A study reveals that the booming halal industry is not just about food and finance — it’s creating a new Muslim middle class that is reshaping national economies, challenging Western consumer culture, and redefining what it means to be modern.
For decades, the story of global development was written in the West. But a quiet revolution is underway in Southeast Asia, where two of the world’s largest Muslim-majority economies are forging an alternative path. This is not just about escaping poverty. It is about building a distinctly Muslim middle class — one that is pious, prosperous, and proud.
A new study published in the journal Research in Globalization (2025) by researchers from Roskilde University in Denmark and the Australian National University provides a fascinating historical and ethnographic analysis of what they call the “emerging middle” in Indonesia and Malaysia. The findings reveal how state policies, market forces, and religious resurgence are converging to create a new class identity centered on the halal economy.
“Middle-class Muslims in Indonesia and Malaysia play roles as producers, regulators and consumers in the global halal industry,” the authors write. “The halal industry shapes — and is itself shaped by — Islamic middle-class lifestyles.”
The Scope: A $300 Billion Piety Economy
The numbers are staggering. The global halal industry market in Indonesia alone is forecast to account for 19.1% of GDP by 2030, equivalent to over 311billionUSD.ForMalaysia,thecorrespondingfigureis11311billionUSD.ForMalaysia,thecorrespondingfigureis1158.5 billion USD.
But this study is not about spreadsheets. It is about people — a new generation of urban, educated, tech-savvy Muslims who proudly declare: “Semakin kaya, semakin religious, dan semakin sadar tentang halal lifestyle” (The richer they become, the more religious they are, and the more aware they are of the halal lifestyle).
This is not a rejection of modernity. It is an alternative modernity — one that embraces globalization, technology, and consumer culture while remaining firmly rooted in Islamic principles.
The Halal Economy in Indonesia and Malaysia at a Glance
| Indicator | Indonesia | Malaysia |
|---|---|---|
| Population (Muslim majority) | ~279 million (~90% Muslim) | ~34 million (~50% Malay-Muslim) |
| World Bank Classification | Upper-middle-income (since 2019) | Upper-middle-income (since 1996) |
| Halal industry forecast (2030) | 19.1% of GDP (~$311.7 billion USD) | 11% of GDP (~$58.5 billion USD) |
| Key state halal body | MUI (Majelis Ulama Indonesia), BPJPH | JAKIM (Islamic Development Department) |
| Middle class trend (2019-2024) | Shrunk from 21.5% to 17.1% (reclassification) | Largest and fastest-growing segment is Malay middle class |
| Economic ambition | Indonesia Emas 2045 (escape middle-income trap) | WKB 2030 (Shared Prosperity Vision) |
Understanding the ‘Emerging Middle’
The term “emerging middle” refers to middle-class groups in middle-income countries — and Indonesia and Malaysia are quintessential examples. Malaysia achieved upper-middle-income status in 1996, while Indonesia reached this classification more recently in 2019.
But the researchers caution that middle-class status is fragile. A 2023 white paper from the University of Indonesia found that 27% of the middle class experienced downward mobility between 1993 and 2014, while 42% remained stuck in the same economic class. This is the reality of the middle-income trap — a situation where countries grow rapidly but then plateau, unable to compete with both low-cost and high-innovation economies.
The study introduces a multi-scalar approach to understanding this trap:
- Nationally: Distinguishing middle-income from high-income countries
- Locally: Highlighting disparities between core and less prosperous regions (e.g., western vs. eastern Indonesia)
- Individually: Contrasting wealthier households with those facing economic constraints
The message is clear: building a strong, resilient middle class is not automatic. It requires deliberate policy, investment in education, and support for innovation.
How the State Shaped the Muslim Middle Class
In both Indonesia and Malaysia, the state has played an active, interventionist role in creating a Muslim middle class. The drivers differ, but the outcome is similar.
In Malaysia: The New Economic Policy (NEP), implemented in the 1970s, was explicitly designed to create a Malay (Bumiputera) middle class. Preferential quotas in education, business ownership, and employment aimed to address economic imbalances with the Chinese community. The result? A thriving Malay middle class that is now the largest and fastest-growing segment in the country. Universities like the International Islamic University Malaysia (IIUM) and the Islamic Science University of Malaysia (USIM) were established to integrate Islamic values with modern education.
In Indonesia: Under President Soeharto’s New Order regime (1967-1998), economic liberalization and the expansion of secondary and tertiary education fueled middle-class growth. The establishment of the Association of Indonesian Muslim Intellectuals (ICMI) in 1990 marked a turning point, creating a space for educated, pious Muslims to influence policy. Today, state Islamic universities (UINs) have transformed from religious institutes into comprehensive universities, with the three most popular majors being Islamic financial management, Islamic economics, and Islamic banking.
The study highlights a key tension: in Malaysia, the focus on ethnic Malay empowerment has created a “bumiputera economy” that some argue hinders necessary reforms to escape the middle-income trap. In Indonesia, the vast majority of halal-certified products are concentrated in western provinces (West Java, Central Java, East Java), while eastern Indonesia lags significantly behind.
