- Enforcement of Indonesia’s Mandatory Halal Certification Regulation Set for This October
- K-Cosmetics Expansion Accelerates: Islamic Market Share Surges 2.5 Times in 4 Years

- Conglomerates Complete Proactive Process Conversions, While SMEs Are Left Stranded Due to High Costs and Lack of Cross-Contamination Prevention Facilities

- The Threshold of the Massive Muslim Market: ‘Halal’ Decides the Fate of K-Beauty

"K-Cosmetics," which has built a monumental achievement as the world's second-largest exporter, has entered an unprecedented testing ground in the vast Islamic market. This transition comes as "Halal" certification—meaning permissible under Islamic law—evolves beyond a passing trend into a powerful trade regulation, foreshadowing a tectonic shift in the domestic cosmetics industry. In particular, as Indonesia, home to the world's largest Muslim population, has decided to mandate Halal certification for cosmetics distributed within its borders starting this October, the anxieties of domestic beauty small and medium-sized enterprises (SMEs) that have staked their survival on pioneering new markets are deepening.

The movement of government authorities has also become urgent. The Ministry of Food and Drug Safety (MFDS) is scheduled to urgently hold a seminar and job training session for cosmetics Halal certification experts on June 17. The background behind the health authorities arranging such an unprecedented, large-scale training program for a specific religious certification lies in the legal regulatory measures of Indonesia, which are now just four months away.

As Halal certification, which previously remained in the realm of voluntary choice or marketing tools, is enforced as a mandatory national law, domestic companies find themselves in a position where they will inevitably suffer a massive blow in the local market if they fail to secure the certification. Experts unanimously agree that survival in the future Islamic market will depend entirely on how swiftly companies can overcome the ‘Halal barrier,’ rather than on technological prowess or brand awareness.

■ Explosive Growth of Exports to the Organisation of Islamic Cooperation (OIC)… ‘Non-Halal’ Labeling Is Virtually a Death Sentence

The mandatory Halal enforcement measures implemented by the Indonesian government are highly extensive in terms of both scope and depth. The certification targets encompass not only finished cosmetics products but also general consumer goods such as pharmaceuticals and household items, as well as the raw materials used before processing. Consequently, starting this October, domestic companies wishing to export cosmetics to the Indonesian market must unconditionally secure certification recognized by the Indonesian Halal Product Assurance Organizing Agency (BPJPH). Fortunately, five domestic organizations, including the Korea Testing Certification Institute (KTC), have signed Mutual Recognition Agreements (MRAs) with local Indonesian authorities, opening up a path to undergo evaluation domestically. However, passing the evaluation criteria itself is an entirely different matter.

Instead of taking the extreme measure of immediately banning imports of uncertified products, the Indonesian government has made it mandatory to display the text "Non-Halal" on containers, indicating that the product does not comply with Islamic law. However, trade experts commonly point out that this is virtually no different from a "sentence of expulsion" from the market.

Jang Gun, director of the Korea Institute of Halal Industry, emphasized, "For Muslims, Halal is not a religious procedure; it is a lifestyle and a philosophy of life itself." Director Jang explained, "Excluding a very small number of ultra-expensive global luxury brands, for the vast majority of mid-to-low-priced K-Beauty products, the presence of Halal certification will serve as an absolute standard dictating local consumers' choices." He added, "In a situation where competing local products simultaneously mount the shelves with the Halal mark, it is physically impossible for Korean products to compete while branded with the 'Non-Halal' stigma."

In fact, the Islamic market has recently served as a solid breakthrough for the Korean cosmetics industry, which had been agonizing over sluggish exports to China. Countries such as Malaysia, the United Arab Emirates (UAE), Saudi Arabia, and Türkiye are rapidly emerging as core consumers of K-Beauty. According to statistics from the Korea Institute of Halal Industry, Korea's cosmetics exports to the Organisation of Islamic Cooperation (OIC) member states recorded 1.22608 billion dollars last year. The proportion of the Islamic market out of total global cosmetics exports was a mere 4.3% in 2021, but it skyrocketed to 10.7% as of last year, expanding its territory to a level 2.5 times higher in just four years. The MFDS also forecasts that the global Halal cosmetics market size will expand from 87 billion dollars in 2023 to 118 billion dollars by 2028, meaning that losing this market equates to losing the future growth engine of K-Beauty.

