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The Importance of Optimization of Halal Tourism: A Study of development of

Halal Tourism in Indonesia

Conference Paper · May 2017

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 THE IMPORTANCE OF OPTIMIZATION OF HALAL TOURISM:
A STUDY OF THE DEVELOPMENT OF HALAL TOURISM IN

INDONESIA

Majang Palupi*
majang_palupi@uii.ac.id
Rizqi W. Romadhon
rizqiwr@students.uii.ac.id
Nur Arifan
14311557@students.uii.ac.id

Universitas Islam Indonesia, Yogyakarta, Indonesia

Digitally signed by Rizqi Wahyu
Romadhon
Rizqi DN: cn=Rizqi Wahyu Romadhon
gn=Rizqi Wahyu Romadhon
Abstract c=Indonesia l=ID o=Universitas
Wahyu Islam Indonesia ou=Faculty
Halal tourism is a part of tourism industry which is based on Islamic
EconomicsPrinciples
e=rizqiwr@students.uii.ac.id
Romadho
and addressed to the Muslim tourist. The potency of Halal tourism is very broad
Reason: I am the author of this
to be developed, because the growth of Muslim populations increased
document rapidly.
Location: Faculty of Economics,
n
Indonesia is one of the biggest country with the largest MuslimUII
therefore its human resources and natural resources have very Date:
population,
good2017-05-31
potential10:10+07:00
to
be part of the Halal tourism industry. However, in fact all these potentials have
not been optimized very well as what the neighboring countries did. Hence, this
paper will discuss the underlying reasons to develop Halal tourism, and the
factors influencing the success of developing Halal tourism in Indonesia, and also
the optimization strategies which can be adopted by the government so that Halal
tourism industry in Indonesia has a sustainable competitive advantage. This is a
literary study relying mostly on the practice of Halal tourism data in Indonesia
derived from the studies by Indonesian Ministry of Tourism. The outcome of this
research is expected to assist and support the Indonesian government, tourism
agents and other stakeholders to optimize the potentials of Indonesia’s abilities
and capacities to develop Halal tourism industry in Indonesia in order to compete
with other countries.
Keywords: Halal Tourism, Islamic Principle, Optimization, Sustainable
Competitive Advantage

I. INTRODUCTION

N owadays, Halal tourism is becoming very attractive to be developed, not only for Muslim
majority country, but also for the Muslim minority countries. With the rapid growth of
Muslim populations, the industry must be well prepared to meet the needs of Muslim travelers.
Global Muslim population is estimated to be around 1.4 billion. In Indonesia, Malaysia, Middle East
and some Maghreb countries, the growth of Halal tourism market is rapidly increasing in terms of
GDP (Di Foggia, Lazzarotti and Pizzurno, 2012).
It is important to understand Muslims’ tourist needs and behavior in order to create a suitable
product for halal tourism market (Shafaei and Mohamed, 2015). Based on research conducted by
Mastercard and CrescentRating (2015a), Muslim travelers in 2014 accounted to 108 billion visitors
which represent 10% of the entire travel economy. In 2015 it was estimated that there were 117
million of Muslim international travelers. This number is projected to grow to 168 million by 2020,
where the travel expenditure by Muslim travelers is expected to exceed $200 billion.

*Corresponding Author: Majang Palupi, BBA., MBA is with Islamic University of Indonesia, Faculty of Economics, St
Prawirokuat, Condong Catur, Depok, Sleman, Yogyakarta (55281), Indonesia, email: Majang_Palupi@uii.ac.id

