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Halal Products of Indonesia in ASEAN Economic Community: Brand Prospects

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INDONESIAN SCHOLARS JOURNAL –Paper Number (Will be replaced with volume and paper number if the
manuscript is accepted)

Halal Products of Indonesia in

ASEAN Economic Community:
Brand Prospects & Competitiveness
1
Al Afif Muzakir*, 2Randi Andiyana & 3Dzakwan Ina Ghandur
1
Undergraduate Students, Faculty of Economics, Universitas Riau
*afifmuzakir@gmail.com

Abstract. The current study aims to analyze strategy in developing Islamic business in Indonesia. As part of the effort
to develop halal Industry in Indonesia amidst rising competition within ASEAN economic community. Using time
series data during the last ten years, It will be compared with five competitors ASEAN countries that are also
producing and export halal products. The paper examines data of six potential products traded in the international
markets that are highly recommended as halal products. The paper finds that competitiveness pharmaceutical products
are high. Average revealed comparative advantage (RCA) on 4 and in 2014 more than 6. Animal, vegetable fats, and
oils, cleavage products, etc have higher competitiveness level and have good prospects in the future. Average revealed
comparative advantage (RCA) on 3. Therefore required several strategies, Indonesia with a large pool of resources,
the largest number of the Muslim population, has the advantage to make halal products as a leading marketing strategy
and develop a distinctive halal brand to serve the ASEAN market.

Keywords: ASEAN Economic Community; Brand; Competitiveness; Halal Products; Prospect

