October 9, 2025

An Examination of The Factors Associated with The Awareness of Halal Principles Among Micro, Small, and Medium-Sized Enterprises Involved in Cross-Border Trade Between Indonesia and Malaysia

Key Points

Halal awareness significantly impacts the business development of MSMEs in cross-border trade.
The study identified commitment and general knowledge as crucial factors for halal compliance in MSMEs.
Exploratory Factor Analysis was performed on 234 MSME respondents to uncover key determinants of halal awareness.
Strengthening halal food awareness can lead to competitive and sustainable business growth in the halal market.

Abstract

In line with the growing global halal industry, halal awareness among business leaders is one of the most critical factors in the food and beverage product halal supply chain. Cross-border trade between Indonesia and Malaysia creates dynamics, particularly for micro, small, and medium-sized enterprises (MSMEs) that lack halal-related standards for their products. This study explores the most critical factors in halal awareness among business actors regarding implementing the halal food system. The study employed Exploratory Factor Analysis (EFA) with 234 processed food MSME respondents with halal certification in Tarakan City, North Kalimantan Province. The study's results revealed two main factors critical to halal awareness among business actors regarding implementing the halal food system: Factor 1 (commitment and general knowledge) and Factor 2 (halal implementation awareness). These factors support business development and strengthen MSMEs' commitment to Sharia compliance, legal standards, business ethics, and product quality. This helps build competitive and sustainable businesses based on halal food in the cross-border trade area between Indonesia and Malaysia. Keywords: the awareness of halal, halal food products, halal business actors, Exploratory Factor Analysis.

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