Halal Certification for Indonesian Small and Medium Enterprises

Opportunity and Thread

Moch. Khoirul Anwar, Ahmad Ajib Ridlwan and A’rasy Fahrullah

Program Studi Ekonomi Islam, Universitas Negeri Surabaya, Surabaya, Indonesia

arasyfahrullah@unesa.ac.id

Keywords: Empowerment, Small Medium Industry, Halal Certification.

Abstract: Law No. 33 of 2014 states that products that enter, circulate and trade in the territory of Indonesia, must be

certified halal, will soon be implemented. This is certainly a problem for food companies, especially the

category of Small and Medium Industry. They have limited funds and human resources. On the other hand, it

is the governments obligation to empower small and medium-scale industries, considering the large number

of workers involved. So that poverty alleviation efforts in Indonesia can work well. If there has been halal

certification of LPPOM MUI cooperation with government agencies, especially the Provincial and District /

City Industry and Trade Office, but only limited to certification and the small and medium-sized industries

when it has obtained halal certificate already feel finished. Whereas halal certification is an activity that

requires sustainability, not only in the beginning of halal certification, but most importantly how to maintain

the quality of the companys products, especially about halal. The purpose of this study is to describe the

empowerment system of small food product industry through halal certification in East Java, Finding the

shortcomings and advantages of government institutions and halal certification institutions in the

empowerment of small food products industry in East Java Describe the things that support the

implementation of small industry empowerment Food products through halal certification in East Java to be

more effective and productive. The type of research to be carried out is field research. As a practical source,

this research was conducted at the halal certification institute of LPPOM MUI of East Java Province and

Small and Medium Industry of food products in east java, whether certified as halal or not. While the paradigm

used in this research is a naturalistic paradigm with phenomenology approach. Technique of taking data with

Observation, Interview and Focus Group Discussion (FGD) to get data about general description of halal

certification in East Java along with problems and obstacles in implementation by Small and Medium Industry

of food product.

1 INTRODUCTION

The concept of empowerment is one part of the

concept of development that seeks to realize a

prosperous society in a fair and equitable. Because

part of the concept of development, the grand theory

used in this research is Max Weber's economic

development theory that connects religion with

economic development. This Weber theory rejects the

description of modern capitalism Veblen as a form of

barbaric evolution, and also opposes Karl Marx's

theory of exploitation and surplus value. According

to Weber Theories The development of modern

society emerged because of the moral discipline and

loyalty to the hard work that resulted in long-term

investment and management of more advanced

companies. Weber considers that the source of

economic development is religion, especially his

doctrines about the simplicity and moral obligation to

work. This weber theory also says that the birth of the

century of capitalism is not the greed and seizure of

unlimited profit, but derived from the ideals of

religion (Skousen, 2009).

According to Friedman (1992), the concept of

empowerment emerges with two major premises of

failure and hope. The failure in question is related to

the failure of models of economic development in

tackling the problem of poverty and environment in a

sustainable manner. While the intended expectation is

the existence of economic development alternatives

that include the values of democracy, gender equality,

intergenerational equations, and economic growth

adequately. Failure and expectation are not a measure

of the social sciences alone, but rather a reflection of

Anwar, M., Ridlwan, A. and Fahrullah, A.

Halal Certiﬁcation for Indonesian Small and Medium Enterprises Opportunity and Thread.

In Proceedings of the 1st International Conference on Islamic Economics, Business, and Philanthropy (ICIEBP 2017) - Transforming Islamic Economy and Societies, pages 631-634

ISBN: 978-989-758-315-5

631

normative and moral values that seem very real at the

level of individuals and society. Therefore, according

to Sumodiningrat (2007), community empowerment

is essentially the collective value of individual

empowerment.

Whereas according to Ife in Nawawi (2006),

empowerment consists of two key definitions, namely

power and the weak group. This conclusion arises

because empowerment means giving power to a weak

group. Power here is not only about political power,

but power in a broad sense that includes personal

choices and life opportunities; defining needs; ideas;

institutions, and economic activities.

In the view of Islamic economics, the economic

empowerment program of the people is very

compatible with the teachings of Islam, because the

goal of Islamic economy is to create a safe and

prosperous human life. Islam considers that the

dignity of humanity is an essential thing, so that every

human being plays a role to get the happiness of his

life. Islam also provides a deep awareness for us that

economic prosperity we will not get without a

harmonious social relationship. This is evident if in a

country there is a sharp social gap, then the country's

economy will run with a halt (Muhammad, 2002).