A. BACKGROUND to The Halal Food Information Center, production of halal

The commercial value and trade volumes of Halal products
globally have reached an encouraging scale. The niche sector is
now developing rapidly in many parts of the world. As a dietary
or lifestyle choice, halal has now been accepted as a universal
concept. Halal products stand not solely for just and fair
business but also a concern with safety, animal welfare, social
justice, and sustainable environment Nasir and Chiew [1]. The
variation of halal products extends to all consumables, such
as food, toiletries, pharmaceutical, cosmetics and services
including finance, investments, and business Rahman [2].
However, the responsibility of any products to be declared as
Halal is the prerogative of respective government or any
organization authorized by the government. It might be different
across different countries, as each country may have different
opinion or approach to certifying certain products are halal or
not Afifi et al [3].
Interestingly, the effort to develop halal industry is not only
happening in Muslim-majority countries, but also in countries
with the diverse or multicultural population. It is taking place in
all continents, starting from Asia, Africa, Europe and even
America. In ASEAN region itself, countries such as Malaysia,
Thailand, Indonesia, Singapore, and Philippines have their own
institutions that are in charge of Halal product certification
ASEAN [4].
Furthermore, the main challenges in the international market
are a competition that comes from large producers or exporters.
The largest producers of halal goods and services are not
necessarily Muslim countries or manufacturers. In fact, the halal
market is no longer the domain of Muslim countries. According
goods and services are controlled mostly by non-Muslim
countries. The largest Halal food exporting countries are not
from Muslim countries, but Brazil and India, which at present
rank as the No.1 and 2 leading Halal food exporters of the
world with market shares of 10.7% and 9.0% respectively.
Other foods exporting countries are the United States with
4.9% share, China 4.6%, Thailand 4.4%, Australia 4.4%,
France 4.2%, and Russia 3.9%. Indonesia and Malaysia, the
major advocates in promoting Halal food to the world are
ranked No. 21 and 23 as Halal food exporters with about 1%
share of the world’s halal market.
ASEAN Economic Community (AEC) is stepping stone to
develop and strengthen the unified economy of South East
Asia. The economic community is a strategy to enhance the
capacity of each country and improve competitiveness level to
win the global market. However, almost half of the 629
million people living in the ASEAN region are Muslims. Within
the ten countries of ASEAN, three countries Brunei
Darussalam, Indonesia, and Malaysia have Muslim majorities,
and the remaining seven countries host Muslim minorities,
ranging from 0.1% in Vietnam to nearly 16% in Singapore.
Indonesia is a country with the largest Muslim population in
ASEAN, namely 14% from 30% the amount of Muslim
population in Southeast Asia. In terms of international trade
volume of the halal food market, Indonesia is one of the biggest
markets in the world after Africa. Thus, the challenges facing
Indonesia in introducing halal brand do not only come from
the domestic market but also in seizing the opportunity to
increase trading sector in the international market. However,
all obstacles in producing halal products, such as low
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production, the standard of Halal certification, ability to
compete, positioning and product development, as well as
the level of demand for Indonesian products in destination
countries. Besides, a recent study indicates that the attitude
towards Halal products is still behind that of Western brands. It
also appears that if a Western brand falls into a category that the
local brands can compete with, soon after the permissibility of
these Western brands will be questioned by its competitors,
forcing them to search for a leverage to defend its position in
the Muslim markets Mukhtar and Butt [5].
Indonesia has a variety of halal products, especially due to
its ethnic and cultural diversity that gave birth to a variety of
local products with unique characteristics. Among such
products are local snacks, food, restaurant, batik, souvenirs,
handicrafts, pharmaceutical products, and many others. Local
products are also rich in designs, appearances, models, and
patterns that put them at a high level among other similar
products in South East Asia.
The position of Indonesia as one of the key country in halal
products world trade has a big opportunity. It has experienced,
great Moslem population and variation of products. There are
five halal principles that should be fulfilled, based on Islamic
