Between Humanitarian Solidarity and Local Economic Impact

The following article was translated using both Microsoft Azure Open AI and Google Translation AI. The original article can be found in Boikot Produk Israel: Antara Solidaritas Kemanusiaan dan Dampak Ekonomi Lokal

JAKARTA, KOMPAS — The movement of boycotting products associated with Israel needs to be conducted proportionally. If the boycott action is carried out without careful consideration, the local workforce and entrepreneurs involved in the boycotted product supply chain could be affected as well.

Since the escalation of the conflict between Hamas and Israel in the Gaza region turned into a humanitarian tragedy, calls for domestic consumer boycotts of products or brands affiliated with Israel have increasingly emerged.

The Indonesian Ulama Council (MUI) even issued MUI Fatwa Number 28 of 2023 concerning the Law on Support for the Struggle of Palestine. In the fatwa, the MUI urges or recommends Muslims to avoid transactions and the use of products that support Israel.

The MUI fatwa is in line with the global social movement phenomenon called Boycott, Divestment, and Sanction (BDS) which means boycott, divestment, and sanctions that emerged since 2005. This movement not only targets products of goods or services, but also cultural aspects with the aim of pressuring Israel from economic, social, cultural, and political aspects.

The boycott movement will have effective consequences if the rejection is directed towards imported products that are actually sourced directly from Israel.

Gradually, the social movement BDS is spreading and drawing sympathies from various parties in several countries. In this Israel-Palestine conflict, BDS activists from several countries, including Indonesia, revive the boycott campaign through social media channels.

Also read: Ireland Boycotts Israeli Products

Based on the results of Kompas‘s R&D study, fast food restaurants McDonald’s, Starbucks coffee shops, and Unilever are three companies that are often included in boycott lists spread across various social media platforms. People who are aggressively campaigning for a boycott assess that the three products tend to support the Israeli government’s actions.

Secretary General of the Association of Micro, Small and Medium Enterprises (UMKM) Indonesia Edy Misero understands that the sense of solidarity and humanity encourages Indonesian people to boycott products which is allegedly affiliated with Israel. However, boycott actions need to be carried out proportionally so that efforts to pressure the Israeli government do not have an impact on local business actors.

According to him, boycott actions will be effective if rejection is made against imported products that are directly brought in from Israel. However, boycott actions carried out for the service sector or restaurants operating in Indonesia have the potential to hinder the growth of local business performance.

Small and medium-sized enterprises (SMEs) that distribute chicken meat, coffee powder, potatoes, chili, and other ingredients to restaurant brands deemed affiliated with Israel will also be affected by the boycott. This means that the economic actors at the local level will also feel the impact of the boycott,” he said when contacted on Wednesday (15/11/2023).

Economist from the Faculty of Economics and Business at the University of Indonesia, Yusuf Wibisono, explains that the rationale behind the boycott movement aims to exert economic pressure so that the boycotted country can change decisions or actions that are deemed unfair and wrong by consensus.

He gave an example of successful boycotts that occurred during the downfall of the apartheid regime in South Africa. At that time, to overthrow the apartheid regime, the world imposed three forms of sanctions against South Africa, namely boycotting exports from South Africa, imposing an oil embargo, and divesting foreign investments in South Africa.

The boycott began in 1973 when a number of foreign banks tightened credit and a number of companies closed their activities in South Africa. It peaked in the mid-1980s when the major European countries, Canada, Japan and the United States officially boycotted South Africa.

“Then in 1990, the apartheid regime in South Africa came to an end. Along with it, all economic sanctions on South Africa were lifted,” said Yusuf.

Also read:Support for Palestine, from Fund Mobilization to Boycott Movement

Edy sees a positive aspect in the boycott action, namely by directly opening business opportunities for local entrepreneurs to do substitution. Some products targeted by the boycott action can be substituted by UMKM products, such as baby needs products, fashion, as well as food and beverages.

However, he realized that the MSME sector in Indonesia still needed time so that the quality of their products could replace imported products that were affected by the boycott. “Even though the development of Indonesia’s MSME sector is in the right direction, it still takes time for MSMEs to speed up to make substitute products for boycotted imports,” said Edy.

In line with Edy’s statement, the Chairperson of the Micro, Small, and Medium Enterprises Industry Association (Akumandiri), Hermawati Setyorinny, views the boycott of products affiliated with Israel as an opportunity and momentum for MSMEs to take on the market niche previously filled by imported products.

“Actually, this also serves as an opportunity for SME actors to participate. Currently, the ones affected by the boycott are importers or traders who sell imported products,” he said.

From an economic standpoint, Yusuf Wibisono evaluates that consumers’ decisions to participate in boycott movements are largely determined by the costs they will bear as a result of the boycott. The costs borne by consumers are determined by their preferences for the boycotted products and their access to substitute products.

“Therefore, one of the most important strategies for the boycott movement against Israel is to focus on several priority targets, where the public has substitute products with prices and quality that suit consumer preferences,” said Yusuf.

The boycott of a number of products from companies that are deemed to support Israel’s finances has actually been ongoing for a long time. In 1949, the Arab League, consisting of 22 member countries, boycotted Israeli products to isolate it economically.

The move also aims to prevent the expansion of Israeli territory that would threaten the position of Palestine. Instead of achieving its goal, the action only had an impact on the efforts for a ceasefire in the Gaza Strip.

Economist and industry, trade, and investment researcher at the Institute for Development and Finance (Indef), Ahmad Heri Firdaus, assesses that society who participate in boycott actions believe that their actions can disrupt or at least hinder company revenue, which in turn affects financial support for Israel.

However, upon further investigation, a much larger flow of funds is obtained by Israel from foreign loans, oil sales, and transactions for software devices.

Heri explained that most of the companies on the domestic boycott list actually have domestic licenses and have already absorbed local labor and resources.

“If there is a boycott action, it means that the workforce within those companies, which are local workers, will be affected,” said Heri.

Chairman of the Inter-Institutional Relations Division of the Indonesian Employers’ Association (Apindo) Sarman Simanjorang said that the fate of Indonesian workers who could be affected by a boycott of products affiliated with the state of Israel needed to be addressed wisely.

As a developing country with a large workforce, a boycott action in Indonesia will directly impact the labor sector. However, the escalation of conflict in the Middle East has also hindered the expansion of several industries domestically, including the manufacturing sector.

“In essence, the community must be more vigilant before engaging in boycotts so that the intended goals of the action can be achieved,” he said.

Also read: Boycott Cases and Support for Palestine