REPUBLIKA.CO.ID, By: Greget Kalla Buana, UNDP Islamic Finance Specialist

Rizqi Magdawati Nur Izzizti, UNDP Innovative Finance Intern

Indonesia claimed the highest spot in the Global Muslim Travel Index (GMTI) 2023, sharing the stage with Malaysia. Despite stepping up to the third position in last year’s State of the Global Islamic Economy (SGIE), unlike in the Index, the country’s halal tourism is the only sector absent in the top ten among six indicators (Islamic finance, halal food, Muslim-friendly travel, modest fashion, pharma and cosmetics, and media and recreation).

Indonesian Muslims view tourism as part of a halal lifestyle with an expectation that travelers’ needs based on their religious beliefs are well accommodated. They tend to incorporate religiosity within the excursion by ensuring ease of finding places of worship and halal-certified eateries. These practices are considered the bare minimum, while halal tourism demands beyond such a superficial labeling approach.

Halal tourism encompasses the concept of rahmatan lil’alamiin—a blessing for all humans and nature—serving Muslims and non-Muslims, including non-human elements, which most people often neglect. According to HalalTrip, the Responsible Tourism Framework must promote sensitivity to cultural needs, environmental sustainability, and socio-economic balance through fair trade and ethical consumption, embracing interconnectedness, and advocating compassion towards animals based on faith traditions and values of kindness and mercy.  All this so-called responsible and sustainable tourism holistically aligns with Islamic norms.

In light of this, Indonesia’s dynamic landscape of Muslim-friendly travel is climbing the ranks in sustainable tourism. Its ranking rose from 44 to 32, beating Malaysia, Thailand, Vietnam, and the Philippines (Travel and Tourism Competitiveness Index 2022 by WEF). Shouldn’t halal tourism also rise when sustainable tourism grows since both promote striking commonalities and values?

Unfortunately, a case in several localities of allegedly poisoned dogs in conjunction with the creation of new tourist destinations failed to act for both sustainable and halal tourism. Not to mention the infamous dog and cat meat sale in some regions of Indonesia.  From an ecological dimension, halal tourism is supposed to embrace land and water management, conservation efforts, waste utilization, and the use of natural resources, along with the standardization of halal products and services. It follows Maqasid-al-Sharia'h, which underscores the preservation of faith, life, intellect, wealth, and lineage.

A flourishing halal tourism needs financial and infrastructure strengthening (Indonesia Halal Industry Master Plan 2023-2029 by KNEKS). With Indonesia's prominent third position in Islamic finance based on the Islamic Finance Development Indicator 2023, leveraging Islamic finance instruments for eco-friendly halal tourism projects presents a unique opportunity to foster sustainable development. The focus has to shift from urban or popular destinations with big money to rural areas, including villages, using social funds.

Lubuk Bangkar, a remote village in Jambi Province, has remarkably demonstrated an agro-ecotourism funded by zakat, a time-honored Islamic practice of charitable giving from Muslims earning above a certain threshold. The zakat has evolved into a noteworthy source of innovative financing for sustainable development, upgrading the village from poor to developing status.

An epic synergy between multilateral entities like UNDP, government body BAZNAS, and financial institution Bank Jambi initiated the zakat for sustainable development. Under the nuance of creating self-independence for the beneficiaries, UNDP-BAZNAS complements the program with capacity building for the tourism management group operating under Lubuk Bangkar village-owned enterprises.  

In such a remote village where electricity was completely lacking beforehand, zakat was utilized for the first time in the world to support renewable energy through micro-hydro power plant installation, benefitting over 4000 people and shifting from a consumptive to a productive disbursement model. Electricity has then provided wider access to agriculture, education, health, and tourism activities since 2018.  

This shift showcases the adaptability of Islamic finance principles to contemporary challenges, with zakat emerging as a powerful instrument for financing projects that align not only with religious values but also contribute to environmental concern, economic progress, and sustainability. Tourism, in this case, Lubuk Bangkar’s Bukit Tempurung (Tempurung Hill)—popular with the country above the clouds—is among the recipient sectors, which won 2nd place in the Most Popular Highlands at the Anugerah Pesona Indonesia 2021.

These endeavors promote inclusive growth and serve as a promotional platform for villages, facilitating the promotion of products with marketable value, for example, through Good Agriculture Practices and Responsible Sourcing for coffee. The village transformed from ‘very underdeveloped’ in 2015 to ‘developing’ status in 2022, jumping up two levels as reported by the Ministry of Villages, Underdeveloped Regions, and Transmigration.

A different story can be seen in Kampung Batik Cibuluh. Zakat invigorated the community's economy by providing training to enhance productivity and capital assistance, especially when most residents lived below the poverty line. As a result, it has transformed into an educational tourism hub, emphasizing Bogor batik motifs and reflecting cultural capitalization positively.

In Islamic social finance, zakat plays a pivotal role in shaping redistributive practices, particularly among the community as the key player in the burgeoning sector of halal tourism. Zakat, if distributed to industries with potential, may be used to cultivate potential halal industries in its community. It can foster inclusive growth and village income through manpower skills and infrastructure support.

Another example is Kampung Zakat by the Ministry of Religious Affairs, aiming to alleviate poverty and improve Indonesians’ prosperity, including the 3T (outermost, underdeveloped, and frontier) areas, using zakat funds. Kampung Zakat covers the economic, educational, da'wah, health, and social humanitarian sectors. Intervention in Timang Gajah District, Aceh Province, focuses on enhancing agribusiness-related MSMEs, such as chili chip production, cattle and goat farming, and coffee processing.

The cases above demonstrate that Islamic finance instruments can contribute to sustainable halal tourism in rural areas where investment is absent. Not only that, what has been applied to the tourism sector in Indonesia has also positioned itself with the Responsible Tourism Framework. Both cases show that Indonesia's local tourism accommodated practices of interconnectedness to natural resources, followed by productive education and awareness. 

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