value Tieman and Ghazali [6], as follows: First, physically and
by content, the product should fulfill the halal requirement.
Secondly, the leaders of the company should consistent to the
commitment for applying halal standards internally. Third, the
company should earn halal assurance on its production process
that could be represented by the attainment of halal certification
(in Indonesia, MUI’s halal certification could be used as a
reference). Fourth, yielded product has to meet specific
qualification standard and safety, in Islamic term it called as
toyyib, and fifth is all that related to financial aspect (pricing).
Pricing should free from riba, gharar (ambiguity), and maysir
(the drawing).
Supporting halal products, the government has some
regulation to motivate and keep the quality of products.
Government Bodies responsible for food controlling are
Ministry of Agriculture for meat and animal based foods and
National Agency for Foods and Drugs Control (BPOM - Badan
Pengawas Obat dan Makanan) for food packaged product. In
Indonesia, protecting halal products by MUI (Majelis Ulama
Indonesia / The Indonesian Council of Ulama) based on an
assessment done by LPPOM MUI (Lembaga Pengkajian Pangan,
Obat dan Kosmetika Majelis Ulama Indonesia – The
Assessment Institute for Foods, Drugs, and Cosmetics The
Indonesian Council of Ulama). The halal certification indicates that
the manufacturer of halal products complies with all procedures
and requirements mandated by the authorized body. It is proven
that halal certification not only symbolizes the Islamic religion
but is also a suitable and practical standard system for all
nations and not limited to Muslim consumers.
There have been some recent studies on halal products and
its development. Among such studies is Othman et.al. [7], Afifi
[3], Kamarulzaman et.al. [8], Nasir and Chiew [1], and Bin
et.al. [9]. Other researchers on the competitiveness of
products are by Ragimun [10], Rifin [11], Shahzad [12], and
on brand development and product design by Reguia [13],
Ireland [14], Borzooei [15] and many others. However, these
researchers do not explain how to measure competitiveness,
future prospects and potential of halal products in terms of
measurement and kind of products. Furthermore, these
researchers are not particularly talking about halal products in
Indonesia.
With abundant resources that it owns, Indonesia will be able
to improve its ability and competitiveness in exploring the
potential of halal products. Thus, this paper will be a focus on
strategy to build and develop an Indonesian brand of halal
products by measuring six potential products for the
international trade. Therefore, this research aims to contribute
to continuous improvement in the competitiveness of
Indonesian products to seize halal market opportunities and
become a leading brand in ASEAN.
B. METHODOLOGY
The data used in this research is secondary data consists of
time series data (time series) with the annual ten-year period of
the year 2005 to 2014 for potential products that can be made
advantage products of Indonesia. The type of data acquired
includes a data volume of export value. Secondary data used in
this study comes ASEAN Statistics and International Trade
Center (ITC), Ministry of Commerce and of the study of
literature sourced from books and other literature in the library,
which is accessible by 2016.
Analysis Methods Processed Data
Revealed Comparative Advantage
One of showing the indicators of changes in comparative
advantage is a method of Revealed Comparative Advantage
(RCA), RCA is an index used to measure the relative
advantages and disadvantages of a particular commodity in a
country which is reflected in the pattern of trade. This index
shows the ratio between the share of exports commodity or
group of commodities to a country's export share of these
commodities from around the world or in other words the RCA
index showed a comparative advantage or the export
competitiveness of a country in a commodity of the world. This
concept was first introduced by Ballasa in 1965, which
considers that the comparative advantages of a country or can
be seen reflected in its exports.
Systematically, RCA Index is as follows :
𝑋𝑖𝑎/𝑡𝑜𝑡𝑎𝑙 𝑋𝑎
(1)
𝑋𝑖𝑤/ 𝑡𝑜𝑡𝑎𝑙 𝑋𝑤
The export kind of products from Indonesia (Xia) will be
divided with total products that export by Indonesia (total Xa).
Then, It will be compared with Export kind of commodity in the
world (Xiw) divided with total export of world (Xw).
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Index of Trade Concentration
In this case, to find out dependency of products Indonesia
with partnership country that's use Index of Trade
Concentration (ITC). It is one of manner to know trade intensity
a country with another country.
Thus, more vulnerable to the economic conditions of its
trading partners. ITC is used to measure the Index of Trade