1
 Battour & Ismail (2016) define Halal tourism as any tourism object or action which is permissible
according to Islamic teachings to be used or engaged by Muslims in tourism industry while the
Indonesian Ministry of Tourism defines Halal tourism as an activity supported by facilities and
services provided by society, entrepreneur, government, and local government that is Sharia
compliant (Kemenpar, 2012). Principles in Islamic teaching play an important role in influencing
Muslim’s decisions. Zamani-Farahani & Henderson (2010) mentioned the Islamic Principles to obey
by the Muslims, which prohibit adultery, gambling, consumption of pork and other haram foods,
selling and/or drinking liquor, dressing inappropriately, displaying affection in public, shaking hands
or having any physical contact between members of the opposite sex. In consequence, the
stakeholders in tourism industry must pay attention to these Islamic principles to fulfill the Muslims
travelers’ needs. One of the industries highly affecting economy of a country is tourism industry.
Indeed in some countries, tourism is the top three industries (Goeldner and Ritchie, 2006).
Indonesia is a Muslim majority country. The potency of Halal tourism industry in Indonesia is
superior compared to other countries (Zuhri, 2016). Halal tourism industry could become one of the
essential economic pillars of Indonesia. Unfortunately, this sector has yet to be optimized very well
apart from the fact that Indonesia has a good potential in terms of human resources and natural
resources. The number of Muslim visitor to Indonesia is only 2 million tourists, not as much the
number of visitors of the neighboring countries such as Malaysia which tracks 6 million Muslim
tourists (Hidayat, 2016). Hence, optimization in Halal tourism industry in Indonesia is indispensable.
This research is expected to be able to answer the following critical questions in terms of the
development of Halal tourism in Indonesia: (a) how is the development of Halal tourism industry in
Indonesia, (b) what factors can influence the success of Halal Tourism Industry, and (c) what are the
strategies that can be used in developing Halal tourism in Indonesia. Finally this research will offer
further opportunity in this area which can help shedding light on how far is the efforts have been
made to make Halal torism become part of the national tourism industry which then can turn
Indonesia as the center for Halal tourism worldwide in the future.

II. METHODOLOGY
This study used the literature review to describe the development of Halal Tourism Industry in
Indonesia, and then conceptualize the strategies which may be used by the stakeholders to develop
Halal tourism industry in Indonesia. These strategies are expected to be able to be used by the
government so that the Halal tourism industry in Indonesia has a sustainable competitive advantage.
This study also adopted literary research for data collection technique.

III. DISCUSSION
A. Current Halal Tourism Industry in Indonesia
Indonesia is the biggest country with around 250 million populations and 88% of them are Muslim.
Indonesia is also the biggest archipelago with more than 17.000 islands, 300 distinct native
ethnicities, and 746 different languages and dialects. Indonesia’s economy has enormous promise,
already the 16th largest economy in the world, Indonesia has the potential to be the seventh biggest
economy in the world by 2030 (McKinsey Global Institute, 2012).
Indonesian government started to develop Halal tourism industry since 2012 (Micom, 2016).
Seeing the great opportunity for increasing the contribution of tourism industry to the Indonesian
economy. Indonesian Government through the Ministry of Tourism has set 13 provinces in Indonesia
namely West Nusa Tenggara, Nangroe Aceh Darussalam, West Sumatra, Riau, Lampung, Banten,
DKI Jakarta, West Java, Central Java, Yogyakarta, East Java, South Sulawesi, and Bali as Halal
tourism destinations. These destinations are determined based on the readiness of its Human
resources, Culture, Regional tourism product, and accommodation (Andriani et al., 2015). The
development of Halal tourism industry in Indonesia is lagged behind other countries such as Thailand
and Japan – the Muslim minority countries - where Thailand had realized the great potential of Halal
tourism industry by building the Halal Science Center in 2003 and Japan did the same by developing
Japan Halal Association (JHA) in 2010.
According to the report from Mastercard & CrescentRating (2015), Indonesia ranks 6th in top 10
OIC (Organization Islamic Cooperation) destinations, while Malaysia ranks first. In 2016,

2
Indonesia’s position in GMTI report increased from the 6th position to the 4th position (Mastercard
and CrescentRating, 2016). Whereas in the non – OIC countries, Singapore occupies the first
position, followed by Thailand in the second place. This indicates that the ASEAN countries become
one of the favorite’s destinations for Muslim travelers. Therefore, Indonesia should be able to take its
potential advantage of it as well as possible.

