HALAL CERTIFICATION AND HALAL ASSURANCE SYSTEM

1. HALAL CERTIFICATION AND HALAL ASSURANCE SYSTEM

2. LPPOM MUI • Lembaga Pengkajian Pangan Obat-obatan dan Kosmetika - Majelis Ulama Indonesia (LPPOM – MUI), is an institution formed by MUI to run MUI function in protecting muslim consumers in consuming products of foods, drugs, and cosmetics • Establish on January 6th, 1989 in Jakarta • Mission • To establish and develop halal standard and inspection system • To halal certify foods, drugs and cosmetics consumed by the people • To educate people and be aware to only consume halal products limitedly • To provide complete and comprehensive information about halalness of products from various aspects integratedly

4. Auditor of LPPOM MUI Auditor is a person assigned by LPPOM – MUI through a selection process including his/her competency, quality and integrity to conduct halal audit. Auditor is a representative of ulama and a witness to find facts on halal production of a company. MUI Fatwa Committee MUI Fatwa Committee is one of MUI committees whose task to produce an Islamic legal opinion about law status on certain case. Members of fatwa committee are representative of Islamic organizations in Indonesia Fatwa Fatwa is Islamic legal opinion about law status of a certain case. In halal certification process, fatwa output is the halal or haram status of product(s) based on auditing process performed by LPPOM – MUI.

5. Education • Auditors : • - Chemistry • - Food Science • - Biochemistry • - Agro industry • - Biology • - Physics • - Veterinary Fatwa Committee : - Syariah - Da’wah - Ulumul Qur’an - Ulumul Hadits

6. Halal Certificate Halal Certificate (HC) is a written fatwa issued by MUI to state the halalness of a product based on auditing process performed by LPPOM – MUI. Internal Halal Auditor Internal Halal Auditor is staff(s) officially appointed by Company Management to coordinate implementation of HAS. HAS Audit HAS Audit is audit on Halal Assurance System implementation in the halal certified company.

7. Procedure Halal Certification Registration 1st HAS Document Product Certification Document Product Audit No Audit Memorandum Audit Evaluation Yes No Fatwa 2nd HAS Document Yes Halal Certificate

8. HALAL CERTIFICATION

9. 3 Step of LPPOM MUI Halal Certification1. Pre-Audit 2. Process-Audit 3. Post-Audit

10. Pre-Audita. Fill in three kind of application form : * Namely the request for halal certification form * The Declaration on ingredients form * Company’s affirmation formb. Attach information with specification, halal certificate and document on Halal Assurance Systemc. LP POM MUI sending official letter of schedule auditd. Auditing process to the factory

11. Process-Audit* Auditing Process Covers : a. Management of Halal Assurance System b. All documents regarding to the raw material c. Whole process of production d. Sampling if necessary* The Field Auditing : a. Production location (every location, branches and toll manufacturing) b. Factory location in the country origin c. Factory location for base form of raw material

12. * Auditing is conducted at the running time* The result of auditing evaluated in the Auditor Team Meeting * If auditing result complete, the meeting result will be reported and submitted to the Fatwa Commission Meeting of MUI* Fatwa Commission will decide the halal status of the product* MUI Halal Certificate will be issued and valid for 2 (two) years

13. Post-AuditThree activities in post audit will be conducted by company and LP POM MUI are :a. Company prepare Halal Assurance Systemb. Company regular report system to LP POM MUI every 6 months and every changes raw material, supplier, factory process, ect.c. Unscheduled inspection by LP POM MUI to the company factory

14. FATWA COMISSIONHalalHaramReferrence : 1. Al-Qur’an 2. Hadist 3. Fatwa Ulama

15. MUI HALAL CERTIFICATE

16. HALAL ASSURANCE SYSTEM

17. Halal Assurance System is a management system to maintain the halal status of products that have obtained halal certificate

18. Description • For a new company which has not obtained MUI Halal Certificate, HAS documents needed are : • 1st HAS Document contains at least an official statement to submit Manual of HAS within 6 months after halal certificate is issued. • 2nd HAS Document contains at least Halal Policy, halal management organization, and scope of HAS implementation. • For company which has already had halal certificate but its HAS implementation has not been audited, then HAS documents needed are : • 1st HAS Document contains at least Halal Policy, halal management organization, and scope of HAS implementation. • 2nd HAS Document contains standard Manual of HAS • For company whose HAS has been audited and is going to renew its halal certificate then HAS documents needed are : • 1st HAS Document contains HAS implementation report on recent condition or revised HAS Manual or statement letter mentioning the company has got at least B grade or copy of HAS certificate. • 2nd HAS Document is not needed.