Concentration or Hirschman Index, the formula is as follows1 :
𝜒𝑖 2
𝐻𝑗 = √(∑ ) (2)
𝜒 framework for ASEAN transformation trough 4 (four pillar),
Where x is value of product i’s exports and X value of total
exports of country. This index is normalized so that its values
range between 0 and 1. Values closer to one indicate more
concentrated trade structures. It is generally assumed that lower
export concentration reduces the impact of international trade
risks due to the possible price fluctuations of specific products.
Index of Specialization Trade
Thus, to know about any commodities, Indonesia prefer to
be exporters or importers. This research will use index of
specialization product (ISP) with formula as follows 2:
[(Χi−Μi)] 𝐼𝑛𝑑
(3)
[(Χi+Μi)]𝐼𝑛𝑑
Where X and M respectively export and import, and i and
each is a kind of goods i and a state . Implicitly , this index
consider the demand side and the supply side, where exports
identical to the domestic supply and imports are domestic
demand , or in accordance with international trade theory , the
theory net of surplus , as exports of goods occur when there is a
surplus on goods in the domestic market .
Analisis Forecasting Pola Trends
Trends analysis is a method of statistics analysis are
intended to make an estimate or forecast to the future. To make
a good forecasting, it needs some information or enough data
and observation in time periods which relative of a long time.
With the result of analysis be able to know, how many
fluctuations and the factors that influence those changes. In
theoretical, The time series of analysis data. Something that
most decisive is quality and accurate from the data, and also
time or period from collected the data. If the data collected more
substantial, it will be better the estimation or forecasting which
is obtained and vice versa. In particular, the analysis of time
series with the least squares method can be divided into two
cases, namely the case of the data even and odd data cases.
Linear equation of time series analysis will follow:
𝑦 = 𝑎 + 𝑏𝑥 (4)
1 2
Introduction Trade of Research II:Trade Data and Statistics, Artnet
Capacity Building Workshop and Trade Research on 22-25 March 2005
prepared by Mia Mikic, Unescap.
C. RESULT AND DISCUSSION
Prospect and Competitiveness of Halal Products Indonesia
Along the development, at meeting to 39 ASEAN Economic
Ministers (AEM) in 2007 year, the agreement about script
ASEAN Economic Community (AEC) Blueprint with Strategic
Schedule including new initiatives and roadmap which clear to
achieve ASEAN Economic Community 2015. Furthermore, the
head of state member of ASEAN releases Declaration on the
ASEAN Economic Community Blueprint in November 2007.
ASEAN Economic Community Blueprint (AEC Blueprint)
that is : (i) a single market and production base,(ii) a highly
competitive economic region, (iii) a region of equitable
economic development, and (iv) a region fully integrated into
global economy” ASEAN Blue Print[16].
Increasing competitiveness needs to be done, not least
Indonesia as one of the founding pioneers AEC. With the
improvement of competitiveness, will reduce trade transaction
costs and facilitate trade in AEC. Therefore, it is necessary to
identify how the competitiveness of Indonesia compared to
neighboring countries as well as the factors that need to be
improved so that Indonesia has a high competitiveness
welcomed the implementation of the AEC which had begun at
the end of 2015. Generally, economic of Indonesia still be able
to growth above ASEAN of economic growth. ASEAN – 5
indicated that Economic of Indonesia condition capable of
growth higher rather than each member countries. The
Indonesia Economic growth ten last years average 5,8 percent,
more than high from Philipines, Malaysia and Thailand still
growth 5,4; 5,0; and 3,9 percent. However, If compare with
Vietnam dan Singapore, the economic of Indonesia growth
under 6,4 and 6,3 percent Niza[17].
The trend of Indonesia growth from 2001 – 2013 years
significantly to show the stability of economic and positive than
ASEAN countries member. The financial crisis of United state
even 2008 – 2009 years give influence for developing country
include Indonesia. The problem is able to look for solve with
fiscal policy and expansive policy. Thus, the stability of
economic growth of Indonesia still stands positive Niza[17].
The competition in AEC to show Indonesia has to ready with
halal product challenges from every single country of ASEAN.
Revamping in the production process, regulation, and
marketing of halal products to be important agenda for
Indonesia to realize the strongest of competitiveness itself.
Trade Policy Analysis and Development Agency of Indonesia, see more in
http://www.kemendag.go.id/addon/isp/
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Table 2. RCA 6 Potential Halal Products of Indonesia

