Goh Lim Thye of Universiti Malaya said prolonged boycotts of foreign products could potentially deter foreign investors and create uncertainty in the market.
He said the closure of foreign food and beverage businesses could raise the unemployment rate for the 1.37 million Malaysians and 207,200 non-citizens currently working in the industry, even when it accounts for only 2.4% of the nation’s gross domestic product.
“A sustained boycott movement could result in substantial job losses in this sector, raising the unemployment rate and diminishing economic activities in the related industries.
“Widespread closures can also create a negative perception among investors regarding market stability,” Goh told FMT.
He said these business closures could also lead to localised economic impacts, such as disruptions to the supply chain system.
“Local producers who supply products to these outlets, such as farmers, distributors and manufacturers will also be adversely affected, leading to a ripple effect throughout the economy.”
In April, QSR Brands (M) Holdings Bhd, which owns and operates fast food chain Kentucky Fried Chicken, said it had temporarily closed several outlets following months of boycotts due to KFC’s perceived links to Israel and the war in Gaza.
On July 31, the economy ministry said in a parliamentary reply that the boycott movements have not affected the economy since the food and beverage sub-sector contributes less than 2.5% to the GDP.
The ministry also urged local companies to be more creative and innovative in marketing their products, and thus indirectly increase the demand for Malaysian-made products.
Nazari Ismail, an economist and the Malaysian chairman of the pro-Palestinian BDS boycott movement, agreeing with the economy ministry’s findings, said most consumers are simply shifting from foreign to local products.
“People boycotting Nestlé’s coffee products will instead support other brands such as Indocafe or other local products,” he told FMT.
However, while Goh said the shift to local products would help maintain consumer spending levels, he warned that it might not be enough to fully offset the demand typically met by foreign-owned enterprises.
“Local businesses may find it challenging to scale up production to meet demand. Over time, these issues could impede economic growth and reduce overall productivity,” he said.
To mitigate the long-term negative effects of boycott movements, Goh called on the government to introduce tax breaks, grants or low-interest loans to support the expansion of local businesses and for training and reskilling programmes to be conducted for displaced workers.
“They can also create programmes to help local suppliers diversify their customer base and boost funding for research and development to foster innovation within local industries,” he said.
However, Nazari said companies are responsible for ensuring that their values are aligned with those of its customers. “The blame is on the top management of global companies for failing to understand consumer sentiments and not changing their strategies to suit these sentiments.”