Islam indeed teaches growth and economic

development in a country, so Umer (2000) argued that

Islamic economics should concentrate on the

problems faced by the state and provide proposed

problem solving in an Islamic and economically and

politically allows to apply. Even Manan (1997)

affirms that the economic responsibility of Islam is

not only development and growth in the material field

only, but the spiritual and moral aspect occupies a

very important position. Thus, the Islamic concept of

development and economic growth is broader than

the secular economic concept. Although the basis of

Islamic economic development is multidimensional

which has moral, social, political and economic

dimensions, but from the beginning, moral and

spiritual development has been integrated in

economic development.

Therefore, to achieve growth and development

materially and spiritually, According to Husain

(2004), Islam has characteristics in its growth, which

is all-round, balanced, realistic, fair, responsible,

sufficient and focused on human beings in accordance

with their rights as the Caliph on earth. This

characteristic indicates that the goal of growth and

economic development in Islam is the opportunity of

all members of society-regardless of race, religion

and character-to gain prosperity, so that everyone can

feel the blessings and grace of Allah. (Anwar, 2008).

In order to provide assurance that a type of food is

halal (fulfilling Islamic criteria) and proper for

consumption by the community, especially for the

followers of Islam, MUI (the Indonesian Scholar

Council) takes policy by establishing LPPOM (a drug

and cosmetics food assessment institute) which

oversees and examines a food products, medicines

and cosmetics to then provide input to the fatwa

(Islamic jurist law declaration) commission to

provide halal certification to products that meet the

halal criteria. In the meantime, LPPOM MUI is only

passive, meaning that this institution is just doing

research on a product, if there is demand from

producers who want the products declared halal. This

is done because Law No. 33 of 2014 has not been

implemented.

2 METHODS

2.1 Research Object

The object of this research is the halal certification

institute of Food, Drug and Cosmetics Assessment

Institute (LPPOM) MUI East Java Province and SME

food products in East Java. The SMEs that become

the object of research is UD. Makmur Ds. Sukorame

Kec. Gandusari Kab. Trenggalek, Plemben Jl. S.

Hasanudin 224 Kab. Trenggalek, Ne-Vista Ds.

Tanggung Gunung Kec. Tanggung Gunung Kab.

Tulungagung, Kopai Osing HOS Cokroaminoto 93

Kabupaten Banyuwangi, and Omah Kopi Dsn.

Krajan RT. 02 RW.02 Ds. Telemung Kec. Kalipuro

Kabupaten Banyuwangi, with Dua Putri Jl. Rinjani

Gg. Cempaka Singotrunan Banyuwangi, and Maneer

Deles JL. Imam Bonjol NO.12 Tukang Kayu

Banyuwangi.

2.2 Data Collecting Technique

In this research, qualitative data will be collected

(related to quality) and quantitative data (relating to

quantity). Because this research is a qualitative

research, it will be more emphasis on meaning, and

more focus on quality data with qualitative analysis.

While the quantity data, will be processed in the

mindset quantitative, not forced to be analyzed

qualitatively. This is what the researcher will do in

collecting this research data, so the quantitative data

is calculated not by the proof of to proof for a

prediction, but it is used as a supporting phenomenon

of qualitative analysis for the final conclusion of the

research.

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3 RESULTS AND DISCUSSION

The scope of LPPOM MUI East Java activities

include the following:

 Engage actively in the assessment of the Halal

Quality Assurance System (HAS);

 Be actively involved in socializing HAS

through writing in mass media, seminar

forums, workshops, etc;

 Providing consultation and training services for

HAS socialization to business actors;

 Providing halal certification service;

 Establish a wide network of similar institutions

and supporting institutions on a national and

international scale;

 Conducting research in an integrated manner

involving various disciplines;

 Provide periodic counseling on the importance

of consumers knowing their rights;

 Conducting other activities in line with the

vision and mission of LPPOM MUI East Java.

Implementation of Halal Certification Activities

for IKM in East Java Province in cooperation with

LPPOM MUI of East Java Province and Industry and

Trade Office of East Java Province, referring to the

Work Plan that has been made.