Figure 1 shows the 4 Top Four ASEAN countries destinations for Muslim travelers with 2 of that
countries, Malaysia as an OIC Country and Singapore as non – OIC Country, are the market leaders
in this Industry. The data represent the competitive market in Halal Tourism Industry, especially in
ASEAN region. In addition, Indonesia is currently vigorous promoting its Halal tourism industry.
Besides targeting the Chinese and European in the promotion of conventional tourism, Indonesia is
also targeting the Muslim nations especially those from the Middle East countries to accelerate the
growth of Halal tourism industry in Indonesia. Based on reference (Antara, 2016), Indonesia which is
also supported by its predominantly Muslim population, can become a friendly tourist destination
nation for the worlds Muslims.
B. Factors Influencing the successful of Halal Tourism Industry
The Availability of Halal Accommodation
Muslim tourists are very concerned with services and also products that do not violate the Islamic
principles. One of the most important factors influencing the successful of Halal tourism industry is
the availability of hotel that is Sharia compliant. Ezzat Saad et al (2014) describe Sharia compliant
hotel as a hotel that provides services in accordance to the Sharia Principles. In some Muslim and non
– Muslim destinations, the numbers of Sharia compliant hotels are evolving (Battour and Ismail,
2016).
The sharia compliant hotels must provide the services for Muslim tourist such as Halal food,
alcohol – free beverages, a copy of Qur’an in each room, prayer rooms with Qibla direction, Islamic
funding, and appropriate entertainment (Henderson, 2010; Ezzat Saad, Nabil Ali and Abdel-aleem
Magdy, 2014; Battour and Ismail, 2016). It is important to note that in order to be considered as a
fully Sharia compliant hotel, the operation, design and financial system of the hotel has to comply
with Sharia rules and principles (Ahmat et al., 2013; Ezzat Saad, Nabil Ali and Abdel-aleem Magdy,
2014).
There are still no written formal requirements or classification for Sharia compliant hotel (Ezzat
Saad, Nabil Ali and Abdel-aleem Magdy, 2014), but in Indonesia there is a ministerial regulation
issued by the minister of the tourism of Indonesia that regulate the Sharia Hotel. The criteria of
Sharia hotel are formulation of qualification and/or classification that includes aspect of products,
services and management. Sharia Hotel can be classified into 2 classifications. First, it is called Hilal
1, and second is called Hilal 2. Hilal 1 is Sharia hotel which still has looseness in applying Sharia law
(e.g. there is still an alcoholic beverage like wine). Hilal 2 is Sharia hotel that fully adopted the Sharia
law in its services, operations and management (Ministry of tourism of Indonesia, 2014; Andriani et
al., 2015). But there are only few Sharia compliant hotels in Indonesia.
Another important factor is availability of Muslim friendly airport. Facilities like prayer room with
pure water for taking ablution are very important in Muslim friendly airport. Airport that has
established to become Muslim friendly airport is Kansai international airport. Claimed to be the first
Muslim friendly airport in Japan, Kansai international airport provided prayer rooms and also
initiated Muslim friendly meal service in some restaurants and shops (KIX, no date). Likewise, in
Indonesia, one of Indonesian airport namely Sultan Iskandar Muda international airport was awarded