Middle-Class Lifestyles — State vs. Market Dimensions
| Dimension | State-Led Initiatives | Market-Led Expressions |
|---|---|---|
| Education | UINs (Indonesia), IIUM (Malaysia), IHRAM halal research labs | Professional careers in Islamic finance, halal consulting, Sharia compliance |
| Certification | MUI, JAKIM, BPJPH mandatory halal certification (Law No. 33/2014 in Indonesia) | Global brands (Nestle, Coca-Cola, KFC) seeking halal certification to access Muslim markets |
| Consumption | Government campaigns for halal awareness | Halal food, modest fashion, Islamic tourism, halal cosmetics |
| Finance | KNEKS (Indonesia), Islamic banking regulations | Sharia-compliant mortgages, loans, investment products |
| Digital economy | Support for halal e-commerce platforms | Social media influencers promoting halal lifestyle; fintech apps with Islamic features |
| Urban spaces | Development of halal tourism zones (e.g., Mandalika, Lombok) | Halal-certified hotels, restaurants, shopping malls in Jakarta, Kuala Lumpur, Surabaya |
The ‘Hijrah’ Movement: Young, Urban, and Pious
One of the most striking findings of the study is the rise of the hijrah movement (religious renewal, literally “migration”) among urban young Muslims. This movement, which gained significant popularity following the involvement of public figures and social media influencers, emphasizes becoming a better Muslim — not in isolation, but in full engagement with modern consumer culture.
Conservative preachers with halal business ventures now leverage social media platforms like Instagram, TikTok, and YouTube to reach tech-savvy audiences. Young middle-class Muslims proudly showcase their piety through:
- Stricter Muslim fashion (hijab, modest clothing)
- Consuming only halal-certified food
- Traveling to halal-friendly destinations
- Using Islamic banking and fintech apps
- Participating in online religious study groups
This is not the “Coca-Cola culture” of Western consumerism that anthropologists described in the 1980s. It is something new: global brands that have become fully halal-certified (Coca-Cola Malaysia has been halal-certified since the 1990s) are now embraced as compatible with Islamic identity. As the authors note, this does not imply convergence with Western lifestyles, but rather “an alternative celebration of Muslim middle-class identity, diverging from Western consumer preferences without developing an anti-Western stance.”
The Tensions: When Piety Becomes Excess
The study does not present a one-sided picture. Within the Malay and Indonesian middle classes, there are two opposing lifestyles:
- Proper Islamic consumption: Full support of Muslim piety as economy. Being fastidious about everyday consumer choices is a moral imperative. Halal is elastic and expansive — more products and services should be certified.
- Pragmatic resistance: The view that the piety economy has become excessive and materialistic. As one woman informant in her 40s stated: “Islamic belief alone should be fine.”
This tension between religious idealism and consumer pragmatism is central to understanding the lived experience of the emerging middle. It is not a simple story of linear progress. It is a messy, contested, and deeply human negotiation.
Challenges: The Fragility of the Middle Class
Despite the impressive growth of the halal economy, the study sounds a note of caution. In Indonesia, the middle class shrank from 21.45% of the population in 2019 to 17.1% in 2024, according to the Central Statistics Agency (BPS). This decline is partly due to a reclassification based on monthly spending, but it also reflects real economic pressures.
Key challenges identified:
- Regional disparities: Eastern Indonesia lags far behind western provinces in infrastructure, halal certification, and economic opportunities.
- MSME concentration: The halal economy is dominated by micro, small, and medium enterprises (MSMEs), many of which struggle to upgrade and compete globally.
- Gender dimensions: While 64.5% of MSMEs are led by women entrepreneurs, they face barriers in accessing capital, technology, and global markets.
- Downward mobility: A significant portion of the middle class is vulnerable to economic shocks and can fall back into poverty.
The Indonesian government’s Indonesia Emas 2045 vision aims to escape the middle-income trap before the country’s 100th anniversary of independence. But as the study suggests, focusing solely on becoming a high-income country may be less prudent than building a strong, resilient, and innovative middle class capable of driving the Islamic economy from within.
A New Framework for Global Development
The authors argue that their class analysis, centered on lifestyles, fills gaps found in both Marxist-oriented analyses (which focus too narrowly on production and conflict) and global development thinking (which remains vague and ahistorical).
By examining the state (education, science, bureaucracies) and the market (consumers, businesses, finance), they show that middle-class lifestyles emerge as “mental and social negotiations between the opulence and excess of the elite class and the economic necessities faced by the lower classes.”
Crucially, the study finds that Muslim middle-class individuals and groups in Indonesia and Malaysia often perceive themselves as a distinct class entity — a class for itself, not just in itself. This self-awareness, shaped by state policies, market opportunities, and religious identity, is a powerful driver of economic and social transformation.
Conclusion: A Model for the Muslim World?
What is happening in Indonesia and Malaysia matters far beyond Southeast Asia. With a combined Muslim population of over 275 million, these countries are laboratories for a new kind of development — one that integrates Islamic ethics with global capitalism, state intervention with market dynamism, and religious piety with consumer culture.
The “emerging middle” is not a perfect model. It is fraught with tensions, vulnerabilities, and inequalities. But it offers an alternative to the secular, Western-centric development paradigm that has dominated for decades.
As the study concludes: “Middle-class lifestyles emerge as mental and social negotiations between the opulence and excess of the elite class and the economic necessities faced by the lower classes.” In that negotiation lies not just the future of Indonesia and Malaysia, but a possible blueprint for Muslim-majority societies worldwide.
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