along with a health certificate and come from halal slaughter establishments listed with the Indonesian Ministry of Agriculture. In late 2003, an on-line Australian halal directory was launched.
Some Indonesian trade opportunities do come knocking on Australian suppliers’ doors. But sustainable business usually requires effective representation on the ground. An active agent, importer and/or distributor is almost always needed to manage the physical process of customs clearance and represent products to buyers on a regular basis. Companies have a range of options to consider, depending on their circumstances
The right choice for an Australian exporter will depend on:
- Its size and resources, including its capacity to provide in-market support
- The nature of its product and supply chains for those products
In general, though, understanding the way that in-country partners will manage the marketing and physical distribution of product is essential. The more that is known about potential partners’ positions in the supply chain and the number, type and nature of clients they deal with, the better positioned a business is to decide on the right partner or partners.