2-12-2023 (JAKARTA) Indonesian businesses have expressed their apprehension over a boycott on products from companies perceived to support Israel, citing negative impacts on retail sales and potential risks to the country’s economic growth target.
Shinta Kamdani, the chairwoman of the Indonesian Employers Association (Apindo), argued that the boycott had unfairly targeted local companies with no affiliation to Israel. In response, the association plans to release a comprehensive list of products from manufacturers that are genuinely connected to the Middle Eastern country.
“We will gather accurate data, allowing people to distinguish whether a company claimed to be affiliated with Israel actually has any connection or not,” Shinta stated on Wednesday, as quoted by Kompas.
She further emphasized that the list aligns with Fatwa No. 83/2023 issued by the Indonesian Ulema Council (MUI), which supports Palestine through a boycott of products from pro-Israel firms. However, the fatwa itself does not specify the brands or products that should be boycotted.
Shinta specifically mentioned PT Unilever Indonesia as one of the companies wrongly targeted by the boycott. She clarified that the major fast-moving consumer goods (FMCG) manufacturer has no affiliation with Israel and has been a locally registered company since 1980.
If the boycott persists, the company may be compelled to reduce production and downsize its local workforce, Shinta added. She expressed concern for consumers who are misinformed and mistakenly believe that these products support Israel’s aggression against Palestine. She emphasized the importance of verifying the origin of products before participating in any boycott.
Budihardjo Iduansjah, the chairman of the Indonesian Retail and Tenants Association (Hippindo), also highlighted another local company affected by the boycott, PT Fast Food Indonesia, the operator of Kentucky Fried Chicken (KFC) outlets in the country. He emphasized that the restaurant chain employs local workers and sources raw materials, such as chicken, rice, and vegetables, from within Indonesia.
The Indonesian Chamber of Commerce and Industry (Kadin) echoed the concerns, stating that the boycott has caused losses for local companies due to allegations of their affiliation with parties involved in the Palestine conflict. Consequently, the government is urged to take action to protect national interests and foster a favorable business environment.
Yukki Nugrahawan Hanafi, the acting chairman of Kadin, advised customers to critically assess information, rely on accurate news sources, and avoid falling prey to hoaxes that could lead to losses for certain companies and affect thousands of employees.
Asrorun Niam Sholeh, the head of the MUI fatwa, urged companies wrongly accused of supporting Israeli aggression to publicly declare their stance and provide evidence to refute the allegations. He emphasized the importance of not penalizing innocent companies based on the justification of a fatwa.
To determine whether a company supports Israel or not, Asrorun suggested that consumers examine financial statements, comments from board members, and news reports or studies from reputable organizations.
In an Instagram statement, the MUI clarified that while losses or layoffs at companies supporting Israel were not the intended outcome of the fatwa, they could serve as pressure for businesses to cease their support. The council placed blame on the decisions made by the company’s managers or the global parent company to endorse Israel’s aggression.
Roy Mandey, the chairman of the Indonesian Retailers Association (Aprindo), acknowledged discussions regarding the possibility of creating a blacklist of Israel-related products. However, he believed that releasing the list would require finding a compromise regarding the companies included.
Roy explained that retail sales had significantly declined following the boycott call, particularly for FMCG products. Continuing the boycott could potentially hinder economic growth, with Indonesia’s GDP growth reaching 4.9% year-on-year in the third quarter. The government aims for growth above 5% for the full year, but Roy speculated that it might drop to 4.8% or 4.7% due to weakened consumer spending.
He suggested that the government promptly respond to the decline in retail sales by providing fiscal incentives or salary subsidies for retailers.
“We cannot allow the situation to persist as it is. The speed of response to this trend is crucial,” Roy stressed.
