Analysis: A war of opinions brewing in Malaysia and Indonesia over impact of anti-Israel boycotts

LOCAL ECONOMY FIRST TO FEEL IMPACT OF BOYCOTTS, SAY EXPERT

Economist Dr Yeah Kim Leng of Sunway University in Malaysia said that the boycott could potentially increase unemployment, especially if there was a huge slowdown in business.

He said that employees could first be placed on staggered working hours resulting in an income loss to them.

“When there is less income, consumption will be slower. The worst-case scenario would be retrenchments and will lead to social problems,” he said, adding that it was important not to allow the boycott to spread to other businesses.

He added that there could be ramifications to an entire supply chain in a particular industry, with the franchise businesses of McDonalds, for example, and businesses in the supply chain owned by Malaysians.

“The immediate impact is to the local economy,” he said.

He said that as McDonald’s is an extensive food chain in the country, the impact of the boycott will be felt widely.

According to its website, McDonald’s Malaysia has more than 320 outlets in the country and serves more than 13.5 million customers a month.

It also employs more than 15,000 workers in Malaysia.

Dr Yeah doubted the boycott would have a direct impact on the Israel-Hamas war in Gaza, although it would be seen as moral support for the Palestinian cause.

“A more productive way of expressing support is sending more humanitarian aid rather than affecting our local economy and local businesses,” he said. 

Mr Dedi Dinarto, lead Indonesia analyst at public policy advisory firm Global Counsel, told CNA that banning multinational companies affiliated with Israel could also potentially harm the Indonesian economy. 

This is because these companies have employed local workers and utilise local resources, he added. 

He said that the Indonesian government is also unlikely to ban Israeli products or companies with ties to Israel. 

“There is not a compelling economic rationale that suggests such a ban would significantly impact Israel’s economy and deter them from their actions against the Palestinians,” said Mr Dedi. 

The push for a boycott also does not align with the government’s official position, he said, citing how several government officials in the cabinet and parliament have said that the boycott is not an effective means of deterring Israel. 

“Instead, they believe Indonesia should continue advocating for Palestinian rights in the United Nations (UN), especially since Indonesia (has a seat) in the United Nations Human Rights Council,” he told CNA.

Last Friday, Ms Meutya Hafid – who is the chairman of the Indonesian House of Representatives’ First Commission – publicly condemned the boycott and said that a solution needs to be reached through international forums such as the UN.