19. Reason of HAS Implementation • Period of Halal Certificate : 2 years • Need a sytem which can assure halal during period of Halal Certificate • Based on Islamic Law : • - To consume Halal Products is obliged for Moslem • - All activities for guarding Halal Status of Products • become obliged, like : • a. Make agreement with company to maintain • Halal Production consistenly • b. Create HAS and It has to be applied by company which have got Halal Certificate

20. Reason of HAS Implementation (continued) • Maqhashid Shari’ah • Trend of Increasing Market for Halal Product Globally (Customer Satisfaction) • Continual product development (rapid development) in a short time • Supply chain management in global market • Join responsibility for halal production • LP POM – MUI as external body

21. Declining life cycle of product (continued) Sales decline Company responds Production changes Figure 1. Life cycle of product Maarif and Tanjung, 2003) Life style changes consumer behavior  decline life cycle of product. 4 stages of product in the market (Fig 1)

22. Declining life cycle of product (continued) • Change or modification: • Product • Lay out • Packaging • Production technology • Manufacturer may change raw material, ingredients, or formula ‘Change’ is critical points in maintaining halal status of product.

23. Declining life cycle of product (continued) Producer must set up Standard Operation Procedure (SOP) : a halal manual for detail technical procedures. Any change must refer to SOP.

24. Supply chain management (SCM) in global market Fig 2. Supply-Production-Distribution System SCM maximize costumer satisfaction, reduce costs.

25. Supply chain management (SCM) in global market (continued) 3 critical points in maintaining halal status: • Supplier’s Obligation • Transformation from raw materials to end product • Distribution system

26. Supply chain management (SCM) in global market (continued) 3.1. Supplier’s Obligation • Many suppliers  ALL must provide halal materials • Little suppliers  Continuously supplyhalal materials

27. Supply chain management (SCM) in global market (continued) 3.2. Transformation from raw materials to end product All steps of transformations in Production process, from raw materials to end product, must be clearly documented in HAS so that they can be evaluated properly Figure 3.

28. Supply chain management (SCM) in global market (continued) 3.2. Transformation from raw materials to end product In Supply Chain Management, to reduce cost of investment, production or inventory, some producers may conduct toll manufacturing by using several companies which produce some components of product. Consequently, HAS will also include the company where toll manufacturing is taken.

29. Supply chain management (SCM) in global market (continued) 3.3. Distribution system Some products are easily being contaminated with non-halal product (e.g. meat),  producer must pay great attention during distribution to ensure that products are maintained in halal status until they reach consumers.

30. Supply chain management (SCM) in global market (continued) 3.3. Distribution system Figure 4.click there are several bodies involved in this system which means that halal status of product must be controlled in all bodies involved. Thus HAS include services such as importer, distributor, transportation and retailer.

31. LP POM – MUI as an external body As an external body, LP POM MUI cannot control production process in a company all the time, although there is a surveillance allows LP POM MUI to visit the production site without information prior to visit. Therefore a team of Internal Halal Auditors is required in the implementation of HAS.

32. LP POM – MUI as an external body (continued) • Three components must be carried out in HAS: • Conducting internal audit regularly, • Conducting corrective action when any distortion occurs or procedural errors ; and • Making a report to LP POM MUI every 6 months whether there are changes in raw materials and production process.

33. Halal production is a join responsibility (Total Quality Management) (continued) The implementation of HAS needs Total Quality Management : Internal Halal Auditor and the Top Management are responsible to maintain the halal status of product.

34. Halal production is a join responsibility (Total Quality Management) (continued) Continuous Improvement Objective Principles Customer Focus Process Improvement Total Involvement Leadership Education and Training Supportive structure Communications Reward and recognition Measurement Elements Fig 5. The Total Quality Management System (Arnold dan Chapman, 2004)

35. Halal production is a join responsibility (Total Quality Management) (continued) Components in Total Quality Management (Figure 5) • Halal policy • Halal management structure • Communication • Training and socialization • Materials must be absolutely halal • Management review

36. Halal policy.Support from the top management must be in the form of documented halal policy, hence it can be implemented in halal production process. Halal management structure.It is a management structure that supports the implementation of HAS in manufacturer.

37. Communication.It is the way to encourage transfer of knowledge and internal coordination. Training and socialization.Main purposes of training and socialization for employee are to improve an understanding of Islamic law related to halal product.

38. Materials must be absolutely halal.Any substance or process that can be identified as a critical point in production process must be mentioned in Halal Guide as a technical guidance. HAS does not tolerate low risk, medium risk or high risk in halal production process (zero tolerance) Management review.It is necessary to continuously review and improve the system to assure halal production process.

39. Conclusion Implementation of HAS is required to be able to : • encourage the manufacturer to be aware in maintaining the halal status of the products; • renew halal certificate, and • provide costumer satisfaction.

40. Procedure to be Approved by LP POM MUI

41. Requirement • Halal Certifier Body should be a Public Organization • Supported by Islamic Community • Have at least 2 scientist as Auditor • Have at least 3 Ulama (Islamic Scholars Ship) • Have Standard Operating Procedure for Auditing and Administration

42. Step by step to be approved • Application by letter • Giving full information by answering the questionnaires (attached) • Administrative evaluation • Verification by side visit, including following audit procedure • Giving status

43. Thank You Very Much For The Attention