Non- Pharmace Essential
Tahun Dairy Soups Animal
alcohol utical oil
2005 1.16 0.21 4.15 0.62 0.16 3.09
2006 1.04 0.28 3.19 0.56 0.08 3.24
2007 0.91 0.27 3.54 0.59 0.04 3.35
2008 1.37 0.33 4.87 0.63 0.04 3.18
2009 1.39 0.27 4.16 0.58 0.04 3.29
2010 1.24 0.25 4.73 0.54 0.08 3.12
2011 0.99 0.43 4.77 0.49 0.13 3.79
2012 0.99 0.26 5.17 0.49 0.08 3.24
2013 0.98 0.27 5.64 0.48 0.22 3.55
2014 0.94 0.26 6.48 0.53 0.45 3.94
Figure 1 : Outlook economic growth ASEAN countries 2001-2013
Sources : CEIC, processed According to the analysis above, 2 potential of halal
Production of halal product of Indonesia has a big products which has competitiveness more than 1 are
opportunity in ASEAN market. Particularly at farming sector, it Pharmaceutical products, that is starting from RCA 4 in 2005
abounds natural resources in Indonesia. However, it still needs until 2014 RCA of Indonesia to reach 6. However, Indonesia
serious process to develop halal product and ready for competitors Country which have competitiveness higher than
competitiveness in international arena. In this research, there Indonesia is Singapore, the RCA above 37. Next followed by
are 6 potential products, such as Dairy products, eggs, honey, other countries in South-East Asia such as Malaysia, Thailand,
edible animal productnes, Non-alcoholic beverages (excl. Philippines which has the RCA under Indonesia. The next
water, fruit or vegetable juices and mi), Pharmaceutical products which have ability in competitiveness are Animal,
products, Essential oils, perfumes, cosmetics, toiletries, Soups, vegetable fats, and oils, cleavage products, etc with RCA above
broths & preparations thereof, Animal,vegetable fats and oils, 3. Besides that Malaysia only has capability to compete with
cleavage products, etc. It can provide the good benefit to RCA under 3. Furthermore Singapore, Thailand, and
increase halal products of Indonesia production in ASEAN. Philippines with RCA under 1.
Table 1. Export Halal Products Potential of Indonesia in
]

