Halal cosmetics market set for major growth - Value of exports in 2023 reach US$770.8mil

Additional support: A model applies make up for an event in Jakarta. Indonesia’s domestic halal cosmetics industry is enjoying a boom in exports. — AFP

JAKARTA: Exports of halal products from Indonesia surged last year and a new regulation is expected to lend additional support to domestic brands.

Outgoing shipments reached 656 trillion rupiah (US$41.2 billion) between January and October 2023, Trade Ministry director-general of national export development Didi Sumedi revealed on the ministry’s website.

The government has long hailed Indonesia’s potential in the halal economy, based on the country’s Muslim population, which is the largest of any nation.

The domestic cosmetics industry grew from 913 companies in 2022 to 1,010 in 2023, Coordinating Economic Minister Airlangga Hartarto said in February.

Data on his office’s website also showed that cumulative exports amounted to US$770.8mil for fragrances, essential oils and other cosmetic products from January through November 2023.

Most of the exports, according to government data, went to countries in the region, including Thailand, Vietnam, Malaysia, Singapore and the Philippines.

The latest Indonesia Halal Economic Report estimates that the market value of the domestic halal cosmetics sector reached US$4.19bil in 2022 and outperformed the overall economy with annual growth of 8%.

The global halal cosmetics industry has also seen significant growth, with the State of the Global Islamic Economy (SGIE) Report estimating Muslim spending on cosmetics at US$84bil in 2022 and forecasting an increase to US$129bil in 2027.

According to Shirley Mesela Oslan, founder of cosmetic brand Mad for Makeup, obtaining halal certification for its products is crucial for cosmetics makers to build trust with customers.

She added that a government regulation requiring halal certification for all domestically made products, including cosmetics, commencing in October this year contributed to the expansion of the halal industry in the country, particularly halal cosmetics.

“I believe that the current trend is that individuals are becoming increasingly attentive and concerned about the halal status of products they purchase,” she said. Halal cosmetics from Indonesia could acquire substantial market traction in Malaysia, she added.

Muslims account for 63.5% of the population of the neighbouring country. Shirley explained that the substantial demographic similarity in skin tone between the peoples in the South-East Asian markets influenced her decision to expand into Singapore and Malaysia with Mad for Makeup.

In 2024, local brand Azarine, which produces its products in Sidoarjo, East Java, is aiming for exports of cosmetics worth 23.25 billion rupiah to Malaysia, Tempo reported in January.

“The assortment and innovation of the products are highly representative of local brands, with a particularly strong brand presence in Indonesia compared with neighbouring countries,” Shirley said, underlining that most local brands are heavily focused on the domestic market for now.

She noted that halal certification did not appeal only to the Muslim market segment but also to many non-Muslims keen to rule out certain ingredients in the products they buy.

Rachel Nathani, owner of local cosmetics brand Dew It, concurred, highlighting strong demand from numerous markets and customers for products that contain fewer chemicals.

Rachel stated that Dew It had commenced exports to Singapore and India as a “baby step” in late 2023, shipping 3,000 units of its products to both India and Singapore by year-end. The firm is now preparing exports of its sunscreen product to Australia.

“Our strategy involves exploring the Australian market as our next target. While we are still in the midst of discussions, our extensive user base and numerous stores in Bali have attracted a significant number of Australian customers,” Rachel said.

“When it comes to India, halal products are highly valued and appreciated, which is likely due to the significant Muslim population and the perception of halal as a symbol of clean beauty,” she added.

Shirley highlighted the positive effect that local eCommerce platform Sociolla had on the beauty products market in Indonesia and other South-East Asian countries, while Rachel noted that Sociolla possessed import licences and warehouses, with the latter also facilitating exports of Indonesian goods.

“Submitting our documents and sending our items to their eCommerce warehouses makes the process [of selling and exporting] easier for us,” she said.

Sociolla has expanded to other South-East Asian countries, including Vietnam, demonstrating its ability to connect the Indonesian cosmetics markets with the South-East Asian region.

However, Shirley asserted that the halal label alone was not enough to broaden the market penetration of local brands. She emphasised the significance of cultivating a community to amplify word-of-mouth endorsements, which would ultimately contribute to the expansion of Indonesian brands.

Muhammad Syakir Sula, a syariah-economy expert, emphasised the need for government incentives to help Indonesian cosmetic producers expand overseas. “Overall, I believe that Indonesia has sufficient resources for cosmetics. Greater emphasis should be placed on these to prevent us from becoming mere importers,” Muhammad said, adding that there was still room for further development in the halal economy.

He noted that Indonesian producers of both cosmetics and fashions had yet to identify a viable international market. — The Jakarta Post/ANN

Follow us on our official WhatsApp channel for breaking news alerts and key updates!


Next In Business News

Malaysia-Japan trade set to rise this year - Tengku Zafrul
Global trading platform Webull expands to Malaysia
Maybank 1Q earnings up 9.8% on higher core fees
MPI set for strong show
Investors rush to grab piece of US$1.8 trillion UK pensions pie
Starwood’s US$10bil REIT turns to survival mode as pain lingers
Damned if you do, damned if you don’t
US stock changes affect Asia forex trades
Consistency in a sea of change
Impact of AI on jobs

Others Also Read