■ Conglomerates Complete ‘Pork-Free’ Systems via Capital Power… SMEs Are Thoroughly Marginalized

The problem is that while this vast land of opportunity lies right before them, the polarization within the domestic cosmetics industry is intensifying to an extreme degree. Beauty conglomerates, equipped with massive capital power and specialized personnel, built dedicated production lines early on and completed proactive responses.

Amorepacific, a leader in the domestic cosmetics industry, recognized Indonesia's regulatory movements in advance and underwent a meticulous preparation process from years ago. An official from Amorepacific stated, "Beginning with the product certification of major brands with high local awareness, such as Innisfree and Happy Bath in 2024, we fully completed Halal certification for major related production facilities, including Indonesian operations, by last year." Amorepacific has currently acquired final certification for more than 200 items and has completely eliminated legal risks by mandating the application of a "Pork-free" system that fundamentally excludes pig-derived ingredients from all raw materials input into local manufacturing processes.

On the other hand, the SMEs and newly emerging indie brands that sustain the backbone of the domestic cosmetics ecosystem are on the verge of bankruptcy in the face of the now-visible regulatory barriers. This is because the essence of Halal certification does not stop at ingredient testing of the finished product, but rather lies in tracking and proving the cleanliness and harmlessness of the entire process, "from the extraction of raw materials to manufacturing, processing, storage, and distribution."

The CEO of a functional cosmetics manufacturing SME located in Gyeonggi Province expressed his grievances, saying, "To receive Halal certification, we must exclude alcohol ingredients and individually prove the source of commonly used animal and plant raw materials." He continued, "Above all, the biggest obstacle is the physical separation of space. When producing Halal products, manufacturing facilities and distribution lines must be operated completely independently to block cross-contamination with general products containing ingredients forbidden in Islam. Overhauling existing cramped factory structures or introducing additional dedicated facilities is an area impossible to handle with the financial independence of an SME."

■ High Certification Costs and Complex Renewal Procedures… Effective Financial and Administrative Support from the Government Is Urgently Needed

Another barrier blocking small and medium-sized enterprises is the immense cost and administrative inefficiency. Certifying a single item alone costs anywhere from several million won to tens of millions of won. Given the nature of cosmetics, where companies often possess dozens of colors or product lineups, the total certification cost for SMEs ends up reaching hundreds of millions of won. Adding to this the cost of maintaining and renewing certifications, which typically occurs every two years, creates a situation where the tail wags the dog.

Considering that K-Beauty has dominated the global market using the weapons of SME creativity and swift product launches (Agility), these rigid certification procedures and high cost barriers could result in paralyzing the "trend responsiveness" that is the strongest weapon of SMEs. Products must be supplied in a timely manner to match the timing requested by local buyers, but instances where export contracts fall through because companies are left waiting through months of Halal evaluation periods are occurring frequently.

The government is also subsidizing some certification costs through export voucher projects targeted at SMEs, but the prevailing criticism is that this is merely a one-time financial subsidy and falls short of solving the fundamental problems on the ground. Industry experts suggest that the government should take the lead in establishing "Dedicated K-Beauty Halal Certification Standard Joint Consignment Production Facilities (OEM/ODM)" that SMEs can use collectively, or construct a certified Halal raw material database (DB) from the raw material supply stage to match companies, thereby activating more practical and macroeconomic infrastructure support measures.

The Islamic market, centered around Southeast Asia and the Middle East, is a land of golden opportunity that can never be abandoned for the sustainable growth of K-Beauty. This coming October, before the trade barrier stemming from Indonesia becomes a reality, if a close win-win cooperation model among the government, academia, and large and small enterprises is not built, we must heavily accept the stern warning that the glory of K-Beauty will shrink into the exclusive property of a minority of conglomerates equipped with capital.