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Palestine Will Reel From Economic Peril Due To Boycott: Economist

KUCHING: The current boycott stance by Malaysians and other global citizens to spurn American brands such as McDonald’s, Burger King, and Starbucks, as well as other brands like Nestle’s Milo and Nescafe, which are deemed to be products exported from pro-Israel countries, will certainly exact economic repercussions on such brands.

Institut Masa Depan Malaysia senior fellow Datuk Dr Madeline Berma said boycotting could lead to job losses, especially for Malaysian employees who do not influence a brand’s actions.

However, there is a misconception among consumers who are participating in this call to boycott these popular brands in light of the current Israeli-Hamas conflict in the Middle East, according to a renowned local economist.

Speaking to The Exchange Asia, Dato Dr Madeline Berma said, “Consumers boycotting these brands are not aware that while their action will cause a deficit and hurt the brands that are being given the snub, it will be Palestine as a nation, and Palestinians as a people, who will bear the heavy brunt of this boycott action, more than Israel itself.”

The Senior Fellow of Institut Masa Depan Malaysia, quoting a 2015 report by the global policy think tank Rand Corporation, said: “Boycott, divestment, and sanctions (BDS) and other related financial and trade sanctions against Israel, had resulted in a cumulative reduction of around US$15 billion in Israel’s gross domestic product (GDP) over 10 years.

“This represents about three per cent of Israel’s annual GDP, over US$500 billion. It was further reported that in Palestine, the BDS led to increased trade and transaction costs and a reduction in Palestinians working in Israel.

“This, in turn, caused a US$2.4 billion decrease in Palestine’s GDP, with a per capita GDP decrease of 12 per cent, which is 3.5 times greater than the decrease experienced by Israel. The BDS has reduced economic opportunities in Palestine and inflicted more harm on the Palestinians than serve a good cause to the politically- and economically-challenged nation,” she added.

Madeline said that at the policy level, boycotts can result in economic pressure on the targeted companies, driving them to formulate a policy commitment and modify practices in response to such coercion.

According to her, boycotts can also impact on brand image.

“Brands rely heavily on their image and reputation. Customers’ anger and hatred towards the brand create a lot of negative publicity against the targeted companies. They cause the most damage to relationships between customers and companies, weakening brand strength and impacting profits,” she said.

On the continued corporate performance of a company whose products were given the cold shoulder by consumers, she said: “For targeted companies like Mcdonald’s and Starbucks,  such boycotts can have detrimental effects on corporate performance, particularly in terms of sales, brand image, reputation, and stakeholder relationships.”

Madeline pointed out that boycotts can lead to a noticeable drop in a brand’s revenue, making it a direct and impactful way to hold companies accountable for their beliefs, political stance, and subsequent actions.

She said that during a boycott, a country can suffer economic losses.

“Boycotting can lead to job losses, especially for Malaysian employees who do not influence a brand’s actions.

Malaysians can boycott to their ‘own disadvantage’ since such companies provide employment and are the largest tax-contributing sector to the national economy.

She added, “These multinational chains also buy local, and therefore, local industries will also be affected by such boycott actions.”

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