3.1 Halal Sertification Audit

Halal certification audit activity was conducted in

November 2016 involving 20 LPPOM MUI auditors

of East Java Province. The auditor is spread to each

of the two IKM auditors. While the audit process

includes:

 The auditor team of LPPOM MUI will examine

the documents and application forms of halal

certificate;

 When considered sufficient then will be

examined at the production site;

 The examination runs during the production

process;

 Inspection covers the whole process, from

purchasing, material storage, production

process, administration, formula / recipe,

finished product, employee etc.;

 Sampling to be analyzed (if required).

3.2 Audit Result Discussion and Fatwa

Comission Meeting

Audit results are discussed in the meeting of the

Auditor Team together with the MUI Fatwa

Commission of East Java Province. Based on the

results of the discussion of the MUI Fatwa

Commission of East Java Province, there are SMEs

that are audited and can be issued halal certificate and

there are SMEs who get memo session of Fatwa MUI

Commission of East Java Province, because there are

things that do not meet the requirements, such as the

origin of raw materials that are not obviously, the

production process is still doubtful from the side of

halal, and so forth in accordance with the decision of

the MUI fatwa commission. The SME Unit that got

the memo of the meeting of MUI Fatwa Commission

of East Java Province is still in the development of

LPPOM MUI of East Java Province for 6 (six)

months for production material and production room

to fulfill the halal certification requirement. If the

company does not comply with the memo of the

Fatwa Commission meeting within 6 (six) months

then the company is re-audited at its own expense.

3.3 Barriers Experienced by

Government Institutions and Halal

Certification Institutions in

Empowering Small Industries of

Food Products In East Java

In the implementation of Halal Certification

Facilitation for SMEs in East Java Province, there are

several obstacles that need to be noted as follows:

 Some SMEs still consider halal certification is

licensing. The existence of such assumptions

causes them to underestimate the substance of

halal certification that is making a halal

guarantee of its products;

 Most of the human resources of SMEs are still

lacking and all work is done alone, so often the

existence of halal assurance system which is a

requirement of halal certification is difficult to

be applied maximally.

3.4 Factors Supporting the

Implementation of Small Industrial

Food Empowerment through Halal

Certification in East Java to be

More Effective And Productive

The existence of Halal Certification Facilitation for

SMEs of East Java Province from the Department of

Industry and Trade of East Java Province clearly has

great benefits, both for SMEs themselves and for

consumers. For food SMEs, this activity can improve

the quality of food SME products especially from the

aspect of halal so as to compete with products from

large industries that independently with the

Halal Certiﬁcation for Indonesian Small and Medium Enterprises Opportunity and Thread

633

awareness of having first implemented halal

assurance through halal certification.

As for consumers, especially Muslim consumers,

with halal certification activities, will be able to

provide a sense of comfort and tranquility for

consumers to consume products from SMEs.

To support the work of LPPOM MUI Prov. East

Java, the agreement was made with the University of

Airlangga Surabaya, Brawijaya University of

Malang, and ITS Surabaya dated November 27, 2001.

The scope of cooperation includes human resources

and other supporting resources such as laboratory

facilities.

In an effort to supervise and control the products

labeled as halal, LPPOM MUI of East Java Province

also cooperate with Balai Besar Pengawas Drug and

Food in Surabaya through Memorandum of

Understanding. KS.02.885.1158 / No.04 / LPPOM

MUI / JTM / S.Kep / III / 04 dated March 31, 2004.

With this cooperation is expected that Muslim

consumers are protected from the inclusion of halal

writings that are not through the correct procedure.

To support the task of LPPOM MUI of East Java

Province, especially related to the examination,

therefore using laboratory of Airlangga University

Surabaya, Brawijaya University of Malang, and ITS

Surabaya; such as Veterinary Biomolecular

Laboratory FKH Unair, Fak Testing Services

Unit.Unair Pharmacy, Lab. Basis with Unair, Lab.

Chemistry and Physics FMIPA Unair, ITS and

UniversitasBrawijaya, and Lab. Microbiology Fak.

Unair Pharmacy and FTP Unibraw.

4 CONCLUSIONS

The existence of Halal Certification Facilitation for

SME of East Java Province from Industry and Trade

Office of East Java Province clearly has big benefit

for both SME and consumer. Meanwhile, some of

SME’s could not afford to it due to their limitation of

knowledge and industrial scope. But as an institution,

LPPOM MUI has done its best to provide services by

doing joint program with several laboratories.

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