South Korea Expands into Indonesia’s Halal Market

South Korean businesses are setting their sights on a rapidly expanding opportunity: Indonesia’s halal market. In October 2024, the South Korean Ministry of Agriculture, along with Korea Agro-Fisheries and Food Trade Corporation (aT Center), brought six prominent South Korean food brands to the Franchise & License Expo Indonesia (FLEI) held at Jakarta Convention Center (JCC). Their goal was clear: introduce South Korean franchises into Indonesia’s burgeoning market for halal-certified, global cuisine.

Indonesia, home to the world’s largest Muslim population, is driving global demand for halal products, including food, cosmetics, and pharmaceuticals. As of recent years, Indonesia’s halal food market has seen annual growth rates between 5% and 8%, making it a compelling destination for international brands, especially as the country aims to become the global leader in halal tourism and trade by 2025.

Korean Cuisine Seeks a Place in Halal Market

South Korea’s growing interest in Indonesia’s halal market aligns with broader trade initiatives between the two nations. The aT Center, as a governmental body, supports South Korean businesses in their efforts to penetrate the Indonesian market, specifically with halal-compliant products to accommodate Indonesia’s Muslim-majority population. Six popular South Korean restaurants—Cravy for Chicken, Pizza Maru, Twozzim, Bobaebanjum, Yeok Jeon Halmaek, and Samcheop Bunsik—participated in the expo, showcasing their unique takes on Korean cuisine at the Korea Pavilion.

According to Lee Seung Hoon, Head of aT Center Jakarta, Korean food offers a distinct flavor profile that stands out against other Asian cuisines popular in Indonesia, such as Chinese and Japanese food. This diversity makes Korean food a fresh choice for Indonesian consumers who are interested in trying new, international dishes while maintaining their halal dietary requirements.

“Indonesian food is actually similar to Korean food in some respects,” Lee remarked during the expo. “For instance, Indonesia has sambal, a spicy chili paste, while Korea has gochujang, our own spicy fermented condiment. The major difference, however, is that Korean food often uses fermented ingredients and more vegetables, making it a bit healthier, which we believe will appeal to the Indonesian market.”

The Push for Halal Certification

To succeed in Indonesia’s halal market, South Korean brands must earn halal certification—a requirement that signifies their compliance with Islamic dietary laws. The six South Korean brands participating in the expo are currently working on this crucial certification, facing challenges like factory sterilization and sourcing halal-compliant ingredient substitutes. Originally aiming for certification by October 2024, some brands have encountered delays, but they remain committed to achieving certification soon. Bobaebanjum, one of the Korean brands specializing in beverages, is pushing to secure halal certification for all its offerings by the end of the year.

Halal certification is pivotal for Korean brands to build trust with Indonesian consumers. This trust not only broadens market reach but also establishes a loyal customer base, critical for long-term success in Indonesia’s food industry.

Indonesia-South Korea Economic Ties

Beyond just food, South Korea and Indonesia enjoy strong bilateral relations, with trade partnerships strengthening in recent years. South Korea has consistently ranked among Indonesia’s top ten trade partners, with both countries working toward a bilateral trade goal of $30 billion by 2025. The Indonesian government’s emphasis on economic diversification has paved the way for foreign businesses to invest in sectors like food and beverage, tourism, and hospitality, encouraging South Korean brands to explore Indonesia’s halal market as a lucrative avenue.

Indonesia’s halal food industry was valued at over $100 billion in 2023, representing nearly 13% of the global halal food market, according to recent industry reports. This sizable market share indicates not only the current demand but also the immense potential for growth in the coming years as Indonesia strengthens its position as a global halal hub.

Koreans Seek Partnerships in Indonesia

The Franchise & License Expo Indonesia (FLEI) marked a significant step for South Korean brands in tapping into Indonesia’s expanding halal market. Through this platform, Korean franchises sought not only visibility but also collaboration opportunities. The event concluded with multiple Memoranda of Understanding (MoUs), totaling over $2.2 million (approximately Rp35 billion), signed by the six participating Korean brands.

Korean franchises are also making attractive financial propositions to Indonesian investors, with investment packages for franchises starting at Rp2 billion. Many of these franchises project a return on investment (ROI) within five years, appealing to investors who are eager to bring established international brands to local consumers. The promise of halal certification further strengthens their position in Indonesia, where consumers increasingly prioritize halal compliance across products and services.

The Indonesian Palate

The similarities between Indonesian and Korean cuisine provide an edge for South Korean brands. Spicy flavors are beloved in both cultures, making Korean food more accessible and relatable for Indonesian consumers. Korean food’s focus on fermented vegetables and health-conscious ingredients appeals to a growing demographic of Indonesian consumers who value nutrition and wellness.

Korean brands have also observed a notable rise in the popularity of Korean pop culture, music, and media in Indonesia. The Hallyu, or Korean Wave, has fostered a greater interest in Korean cuisine, which often features prominently in popular Korean dramas and films. By introducing these familiar flavors in a halal-certified manner, South Korean brands can better cater to Indonesian tastes while embracing the Muslim consumer base.

Indonesia’s Halal Market

Indonesia’s commitment to becoming a global halal hub by 2025 positions the country as an essential destination for halal-certified brands. The country’s halal economy has seen significant investment from government and private sectors, with initiatives ranging from halal tourism to halal product certifications, which simplify market entry for foreign brands.

The Indonesian government’s Halal Product Assurance Agency (BPJPH) has streamlined halal certification processes in recent years, making it more accessible for international brands. By working with local certification bodies, South Korean brands have been able to expedite the process, making it easier to enter the Indonesian market with halal-compliant products.

Challenges for Korean Brands

While the potential is vast, South Korean brands face several hurdles in establishing a solid presence in Indonesia. Ingredient sourcing is one such challenge, as many Korean recipes traditionally use ingredients that are not inherently halal, like certain types of meat or seasonings. Ensuring that these are replaced with halal alternatives without compromising flavor requires careful adaptation and quality control.

Moreover, production standards must be aligned with halal practices, a process that requires Korean brands to adjust factory sterilization and ingredient substitution practices to meet Indonesia’s strict halal standards. However, with the right approach, these brands can turn these challenges into opportunities by showcasing their commitment to producing high-quality, halal-compliant offerings.

A Shared Future in the Halal Economy

Indonesia and South Korea’s collaboration in the halal sector is a natural extension of their growing economic and cultural ties. As the demand for halal products continues to rise globally, South Korean brands stand to gain from Indonesia’s expanding halal market. With efforts to establish halal-certified Korean food franchises, both nations are fostering a relationship that enhances trade and satisfies consumer demand for quality halal options.

For South Korean brands, Indonesia is more than just an export destination; it is a gateway to the larger Southeast Asian market, where demand for halal-certified products is expected to grow. As a trusted partner, Indonesia offers a unique opportunity for South Korean brands to build a meaningful presence in one of the world’s fastest-growing halal markets.

In tapping into Indonesia’s halal market, South Korean brands not only expand their reach but also set a new standard for halal-compliant global cuisine, bringing flavors and products that celebrate diversity and cater to the dynamic preferences of Indonesian consumers. This partnership illustrates how cultural understanding, respect for religious practices, and a shared vision can lead to successful cross-border business ventures.