Tabel 3. 5 Countries with Strong RCA in ASEAN

ASEAN
Pharma Essential
Dairy Non Soups Animal
Dairy Pharmac ceutical Oil
Nonalc Essentia Tahun (Mala alcohol (Thail (Indones
TAHUN produ eu Soups Animal (Singap (Singapo
holic l oils ysia) (Thailand) and) ia)
cts tical ore) re)
2005 34389 12366 40087 101470 50237 592556 2005 0.85 2.45 38.8 1.60 3.73 3.09
2006 33010 7290 46653 106073 70225 838820
2007 54991 10173 64540 131782 94874 1377569 2006 0.93 2.39 39.77 1.61 3.17 3.24
2008 88651 22816 72499 148398 129224 2039361 2007 1,27 2.22 41.26 1.60 2.99 3.35
2009 96319 15208 81953 146703 128293 1736834 2008 1.30 2.36 40.72 1.55 3.17 3.18
2010 134717 30641 83225 218846 229642 2875628 2009 1.24 2.62 39.59 1.57 3.43 3.29
2011 133060 89092 116931 277568 345412 3852038
2012 107613 55684 157271 292410 464092 3318163
2010 1.17 2.90 36.49 1.62 3.42 3.12
2013 96897 58638 161178 342204 447747 1799700 2011 1.31 2.82 37.69 1.79 3.24 3.79
2014 87516 74632 193283 365149 508235 2180484 2012 1.55 2.94 37.87 1.81 3.31 3.24
Total 867163 376540 1017620 2130603 2467981 20611153 2013 1.48 3.09 38.52 1.76 3.37 3.55
Sources: ITC Calculations Based On UN COMTRADE 2014 1.77 3.27 38.34 1.84 2.93 3.94
Statistics, 2016
Unfortunately, potential of halal products others still under
Furthermore, Indonesia has some competitors and it has 1, such as Dairy products, eggs, honey, edible animal product
become halal products that are already traded globally. Based nest that has advantages by Malaysia. Indonesia has
off total products of Indonesia in international trade with several competitiveness before, but a few years was decreased. Soups,
countries in ASEAN. Indonesia stays in number 4 after broths & preparations thereof products be able to advantages by
Philippines. Singapore stays in number 1 following by Malaysia Thailand. Then, Non-alcoholic beverages (ex-cl. water, fruit or
and Thailand. The competitiveness will be measured by RCA vegetable juices and mi) advantages RCA also Thailand and
and compare with competitors countries in ASEAN. Thus, after Essential oils, perfumes, cosmetics, toiletries advantage by
competitiveness is found, the position of Indonesia as a country Singapore.
has capability in export or import of products. It will be measure Halal products of Indonesia still needs the government's
with ISP. attention in considering an increase in productivity and
Determining whether products of Indonesia susceptible to competitiveness because products development is still under 1
economic influence other countries, it will be tested with ITC. indicating they have not been able to compete with the state -
Lastly, to determine the prospects of halal products of Indonesia any other country in the world even to the ASEAN level.
a few years with the method of forecasting
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Tabel 4. ISP 6 Potential Potential Halal Products of Indonesia products and Animal, vegetable fats and oils, cleavage products,
Tahun Dairy
Non- Pharmace Essential
Soups Animal
etc. while for other lawful potential products still have RCA
alcohol utical oil
below 1. The strategy for improving the production and product
2005 0.33 -0.99 0.18 -0.99 -0.96 0.97
2006 0.22 -0.99 0.24 -0.99 -0.98 0.97 development is needed in facing the global market, especially
2007 0.23 -0.99 0.32 -0.99 -0.98 0.98 in the ASEAN ECONOMIC COMMUNITY.
2008 0.36 -0.99 0.18 -0.99 -0.99 0.98
2009 0.26 -0.99 0.24 -0.99 -0.98 0.98 Strategy to Increase Competitiveness and Developing
2010 0.15 -0.99 0.26 -0.99 -0.98 0.98
2011 0.11 -0.99 0.27 -0.99 -0.97 0.98 Brand of Halal Products of Indonesia in AEC
2012 0.07 -0.99 0.36 -0.99 -0.98 0.98
2013 -0.03 -0.99 0.28 -0.99 -0.97 0.98
Halal is an important concept in the lives of Muslims. Halal
2014 0.10 -0.99 0.48 -0.99 -0.93 0.98 defines what Muslims can do and can not do, or consume. It’s a
shariah or religious requirement to protect Muslims to stay on
In analysis of Index specialization of product (ISP),
the right path. Likewise, shariah guidelines on halal production
Indonesia still as a big market share to any other products from
also promote sustainability, the concept of hygiene, sanitation,
other countries. Evidenced by the value of the average
and safety Mukhtar and Butt[5].
Indonesian still below 0 (zero). It is the duty of the toughest
In consumption, the concept of halal refers to the command
Indonesia in meeting domestic needs. Smaller domestic supply
from Allah SWT that mankind should consume products that
of domestic demand shows that Indonesia is a net importer of
have the features of halal and tayyib (Surah al-Baqarah 2:168;
today.
Surah al-Maidah 5:88; Surah al-Anfal 8:69; Surah an-Nahl
Tabel 5. ITC 6 Potential Potential Halal Products of Indonesia 16:114). It considers all of the physical and spiritual advantages
Tahun Dairy
Non- Pharmace Essenti
Soups Animal of the products to humankind. ‘Halalan tayyiban’ products can
alcohol utical al oil
2005 0.001 8.9 0.001 0.002 1.38 0.05 be interpreted as the products that are permissible (halal) to be
2006 0.002 0.001 0.002 0.002 6.40 0.06 consumed and beneficial (tayyib) to human body Bin et al[9].
2007 0.001 0.003 0.002 0.002 4.81 0.08
2008 0.001 0.002 0.002 0.002 4.75 0.11 It does not mean that the product must be halal and pure only.
2009 0.001 0.003 0.002 0.002 5.81 0.10 It also means that the product must be beneficial to the body and
2010 0.001 0.003 0.002 0.002 8.10 0.10
2011 0.001 0.003 0.002 0.002 1.10 0.10
does not cause any harm. Furthermore, what is beneficial for the
2012 0.001 0.003 0.002 0.003 6.61 0.11 body is also beneficial for the human’s mind and soul.
2013 0.001 0.003 0.002 0.003 1.63 0.10 According to Sazelin and Safiah[18], whatever products
2014 0.001 0.003 0.002 0.003 3.47 0.11
consumed must meet the criteria of halalan tayyiban which
Analysis Index of trade concentration (ITC) of Indonesia be encompass the holistic concept of quality including hygiene and
able to survive from disturbance economic from partner sanitary, safety, wholesome and the permissible by God.
countries of trade Indonesia. The rates of ITC Indonesia is Nonetheless, few things are strictly prohibited for all
under 0, except Soups, broths & preparations thereof product Muslims apart from exceptional circumstances, such as a
are highly susceptible to the economic conditions of the country serious threat to life. These include acts like indulging in
