Each country in Asia will apply a halal assurance system (HAS) to get a halal certificate and logo. The problem with HAS in Asia is that every country has its own halal standard rules. This problem raises a trade dispute because imported products cannot enter another state market due to different halal standards. So, we need the same halal standards for every country in Asia, one of which requires transparency in each country's HAS. However, the HAS documentation process currently has several shortcomings, such as document fraud and transparency during internal and external audits. This chapter aims to discuss blockchain technology's development in solving internal audit problems to improve its performance, and blockchain technology can improve efficiency, transparency, and traceability of original documents, thereby enhancing the overall halal certification process. And it is hoped that this research will be taken into consideration for those who will make the same halal standards for every country in Asia.
TopIntroduction
The halal industry is one of the developing industries and has tremendous potential in the world. This industry refers to the principles and requirements that are by sharia. The emergence of this industry aims to meet the requirements for products and services compatible with Islam. This industry has developed uniquely in Muslim and non-Muslim countries (Fawwazardi, 2020). Currently, the halal industry sector depends not only on the food and beverage industry; however, other sectors such as finance, health, fashion, tourism, and the media can contribute to its development. This reality shows that the halal industry is believed to have a more significant opportunity in the future because of the expanding market share (Elasrag, 2016). Asia is the largest continent in the world (KBBI, 2016).
The Asian continent has 8.7% of the earth's total surface area and consists of 30% of its land area. With about 4.3 billion people, 60% of the world's human population is today (“Like herrings in a barrel.”). This fact shows that the Asian continent has tremendous economic potential. Based on the report “Global Islamic Economic State 2018/2019,” Asian countries are in the top rank based on the world's halal industry score indicators. Based on this explanation, the halal industry is believed to make a significant contribution to economic growth. This explanation is supported by Malaysia World Islamic Finance's research on Halal Ecosystem Prospect for Global growth, which explains that the center of global Muslim population growth stretches from Malaysia and Indonesia in Southeast Asia to other countries such as the Middle East and Turkey.
At this time, every country in Asia has a halal certificate and logo, which will become an integral part of a halal product, determining whether the product is halal or not on the market. So To get this halal certificate and logo, each country has a system known as the Halal Assurance System (HAS). This system describes, connects, accommodates, and integrates the concept of Islamic sharia. It explicitly discusses halal products, ethics, comprehensive business management, planning, implementation, and evaluation procedures and mechanisms in a series of production / processed materials for Muslim consumption. This system is designed to obtain and ensure that the product is halal due to the awareness and need of Muslim consumers to protect themselves from prohibited (haram) and doubtful products according to the provisions of Islamic sharia.
The problem with HAS in Asia is that every country has its own Halal Standard rules. This problem raises a trade dispute because imported products cannot enter another State market due to different halal standards. Halal standards are then considered a barrier to trade. So, we need a halal standard that is the same for every country in Asia (Johan, 2018). Where to arrive at the same halal standard, one of which requires transparency in the halal system of each country.
In general, the HAS process in Asia is that a company will apply for a HAS certificate. The institution indicated in each country will appoint an auditor to audit existing documents or requirements. This audit will later be used as a consideration for the institution to issue a certificate. Based on the above process, the audit process is vital in HAS.
Audit or examination in the broadest sense means evaluating an organization, system, process, or product. A competent, objective carries out an audit, and an impartial party is called an auditor. The purpose of conducting an audit is to verify that the audit subject has been completed or run according to accepted, accepted standards, regulations, and practices.
The internal audit system is an auditing system conducted by the company to evaluate the halal guarantee system's implementation. Internal auditing is carried out by a halal organization team coordinated by a halal internal auditor. The company appoints the internal halal auditor to supervise and support the product's halal following the Auditing Agency's rules and report the internal audit results to the halal coordinator.
The goals of conducting an internal audit include:
- 1.
To ensure the consistency of operations to keep the halal quality of a product.
- 2.
Improve production by considering the stages of the process that are considered critical for the halal product.
- 3.
Establish a framework for further quality improvement processes.
- 4.
Evaluate and clearly define the responsibilities and authority of the key personnel who decide halal production activities. Reports on the auditing results shall be sent to the halal guarantor institution as accountability to the institution that issues the certificate.