Wahyu Jatmiko and Azizon
Durham, UK/Coventry, UK / Wed, July 3, 2019
When the National Committee for Sharia Finance (KNKS) was formally established by President Joko “Jokowi” Widodo in 2017, many proponents of Islamic economics were skeptical. They scapegoat the term “finance” (instead of “economy”) in the institution’s name. Indeed the development of stand-alone “Islamic finance” during the past three decades has not been contributing significantly to the country’s economy.
This skepticism might be relieved by now. In the masterplan of Indonesian Islamic economy, the KNKS focuses on the real sector of the economy through the concept of halal industry.
Another challenge arises, however. Some, including policymakers, are afraid that the implementation of halal industry might disrupt the country’s social diversity, particularly in a socio cultural-related sector like tourism. We discuss this issue in light of the recent fast-developing field of neuroeconomics.
What is neuroeconomics? This term refers to an interdisciplinary field aimed at evaluating human decision-making by combining economics, neuroscience, psychology and computational science. Neuroeconomics is essential for our discussion, for it may answer the puzzle of illogical economic decisions of Muslims toward halal tourism.
Many Muslims travelers are considered rational economic people. They condense their travel destinations universe and only visit those providing a Muslim-friendly environment. They are willing to pay a premium in return for those features. In other words, they trade wealth for religious values.
Why is this even possible? While mainstream economics has failed to explain this phenomenon, neuroeconomics stipulates a promising answer stemming from human brain analysis.
A scientific article titled “The price of your soul: Neural evidence for the nonutilitarian representation of sacred values” found that religious belief activates an area in the brain which allows believers to make non-cost-and-benefit decision-making. They rather employ deontic logic by considering what is permitted (right) and what is not (wrong) by their religion.
Traditional views may oppose the above decision-making process saying that this will decrease the welfare of economic–oriented individuals, stemming from the reduction of their utility. Yet, studies suggest that religious-based decision making has a positive effect on subjective well-being. It triggers life satisfaction, good health and happiness. It even decreases the activation of the anterior cingulate cortex, a producer of “distress signals” in the human mind.
This unique decision-making process should be capitalized by businesses. The concept of the clientele effect tells us how businesses can price discriminate Muslim travelers. Offering halal tourism allows businesses not only to attract burgeoning Muslim travelers across the globe but also to set a premium price for them. Both businesses and Muslim travelers are thus better off.
Unfortunately, many still fail to observe this advantage. Labuan Bajo of East Nusa Tenggara (NTT) is a compelling example. Unlike other Muslim-minority destinations such as Japan, South Korea, Thailand, Sri Lanka and Singapore, the local policymakers have yet to recognize halal tourism as a business opportunity. They fear that the implementation of halal tourism may disturb local social and cultural stability.
This presumption may originate from misconceptions of halal tourism per se. Halal tourism is more about providing Muslim travelers with a friendly environment, allowing them to perform their religious obligations while travelling. This can be in the form of halal food, prayer facilities and water-friendly washrooms.
Public broadcast of the azan (Islamic call to prayer), provision of Quran in hotels and separation between male and female on beaches are less important than the primary environment mentioned above, according to a survey by the Center for Islamic Economics and Business at the University of Indonesia (PEBS-UI).
Provision of those facilities certainly will not change any sociocultural values of the Muslim minority destinations.
The tourism business should also not be offended by the way Muslim travelers reject non-halal products such as alcohol or pork. Just like many restaurants or airlines which offer different menus for vegans, vegetarians and pescatarians without regret.
Indeed, the interaction between Muslim travelers and locals is inevitable in this business. But this is something that Muslim minority regions should not worry about. Neuroeconomics suggests that religiosity increases activities in the area of the brain that is necessary for representing someone else’s beliefs, namely the left temporoparietal junction. It induces tolerance toward a different social and cultural environment.
Research by Joan C. Henderson of Nanyang Technological University on the interaction between Muslim travelers and locals in Japanese halal tourism confirms this. Henderson found that Muslim travelers tended to make some compromises regarding matters of religion for the duration of the stay. The very behavior of travelling to a non-Muslim region should indicate their openness and curiosity toward the local culture.
Muslim travelers are one of the fastest-growing demographics in the global tourism industry. They are expected to spend US$300 billion in 2026. Popular travel destinations are competing to attract them to visit and spend their money. Their demand is quite simple, facilities to allow them to perform religious customs. This is what brings life satisfaction and happiness for them. If the term “halal” is deemed too strong for tourism, they are quite happy with offers of “Muslim friendly” tourism.
Wahyu Jatmiko is a PhD candidate in Islamic finance, University of Durham, United Kingdom. Azizon is a Master’s student in Behavioral and Economic Science, University of Warwick, UK. They are members of the Sharia Economic Society (MES) in the UK.
Disclaimer: The opinions expressed in this article are those of the author and do not reflect the official stance of The Jakarta Post.