Blog Category Islamic
Blog description Indonesia Maintains Third Place in State of the Global Islamic Economy (SGIE) Report 2024/2025: Strategic Steps Toward Becoming a Global Islamic Economic Hub
Key Facts & Context
- Indonesia secured 3rd place in the SGIE 2024/2025 rankings, compiled by DinarStandard (in partnership with other organisations) across 81+ countries. The Halal Times+3DinarStandard+3Antara News+3
- The report assesses performance across seven key sectors of the Islamic economy: halal food; Islamic finance; modest fashion; halal cosmetics & pharmaceuticals; Muslim-friendly tourism; media & recreation; and halal investment. iaei-website+2DinarStandard+2
- Indonesia’s ranking history shows a strong upward trajectory: from 10th/11th around the first editions of the index, to 5th in 2019–20, 4th for two cycles, and now 3rd. Antara news
- Sector highlights for Indonesia:
- Modest fashion: Ranked 1st globally for Indonesia in SGIE 2024/2025. iaei-website
- Muslim-friendly tourism: Indonesia is 2nd globally in this segment. iaei-website
- Halal cosmetics & pharmaceuticals: Also 2nd globally. iaei-website
- Halal food: Positioned 4th globally; a key area of untapped export strength.iaei-website
- Islamic finance: Ranked 6th globally, showing growth potential.antara news + 1
- Modest fashion: Ranked 1st globally for Indonesia in SGIE 2024/2025. iaei-website
- Investment in the halal/Islamic economy in Indonesia has surged: in 2023 Indonesia completed 40 transactions worth USD 1.6 billion, the highest globally among OIC member countries. Antara news
Why This Matters
- Indonesia, with its large Muslim-majority population and growing middle class, has both demand-side strength and market size for the global Islamic economy.
- The global halal economy is projected to expand substantially (e.g., consumer spend across key sectors projected to rise to ~US$3.36 trillion by 2028) which makes Indonesia well-positioned to capture a meaningful share. Dinar standard
- Maintaining a top-3 position enhances Indonesia’s brand and credibility as a halal/Islamic economic hub. It signals to international investors, trade partners and Muslim-consumers worldwide that Indonesia is a serious player.
Strategic Steps & Recommendations for Indonesia to Rise Further
To move beyond 3rd and aim for the top spot, Indonesia’s path involves several strategic actions:
1. Strengthen institutional frameworks
- Transform the current coordinating body KNEKS (National Committee for Sharia Economics & Finance) into a more robust executive agency (sometimes called the Islamic Economy Agency). This would give clearer mandate, budget and regulatory coordination across ministries.the halal time +1
- Streamline governance and minimize overlapping bureaucracy so that multi-sectoral initiatives (finance + halal industry + tourism + trade) can be executed with agility.
2. Enhance export, certification & supply-chain capabilities in key sectors
- While Indonesia ranks high domestically in modest fashion, tourism, cosmetics & pharma, its halal food export capability remains weaker. Certification recognition, international standards alignment and supply-chain integration are vital. iaei-website
- Boost halal certification accreditation globally, support SMEs in meeting export‐ready standards, and invest in making Indonesia a hub for halal manufacturing for global markets.
3. Deepen Islamic finance ecosystem
- Though Indonesia ranks 6th overall in Islamic finance, there is significant scope to grow market share, product innovation (fintech, green sukuk, digital Islamic banking) and inclusion of underserved regions. uinjkt.ac.id+1
- Integrate Islamic finance more closely with the halal industry — e.g., financing halal supply-chains, Islamic venture capital for halal startups, Islamic fintech for modest fashion or halal tourism.
4. Leverage digitalization, innovation & global partnerships
- Encourage fintech, e-commerce, digital halal assurance tools (blockchain, AI) and social commerce to capture younger Muslim consumers globally. Dinar standard
- Forge international trade partnerships (e.g., halal export agreements, mutual recognition of standards) to widen market reach.
- Promote Indonesia’s regional strengths (ASEAN access, geography, culture) as a gateway for halal products into East Asia and beyond.
5. Build talent, awareness & domestic ecosystem
- Raise halal/Islamic economic literacy, especially in less-developed regions, and support MSMEs in entering the halal market. The halal times .
- Support branding of Indonesian halal goods and services overseas; improve marketing, packaging, global positioning so that “Made in Indonesia” becomes synonymous with high-quality halal goods.
- Ensure sustainable and ethical practices (environmental, social, governance) are embedded in halal industry; international consumers increasingly require such credentials.
Outlook & Ambition
- Indonesia has publicly set a goal of becoming the top Islamic economy by around 2028 or 2029. Antara News+1
- If current momentum continues, Indonesia could not only solidify its top-3 status but challenge the leaders (such as Malaysia and Saudi Arabia) for the #1 spot.
- Success will depend on coordinated implementation, reducing bottlenecks (certification, export readiness, finance market share), and leveraging its demographic and geographic advantages.
Challenges to Watch
- Certification and export standards: Without internationally-recognised halal certification, export growth remains constrained. iaei-website
- Islamic finance market share: Still behind leading nations; improvement needed in penetration and product variety.
- Institutional fragmentation: Multiple ministries, agencies, and coordination challenges can slow progress.
- Branding & global recognition: Indonesian halal products may lag competitors in global branding.
- MSME inclusion: Smaller businesses often lack resources to meet standards or scale globally.
Indonesia has again ranked third in the State of the Global Islamic Economy (SGIE) Report 2024/2025 released by DinarStandard. This achievement confirms the consistency and resilience of the national Islamic economy in the face of global dynamics, while opening opportunities for Indonesia to lead the halal sector regionally and internationally.