3
in the world Halal tourism award as the world’s best airport for Halal travelers (WHTA, 2016). A
research conducted by Khan et al (2013) found that the satisfaction of tourist towards destination is
influenced by the destination image, religious motivation and service quality.
The Availability of Halal Foods and Beverages
Muslims’ purchase decisions are affected by the basic principles of Islam such as prohibition to
consume haram foods and obligation to choose Halal food. Halal status of food is a basic principle in
Islam having its place in Holy Qur’an (Aris et al., 2015). The benefits of halal food are relevant to the
ethical sourcing of safe food even though the concept of Halal has been around for centuries (Lubis et
al., 2016).
Generally, every food is allowed for Muslim except the food which is prohibited both by the Holy
Qur’an and by the Hadith (Khattak et al., 2011). It is important to note that Halal foods and beverages
can be Haram if in the process (manufacturing, packaging, etc.) it is contaminated by the Haram
materials. The utensils, equipment and machinery have to be cleansed based on the Islamic law and
have to be spared from Haram materials (Henderson, 2016).
Muslims are the only major religious group projected to increase faster than the world’s population
as a whole, since Muslim population is projected to increase by 73% between 2010 – 2050 period
(Pew Research Center Religion & Public Life, 2015). This will be a huge market for Halal food and
beverages. Halal food and beverage market is currently increasing. In 2015 global Muslim market
expenditure on food and beverage is worth $1,173 billion representing 16.6% of global expenditure
and it is projected to reach $1,914 billion representing 18.3% of global expenditure (Thomson
Reuters, 2015). One barriers in developing the ecosystem of Halal foods and beverages is
certification of Halal food and beverage product (Euromonitor Research, 2015). Likewise, in
Indonesia, one big problem is certification. In Indonesia, restaurants and cafés serving Halal food and
beverage are still self-claiming that their food and beverage are Halal (Andriani et al., 2015). This
problem must be concerned by the stakeholders because the availability of Halal food play an
important role in attracting Muslim tourist.
Human Capital
Human resources are the important assets for an organization in any industries including Halal
tourism industry. The role of human resources is not only to make a suitable regulation for
developing Halal tourism industry but also for example providing best services in hotel or any
tourism destinations that fit the Muslim tourists. The quality of employees and effective management
affect the success of the tourism and hospitality industry (Atoyan, 2015). The idea that organization
“compete through people” highlights the fact that achieving success increasingly depends on an
organization’s ability to manage talent, or human capital (Snell and Bohlander, 2013). The term
human capital describes economic value of employees’ knowledge, skill, and capabilities (Snell and
Bohlander, 2013).
Continuous Innovation
To be able to survive, continuous innovation efforts has been imperative (Lee and Trimi, 2016).
One of the success factor in Halal tourism market is the innovation (Battour and Ismail, 2016). In
order to satisfy Muslim tourists, continuous innovation in every aspect like services, technology, and
tourism packages is imperative. Research conducted by Battour & Ismail (2016) gave more attention
to one specific area which is innovation in “Muslim – friendly airlines” in order to make the
destination Muslim friendly. Indonesia through its national airlines (Garuda Indonesia) is one step
ahead in developing “Muslim – friendly airlines” by obtaining the award as World’s best airline for
Halal travelers (WHTA, 2016).
Battour & Ismail (2016) claimed that one of the recent practices in Halal tourism industry is
providing Smartphone application that make the holiday enjoyable and Muslim friendly. There are
numerous user-friendly applications for mobile devices such as HalalTrip and Muslim Pro which deal
with Halal-friendly hospitality products and services such as hotels, holiday packages, destination
guides, airport guides and restaurant (Stephenson, 2014). The innovation is not limited in technology
but also in services, tourism packages, and itinerary concept. The benefits of innovation may accrue
to individuals, groups of people, communities, industries, societies, nations, regions and the world
(Lee and Trimi, 2016).

