Japanese Food Firms Show Growing Interest In Indonesia

In the bustling streets of Jakarta, where the aroma of street food mingles with the hum of motorbikes, a quiet revolution is brewing. It’s not the kind of revolution that makes headlines, but one that’s transforming the way global food industries connect with one of the world’s largest consumer bases. Japanese food companies, long celebrated for their precision and innovation, are setting their sights on Indonesia, a nation of 280 million people, where nearly 90% of the population adheres to Islamic dietary laws. This growing interest isn’t just about exporting sushi or ramen—it’s about embracing the halal market, a trillion-dollar industry that’s reshaping global trade. From noodle makers in Hyogo to seasoning giants like Ajinomoto, Japanese firms are navigating the complexities of halal certification to win over Indonesian consumers. But why Indonesia, and why now? The answer lies in a potent mix of economic opportunity, cultural alignment, and a rapidly expanding middle class hungry for quality.

Related: How Japanese Businesses Can Thrive in the Halal Food Industry?

Indonesia’s food and beverage sector is a goldmine, projected to grow at a compound annual growth rate of 8% through 2028, according to industry analysts. With a population that’s young, increasingly affluent, and deeply rooted in Islamic traditions, the country offers a unique opportunity for foreign investors. Japanese companies, facing a shrinking domestic market due to an aging population, see Indonesia as a gateway to Southeast Asia’s 700 million consumers, 40% of whom reside in this archipelago. The ASEAN Economic Community (AEC), launched in 2015, has further sweetened the deal by easing trade barriers and fostering regional integration. For Japan, a nation with a reputation for technological prowess but a less prominent global food presence, this is a chance to redefine its culinary footprint.

The journey, however, is not without hurdles. Halal certification, a prerequisite for tapping into Indonesia’s Muslim-majority market, is a rigorous process that demands meticulous attention to ingredients, production lines, and supply chains. For Japanese firms, accustomed to domestic standards, this means rethinking everything from sourcing raw materials to packaging. Take the case of a noodle company from Hyogo Prefecture, which, in 2014, expressed its readiness to meet Indonesia’s halal requirements, as reported by Tempo.co. This wasn’t just about tweaking a recipe—it involved overhauling production processes to ensure no cross-contamination with non-halal ingredients like pork or alcohol. Such adaptations are costly and complex, yet the potential rewards are staggering: access to a market where halal food sales are expected to reach $4 trillion globally by 2028.

The allure of Indonesia goes beyond numbers. Japanese food, with its emphasis on quality, hygiene, and umami, resonates deeply with Indonesian tastes. Sushi, ramen, and tempura have become staples in urban centers like Jakarta and Surabaya, where a growing middle class dines out with increasing frequency. But it’s not just about exporting ready-made dishes. Japanese firms are investing in local production, leveraging Indonesia’s abundant raw materials like rice, fish, and spices. The Japan International Cooperation Agency (JICA) noted in 2014 that Indonesia’s food sector is a “lucrative investment opportunity” due to its large population and resource availability. This has led to a wave of foreign direct investments, with 20 Japanese food and beverage companies committing between $400 million and $1 billion to the sector, according to Tempo.co.

One of the pioneers in this space is Ajinomoto, a Tokyo-based seasoning giant that has operated in Indonesia since the 1970s. Its monosodium glutamate (MSG) products, branded as halal, are a household staple across the archipelago. However, Ajinomoto’s journey hasn’t been without controversy. In 2001, the company faced a crisis when Muslim authorities accused it of using pork-derived enzymes in its MSG, despite halal labeling, leading to the detention of executives and a temporary factory shutdown, as reported by The New York Times. The incident underscored the sensitivity of halal compliance and the need for transparency. Ajinomoto swiftly reformulated its products, rebuilt trust, and now stands as a model for Japanese firms navigating Indonesia’s halal landscape.

The halal market’s growth isn’t just about food—it’s about trust. For Indonesian consumers, halal certification is more than a label; it’s a guarantee of purity and adherence to Islamic principles. This is where Japanese firms have an edge. Japan’s reputation for precision and quality aligns with the halal concept of “tayyib,” meaning wholesome and pure. Companies like Nichiin Food Creative Corporation, which established a halal-certified curry factory in Malaysia, are now eyeing Indonesia for expansion. Their Maharaja Curry brand, certified by Malaysia’s JAKIM authority, is a hit in multiple countries, and Indonesia’s proximity and market size make it a natural next step. Similarly, House Foods Group, known for its spices and tofu, launched a halal-certified factory in Indonesia in 2016, catering to local tastes with curry products tailored for the market.

