Indonesia Halal Economy and Strategy Roadmap 2018/19 · Purpose Inspire and empower stakeholders...

Indonesia Halal Economy and Strategy Roadmap 2018/19A PREVIEW

Comprehensive Roadmap by IHLC inPartnership with DinarStandard

Purpose

Inspire and empower stakeholders across Indonesia – business leaders, entrepreneurs, government officials, investors and industry

bodies to evaluate an actionable market strategy that addresses the Global Halal

Economy opportunity

Indonesia Halal Economy andStrategy Roadmap 2018/19

A PREVIEW

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• Defining ‘Halal Economy’

• Why Indonesia Should Care?

• Summary Impact & Strategic Framework

• Strategic Opportunity: International

• Strategic Opportunity: Domestic

• Strategic Enabler: Government

• Strategic Enabler: Production

• Strategic Enabler: Islamic Finance/ Investments

Defining Halal Economy

“Halal Economy comprises sectorswhose core products and services arestructurally affected by Islamic law"

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Why care? In a $2.1 trillion global Halal economy, Indonesiarepresents ~10% of 2017 spend, but only 3.8% of related exports

Halal Economy domestic opportunity$214 billion;

10% of globalHalal Economy Exports

opportunity

3.8% of global

Indonesia’s current and projected GDP evolution, targeting $4 trillion in GDP by 2025, and $15 trillion in GDP by 2040-45.

Why care? A strong strategic alignment to Indonesia’slong-term growth plans

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Significant Impact: Economic and Leadership

Economic:• Exports - additional Halal exports between a $5.1

billion - $11 billion annually. (Current $7.6 bill in exports)

• Jobs - additional 170,000-333,000 jobs• Import substitution of $500 million plus increased FDI

Leadership:• Global champions• Islamic finance penetration• Talent pool hub• Global halal compliance leader

Halal Economy Roadmap: Strategic Framework

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Note: Reflects exports to the OIC across Food & Beverage, Women’s clothing, Cosmetics, Pharmaceutical products and Media & RecreationSource: ITC Trademap

Indonesia is the largest OIC-based exporter in Halal Economy Products to the broader OIC, but only 3.3% of Halal exports global share ($7.6 billion)

Halal Economy: International OpportunityOIC export annual incremental, qualified* opportunity $17.8 bill

The top categories include Mixed Medicaments with the largest importers, Belgium and the United States, followed by Vaccines.

The largest food and beverage category was Animal or vegetable fats and oils with the largest importers of this category being India and the Netherlands.

Non-OIC countries across each of 26 categories imported$14.7 billion of Halal Economy products

Halal Economy: International OpportunityNon- OIC export annual incremental, qualified* opportunity $14.7 bill

Halal Economy: International Opportunity Market ProfileSector Top product

categories and values

Top OIC import

markets

Top non-OIC import markets

with robust Muslim

populations

Food

and

beverag

e

Meat and edible meat

offal:

$4 billion

1. Saud

i

Arab

ia

2. United

Arab

Emirates

3. Egypt

1. Germany

2. The Netherlands

3. The United States

Fashion Women’s or girls’

suits, dresses, skirts

etc.:

$567 million

1. United

Arab

Emirates

2. Saud

i

Arab

ia

3. Iraq

1. Germany


3. France

Pharmaceuticals Medicaments:

$5.2 billion

1. Saud

i

Arab

ia

2. Turkey

3. Egypt

1. Belgium


3. Switzerland

Cosmetics Beauty or make-up

products:

$1.1 billion

1. United

Arab

Emirates

2. Saud

1. Singapore

2. Russia

3. Germany

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• Indonesia’s Halal consumer spending $214 billion in 2017

• …growing at a projected6.0% CAGR to reach$330.5 billion by 2025

Domestics Opportunity through Import Substitution & FDI

Indonesia Domestic Halal Economy Drivers

Religion is “very important” to Indonesia’s Muslims and trickles down to their consumption patterns.

93% of 1,880 Muslims surveyed in Indonesia in 2012 considered religion very important in their lives, in line with Malaysia, and ahead of respondents in the MENA region.

Pew Research, Photo: Nikkei Asian Review

Thriving Domestic Halal Economy Production Base

Indonesia has a strong domestic Halal economy asevidenced by low imports relative to domestic spend

Sector Indonesia imports$ billions, 2017

Share of domestic total

consumption, 2017

OIC benchmark, 2016

Food and beverage 16.9 7% 13%

Clothing and apparel 0.1 0% 14%

Pharma 1.0 12% 6%

Cosmetics 1.1 23% 50%

Media 0.6 5% 29%

Total 19.7 7% 14%

• Indonesia’s FDI in Food and Beverage totaled$8.8 billion in the five years to 2017, across 5,500 projects

• Adding domestic investment, total investment in Food and Beverage was $3.5 billion in 2018, moderately up from $3.1 billion in 2018

Domestic growth is expected to boost FDI

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Strengthening Governments Halal Compliance Leadership

Government

Effective global engagementon HalalStandards

Government

Effective global engagement onHalal Accreditation

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Indonesia’s Islamic Finance industry falls below leading OIC benchmarks, which inturn limits the required and varied capital needs for Halal Economy growth.

Participation banking penetration rates by country:

Convergence Opportunity with Islamic Finance

“Real” Halal Economy Financing Needs:• Financing needs p[er industry

survey: Working Capital (listed by 21.7% of respondents), trade finance (18.9% of respondents), and expansion capital (17.3% of respondents).

• SME financing

FintechOpportunities:

• Blossom Finance, Alami, Ethis Ventures in Indonesia and addressing SME financing needs

Convergence Opportunity with Islamic Finance

Private Equity Opportunity:• $667 million in disclosed

investments across allsectors of the HalalEconomy, between 2015/18globally---very limited fromIndonesia.

• Opportunity for private equity ,VCecosystem to establish adedicated fund. Could besupported by Indonesia’sSovereign Wealth Fund, as well asPension Funds, Awqaf Institutions

Indonesia HalalEconomy andStrategy Roadmap

TO BE LAUNCHEDNOV/DEC 2018

Thank you!

Indonesia Halal Economy and Strategy Roadmap 2018/19 · Purpose Inspire and empower stakeholders...

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