4
 C. Strategies that can be used in developing Halal tourism industry in Indonesia
A strategy is a set of actions that managers take to increase their company’s performance relative
to rivals. If a company’s strategy does result in superior performance, it is said to have a competitive
advantage (W. L. Hill and R. Jones, 2008). It is important to understand the services orientation of
the business and the adhere characteristic of tourism in order to achieve a sustainable competitive
advantage in tourism (Evans, 2016).
Indonesian government has passed Law No. 10 of 2009 on tourism which confirms that tourism is
an integral part of the national development that should be done in a systematic, integrated,
sustainable and responsible ways while providing protection of religious, cultures living in society
values, sustainability and quality of the environment and the national interests.
Study on Sharia Tourism Development done by Indonesian Ministry of Tourism in 2015 stated that
the Ministry of Tourism develop Halal tourism into four types of tourism business components (1)
hospitality, (2) restaurant, (3) bureau or travel services, and (4) spa. The strategy that has been
developed by the Indonesian Government is that it defined 13 provinces to become Halal tourism
destinations. The Government through the Ministry of Tourism also has developed the “Great Three”
which is three main entrances namely Jakarta, Bali and Batam. It is expected that tourists can reach
the surrounding areas which become Halal tourism destinations. For example, through Jakarta
tourists can access destinations in West Java, Banten and Lampung. Tourists can access Lombok,
East Java, Central Java, and Yogyakarta through Bali. The last, Batam is more geared to West
Sumatra. thus, the study showed that as a whole the provinces that really expressing commitment and
readiness are Jakarta, West Java, West Nusa Tenggara, Yogyakarta, and East Java.
The findings on study on Sharia Tourism Development showed that there are several strategies
offered but are focused only for Aceh and Menado regions. Those strategies underlined several areas
such as the institutions, information and accessabilities, tourist attractions, accomodations (hotels),
restaurants, travel bureau, tourist guide, spa-sauna-massage. Based on this study and other literatures
we try to offer several strategies beyond what the Indonesian Government had done.
Strategic Policies
Beyond the four components of Sharia tourism previously listed by the Ministry of Tourism,
Indonesian Government through the Ministry of Tourism should create policies that can be translated
into lower level on each province. Those policies will guide each province to develop a reference to
develop Halal tourism program in accordance with the capability and tourism potential of each
province based on the four components listed - hospitality, restaurant, bureau or travel services, and
spa.
Through this strategic policies it means that the government will create strategies alignment,
strategies which are consistent from top to bottom at lower level - the provincial department of
tourism and below, and the stakeholders in each province - which will ultimately support the
achievement of the main objectives that have to be achieved by the central government. There should
be a grand strategy. For example, on the first component, the institutional - Local Government -
incorporates travel charge sharia on tourism into the Regional or Local Government Regulation
which refers to the Central Government’s rules. As a consequence, for example, Halal certifications
are authorized into Indonesian Ulema Council (IUC) through Nasional Sharia Council (NSC). IUC
has branches at amost all provinces. Tourism businesses can obtain certification of sharia conformity
from the National Islamic Council after obtaining a Halal certificate from the Institute of Medicine
Food and Cosmetics which also under the institution of IUC.
The Indonesian Government had been successfully showing to the internasional world that
Indonesia is worthy of being an important player in the world Halal tourism industry by winning 12
of the 16 categories that are contested during World Halal Tourism Awards 2016 in Abu Dhabi,
United Arab Emirates (Jaelani, 2017). This victory should be the basis for the Indonesian government
to be able to encourage and synergize the stakeholders in non-Halal tourism to participate in the
mission of Halal tourism and proud to be part of halal tourism industry. The government should
include travel load of sharia in its strategic framework so that it becomes an integrated program and
are aligned. This is also supported by the recent study by Jaelani (2017) which stated that from his
phenomenological approach, he concluded that halal tourism has become part of the national tourism
industry to position Indonesia as the center for halal tourism worldwide in the future.