As an annual report that serves as a strategic reference for the Organization of Islamic Cooperation (OIC) countries, SGIE 2024/2025 evaluates the performance of the Islamic economy from seven main sectors: halal food, Islamic finance, modest fashion, halal cosmetics and pharmaceuticals, Muslim-friendly tourism, media and recreation, and halal investment. Using the Global Islamic Economy Indicator (GIEI), Indonesia managed to maintain its position after Malaysia and Saudi Arabia.
In the latest SGIE report, Indonesia ranked first in the modest fashion sector, ahead of countries such as Turkey and the United Arab Emirates. This excellence is not only aesthetic, but reflects the competitiveness of the creative economy based on Islamic values and culture. Local brands such as Zoya, Elzatta, Buttonscarves, and Shafira represent the successful synergy between industry players, the hijabers community, and inclusive export policies. The government through the National Committee for Sharia Economics and Finance (KNEKS) continues to encourage the participation of local brands.
Indonesia also boasts strong performance in the Muslim-friendly tourism sector and halal cosmetics and pharmaceuticals, each ranking second globally. Lombok, Aceh, Yogyakarta, and several other regions are being developed as spiritual and ethical destinations, complete with prayer facilities, halal cuisine, and integrated local values. On the other hand, Indonesia’s halal cosmetics and pharmaceuticals are growing rapidly through innovations based on natural ingredients and consumer awareness of Muslim-friendly products. Brands such as Wardah, Kahf, and ElsheSkin are emerging as pioneers in an industry increasingly aligned with sustainability and ethical trends.
The halal food sector, which should be the backbone of the real sharia economy, has dropped to fourth place. Despite high domestic consumption, Indonesia has not yet entered the top five global halal product exporters. The main challenge is that national halal certification is not yet fully recognized internationally. Harmonization of standards, halal diplomacy, and strengthening the supply chain are seen as key to expanding Indonesia’s market penetration into the Middle East, Europe, and South Asia.
In the Islamic finance sector, Indonesia ranks sixth. The domestic Islamic finance market share remains below 11%, compared to Malaysia, which exceeds 40%. However, positive trends are evident through the growth of Islamic fintech, the digitalization of zakat and wakaf services, and the issuance of Green Sukuk by the government. Islamic economists urge the integration of the Islamic finance sector with the halal industry as a model for inclusive financing focused on social welfare.
The most notable achievement in the SGIE 2024/2025 is Indonesia’s success in recording the highest halal investment in the world. A total of 40 transactions worth USD 1.6 billion were realized throughout 2023, covering the halal food, cosmetics, pharmaceuticals, halal technology, and Muslim lifestyle sectors. This figure demonstrates investor confidence in Indonesia’s halal ecosystem, while also strengthening the country’s role as a global halal investment hub. The government supports this achievement through the provision of digital platforms, mapping regional potential, and improving the regulatory climate. As the country with the largest Muslim population and vibrant Islamic cultural diversity, Indonesia has the moral legitimacy to lead the global Islamic economy. However, such leadership cannot be built solely on numbers but must be strengthened by institutional foundations, export strategies, and halal diplomacy.
Malaysia has led the SGIE for over a decade with an integrated global certification strategy. Saudi Arabia has emerged with its Vision 2030 and the expansion of the PIF sovereign wealth fund into the halal sector. Even Senegal has seen an 18-rank increase thanks to regulatory reforms and export support.
Achievements in the SGIE 2024/2025 demonstrate that Indonesia’s Islamic economy is not only growing but has become part of the mainstream of global development. The government has set a target to secure the top position in the SGIE by 2028, in line with the broader agenda of the RPJPN 2025–2045.
“Indonesia must not be content with third place. We must become the leader of the global Islamic economy,” Vice President Ma’ruf Amin concluded in his speech at the launch of the SGIE 2024/2025.
However, to realize this vision, multisectoral collaboration between regulators, industry players, academics, and the community is needed. IAEI, as an institution of Islamic economic science and advocacy, must continue to promote public education, institutional strengthening, and the involvement of the younger generation in shaping the future of Indonesia’s halal economy
In Summary
Indonesia’s maintenance of 3rd place in the SGIE 2024/2025 report is a significant milestone and reflects a decade of deliberate efforts to build a comprehensive Islamic economy ecosystem. With its large domestic market, strong sectoral performance (especially modest fashion, halal pharma/cosmetics, tourism) and growing investment flows, Indonesia is well-positioned to become a global hub for halal industry and Islamic finance.
However, moving from a strong contender to global leader will require focused strategies: institutional reform, export readiness in halal food, deeper integration of Islamic finance, digital innovation, international branding and MSME support. If successfully executed, Indonesia could well achieve leadership within the next few years.
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Mushtabi Fatma is a writer and researcher exploring Islamic economics, global halal industry developments, and the evolving role of faith-based markets in modern society. Her work focuses on connecting economic insight with cultural context, empowering readers to understand global trends through a thoughtful, value-driven lens.
Notes (if any)
- Highlight the specific sectors where Indonesia excelled (modest fashion, tourism, pharmaceuticals & cosmetics).
- Mention the transformation of KNEKS into a stronger institutional authority as a major milestone.
- Include a brief comparison with top competitors (e.g., Malaysia & Saudi Arabia) to show context.
- Emphasize halal food export potential as a key growth opportunity for Indonesia.
- Consider adding quotes from Indonesian government statements or SGIE officials for credibility.
- Embed charts or infographics from the SGIE report to visually support the ranking.
- Link to official sources for readers interested in the full SGIE 2024/25 report.
- Include future outlook: Indonesia’s target to become the #1 global Islamic economy in coming years.
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