The Indonesian government is rolling out the red carpet for such investments. In 2014, it mandated halal labeling for all food products, a policy that, while delayed until 2024 due to implementation challenges, signals a commitment to strengthening the halal ecosystem. Vice President Ma’ruf Amin has actively courted Japanese companies, urging them to share technology and expertise to bolster Indonesia’s halal industry, as noted by Cekindo. This collaboration extends beyond food production to human resource development, with Japan offering training programs to enhance halal certification processes. The Indonesian Ulama Council (MUI), a key authority on halal standards, works closely with Japanese firms to ensure compliance, fostering a partnership that benefits both sides.

Yet, the path to success is fraught with challenges. Halal certification in Indonesia is overseen by the Halal Product Assurance Agency (BPJPH), which requires rigorous audits of ingredients, manufacturing processes, and even transportation. Unlike Japan, where halal certification is managed by over 30 private bodies with varying standards, Indonesia’s system is state-centric, adding layers of bureaucracy. Japanese firms must also contend with cultural nuances. For instance, soy sauce, a staple in Japanese cuisine, often contains alcohol, rendering it haram (forbidden). Companies like Kikkoman have developed alcohol-free versions, but scaling such innovations for Indonesia’s mass market requires significant investment.

Competition is another hurdle. Indonesia’s halal market is already crowded with players from Malaysia, Thailand, and Turkey, all of whom have a head start in catering to Muslim consumers. Turkish brands like Sütaş and Koska dominate halal dairy and desserts, while Indonesia’s own Mie Sedaap noodle brand holds a strong local presence. Japanese firms must differentiate themselves by leveraging their technological edge—think advanced packaging that preserves freshness or fermentation techniques that enhance flavor without compromising halal standards. The Japan External Trade Organization (JETRO) is supporting this effort by establishing export platforms, such as one in the UAE, to help Japanese companies navigate halal requirements and expand into Muslim-majority markets, including Indonesia.

The rise of Muslim-friendly tourism is another driver of Japan’s interest in Indonesia. In 2023, Indonesia sent 840,000 tourists to Japan, a number that has doubled over the past decade, according to the Japan National Tourism Organization. These visitors, many of whom seek halal food, have spurred Japanese restaurants to obtain halal certification. Apps like Halal Navi, developed in Japan, guide Muslim tourists to certified eateries, with its user base growing from 1,000 in 2023 to 12,000 by late 2024, as reported by The Asahi Shimbun. This tourism boom has a reciprocal effect: as Japanese firms cater to Indonesian visitors, they gain insights into their preferences, which inform product development for the Indonesian market.

For Japanese companies, the stakes are high. Indonesia’s halal industry is projected to reach $9.71 trillion globally by 2025, with Southeast Asia and the Middle East as key growth regions. Japan, traditionally a minor player in halal exports compared to countries like Australia or Brazil, is catching up. The government’s push to increase halal food exports, as highlighted by FoodNavigator-Asia, aims to boost “brand Japan” and drive tourism. Events like Food Japan 2017 in Singapore showcased Japanese firms like Kuki Sangyo, which produces halal-certified sesame products, signaling Japan’s ambition to become a halal powerhouse.

The cultural exchange is equally significant. Japanese firms are not just exporting products—they’re learning from Indonesia. Local cuisines like rendang and soto inspire Japanese chefs to create halal versions of traditional dishes, blending umami with Indonesian spices. This fusion is evident in products like halal-certified miso, which Kanasago Foods exports to Southeast Asia. Such innovations reflect a broader trend: globalization is no longer a one-way street. As Japanese firms adapt to Indonesia’s halal standards, they’re also enriching their own culinary heritage.

The road ahead is complex but promising. Japanese companies must invest in education to demystify halal requirements for their workforce. Partnerships with Indonesian institutions, like the MUI or universities, can facilitate knowledge transfer. Infrastructure investments, such as halal-compliant logistics networks, are also critical. Japan’s Sumitomo Mitsui Banking Corp is exploring funding for food companies expanding in Southeast Asia, a move that could accelerate Japanese investments in Indonesia.

For Indonesian consumers, the influx of Japanese brands means more choices and higher standards. Halal food, often perceived as hygienic and ethical, appeals to non-Muslims as well, broadening the market. As Japanese firms refine their offerings, they’re not just feeding Indonesia—they’re building bridges between cultures. The noodle maker from Hyogo, the curry producer in Malaysia, and the seasoning giant in Tokyo are all part of a larger story: one where precision meets faith, and global trade becomes a shared feast.

In the end, Japan’s growing interest in Indonesia’s halal market is more than a business venture—it’s a testament to the power of adaptation. As these companies navigate the intricacies of halal certification, cultural differences, and competitive pressures, they’re proving that the future of food lies in understanding and respecting the values of others. For Indonesia, it’s a chance to welcome a new wave of innovation. For Japan, it’s an opportunity to share its culinary legacy with a world that’s ready to savor it.