5
Nation Branding
Countries and every sector within it are like a large company which can be branded (Temporal,
2011). Yee (2009) describes a nation branding as a branding of a country which can attract or dispel
tourist. Strong brands have become strategic assets (Muhlbacher et al., 2016). Indonesia has
established its nation brand specifically in tourism industry namely “Wonderful Indonesia”. The
ambassador of this brand is the famous marketing expert from Kellog School of Management, Prof.
Philip Kotler. Philip Kotler has been actively encouraging the island of Komodo, at Labuan Bajo,
East Nusa Tenggara as a world class destination which then will be listed as the seven wonders of the
world. As the ambassador Kotler continues to endorse the national tourism brand, Wonderful
Indonesia, in various parts of the world when Kotler spoke at the official forums and been to various
places. In addition, the Indonesian Government also should assign Philip Kotler to promote Indonesia
as a Muslim friendly destination country. Consequently, the ambassador Philip Kotler should
understand the concept of Halal tourism in Indonesia and its practices.
Wonderful Indonesia brand had received a prestigious award namely the Best Destination of
Marketing Award 2016 (Qiang, 2016). Unfortunately, Indonesia’s brand in tourism industry has not
include Halal tourism as one of its marketing brand. Hence, branding Indonesia as a “Muslim friendly
destination” must be established.
The arrival of Saudi King Salman bin Abdulaziz al-Saud from Saudi Arabia to Bali with his 1,500
entourages on March 4 to March 9, 2017 is considered to have positive impact on the tourism and
hospitality sector (Kompas, 2017). Study on Sharia Tourism Development (Andriani et al., 2015)
showed that Bali was not ready and has not been committed in Halal tourism. The selection of Bali
instead of Lombok West Nusa Tenggara – awarded as the World's Best Halal Tourism Destination
and the World's Best Halal Honeymoon Destination on World Halal Travel Award 2015 in United
Arab Emirates (Alamsjah, 2016) - shows that Bali actually can further be developed as destination
for moslem travelers. The Local Government of Bali, supported by the central government should
take this opportunity, moreover Bali as one of the Great Three.
Investing in Human Resources
As is previously noted, human resources play an important role in developing Halal tourism
industry. The government must adopt the strategic view of human resources. Adopting a strategic
view of human resources mean the government must consider employees as human “assets” and
develop appropriate policies and programs as investments in these assets to increase their value
(Mello A., 2015). Although investing in human resources’ cost may be high, it will gain a sustainable
competitive advantage which is hard to imitate by the rivals. Investing in human resources can be like
providing training and development for employees in Halal tourism industry.
A presentation by Deputy for the Development of Institutional Tourism (Kemenpar, 2015) from
the Ministry of Tourism has developed programs and activities to improves the quality and also
quantity of human resources through Human Resource Competency Certification on Tourism and
Tourism Human Resource Training at ten main destination defined by the Ministry of Tourism which
are DKI Jakarta (Great Jakarta), Bali (Great Bali), Kepulauan Riau (Great Batam), JogloSemar
(Yogyakarta & Central Java), Wakatobi-Bunaken-Raja Ampat (Southeast Sulawesi, North Sulawesi,
West Papua), Medan (North Sumatera), Lombok (West Nusa Tenggara), Makasar (South Sulawesi),
Bandung (West Java) and Banyuwangi (East Java). These programs should be designed as an
integrated program with the development of Indonesia as Muslim friendly destination or Halal
tourism concept.

IV. CONCLUSION
This paper highlights the importance of optimization of Halal tourism industry in Indonesia. This is
also supported by recent study on the same topic by Jaelani (2017). The high growth of Muslim
population indicated that Halal tourism is a huge market, and the potency of the development of it is
still wide-open, therefore optimization in this industry is imperative. As a Muslim majority country,
Indonesia is very potential to become a leader in Halal tourism industry. The development of Halal
tourism industry in Indonesia is well developed, as proven by Indonesia’s rank in global Muslim
travel index from the 6th position in 2015 to the 4th position in 2016. The development of Halal
tourism industry in Indonesia must be supported by the government by creating the regulations which
control the Halal tourism industry in Indonesia. So far, the government through ministry of tourism

6
has set regulation fore Halal tourism in Indonesia, and also the regulation that regulate the Sharia
hotel. In the case of human resources, the government has to build the Halal tourism training and
development institution for skill and knowledge training of the employees in Halal tourism industry.
As is previously explained, the potency of Halal tourism industry in Indonesia is superior as
compared to the other countries. Halal has become a lifestyle in Indonesia. But, when it is associated
with tourism, there are a lot of things to regenerate, for example in certification problem. A lot of
restaurants self-claimed that their food is Halal, and this problem must be noticed by the related
stakeholders.
We underline the factors that can influence the success of Halal tourism industry in Indonesia,
namely the availability of Halal accommodation, the availability of Halal food and beverages, human
capital and the last is continuous innovation. Halal accommodation is not only the availability of the
hotel that is Sharia compliant but also availability of Muslim friendly airport and airline, spa and
leisure facilities for men and women. Finally, we conceptualize the strategies that can be lead to
sustainable competitive advantage and can be adopted by the government, tourism agent and other
stakeholders in order to become forefront in Halal tourism industry. We offer an immediate further
research for other researchers to evaluate or make a deeper analysis on whether national tourism
policies in Indonesia have supported the Halal Tourism and how those connections are. This is
important because Halal Tourism should be an integrated to the Indonesia tourism policies in order to
turn Indonesia to be the center for halal tourism worldwide in the future.

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