trading partners in ASEAN. Indonesia still has advantages and adultery, gambling, consuming liquor/pork, taking interest on
can survive from economic condition in another country, it will money, using the blood of animals and the meat of a dead
increase production and export the halal products potential of animal scarifies in the name of other than Allah Run et al[19].
Indonesia to the countries in ASEAN. Thus, products that are made of/or contain liquor, pork, blood of
Then, the last step to know the prospect of halal products of dead animal and services such as contemporary commercial
Indonesia for the next coming years will be used forecasting banking become Haram for most of the Muslims Hakim and
analysis. Jubari[20]. Furthermore, the complexity of human need in this
Tabel 6. Forecasting 6 Potential Halal Products of Indonesia century make people's difficult to attention about halal & haram.
Non- Pharmace Essenti It will be a good study to explore and explain the business.
Tahun Dairy Soups Animal
alcohol utical al oil Particularly in production and consumption.
2015 0,27 0,30 6,22 0,52 0,99 3,55
2016 0,30 0,31 6,50 0,51 0,97 3,60 Strategy to increase competitiveness halal products of
2017 0,32 0,31 6,78 0,51 0,95 3,65
2018 0,35 0,31 7,06 0,50 0,93 3,70
Indonesia be able to relate to national development program by
2019 0,37 0,32 7,34 0,49 0,91 3,75 government. The strategy developing halal products divided
2020 0,40 0,32 7,63 0,48 0,89 3,80
2021 0,42 0,32 7,91 0,47 0,87 3,85 become two categories, that is base on supply and demand. Base
2022 0,44 0,33 8,19 0,47 0,85 3,90 on Supply, the production of factors such us developing raw
2023 0,47 0,33 8,47 0,46 0,83 3,95
2024 0,49 0,34 8,70 0,45 0,81 4,00 materials, human resources, investment and facility for capital
will be increase. In other hand, partnership, research, and
Base on forecasting above show that’s halal products
SME’s become continuity factors of halal products as a solution
potential of Indonesia still dominated by Pharmaceutical
to improve variety of halal products of Indonesia. According to
INDONESIAN SCHOLARS JOURNAL –Paper Number (Will be replaced with volume and paper number if the
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Law No. 20 of 2008, Micro, Small and Medium Enterprises is
a productive economic enterprise that stand-alone, conducted
by an individual or business entity that is not a subsidiary or
branch office that is not owned, controlled, or be a part either
directly or indirectly from medium or large businesses that meet
the criteria for Small Business as defined in the Act No.20 of
2008. 27 SME’s has an important role in supporting the
advancement of the Indonesian economy. The roles of SME’s
are 1) Having a position as a major player in various sectors of
the economy of the country 2) reduce unemploymet by
providing a large job oppurtunities 3) play an important role in
empowering communities and developing local economic
activities, 4) as a source of innovation, so that new market can
be formed, 5) help keep the balance of payments to carry out
export activities of society so that the country's main problems,
especially poverty, can be reduced Tedjasuksmana[21].
Base on demand, the ability to diversify the products and
market expansion become important. It can be made through
exhibition, promotion, expo, and etc. Furthermore, efficiency
and productivity to increase quality of products can be obtained
by improving the prospect of halal products itself.
There is some strategy to increase halal products of
Indonesia and how to create a Brand of halal products Indonesia
in ASEAN ECONOMIC COMMUNITY :
1. Improving the business climate and easiness in
bureaucracy
2. Repairing and developing infrastructure to support hala
l production
3. Increasing ability and quality of human resource in und
erstanding about halal production
4. Developing patnership with another country as a mark
et of halal products.
5. Research and Development to make variety of halal pr
oducts to increase and make an innovation and market
analysis.
6. Supporting SME’s as a basic to develop halal products
7. Motivate the society to love production of nation
8. Literacy, promotion and explain to consumer about hal
al products
D. CONCLUSION
From RCA analysis, it shows that only 2 potential of halal
products has RCA more than 1. It demonstrates that the halal
products of Indonesia is still under production, need
improvement and requires more attention to support the
development of halal products in Indonesia. The ISP analysis
states Indonesia still as an importer country, although it can
export and increase the production. This can be seen through
public demand which is still low. On the other hands, the
analysis of ICP shows Indonesia’s ability to compete in
international markets and not affected by the economic shocks
from another country.
This research needs intensive study to create a strategy to
improve the competitiveness of halal products from Indonesia
in the future. Data availability of halal products of Indonesia as
analytical tool is one of important things for measuring the
ability of Indonesia to revealed and strength with global trade.
Hopefully, with this limitation, this research will encourage
another researcher to conduct intensive research on halal
products from Indonesia to seize opportunities in the trade of
International Halal products.
ACKNOWLEDGEMENT
Author would like to thanks to Riau University and all
lecturer for their moral and material for this research . All of
partners in economic faculty University of Riau who has
provided a lot of support and giving spirit, Ms. Lapeti Sari as a
motivate lecturer and Mr. Luqyan Tammani who always
support us.
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Comments to author
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you can put in your background ()
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Response :

1. abstract has been changed according to the results

of the previous review.
2. literature we have lost, and be explained by
background.
3. methodology has to be improved according to the
results the previous review.
4. Additional data on the discussion and
improvement grammar.
5. paper had to be improved based on the template

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