Call for Boycott of Israeli Products in Indonesia, Whats the Law?

PERTANYAAN

Recently, there have been calls for boycotts of pro-Israel products. There have even been a number of pro-Israeli product lists strewn across social media. The recently issued Indonesian Ulema Council or MUI fatwa forbids pro-Israel products. Therefore, is there actually a law to boycott products?

INTISARI JAWABAN

There are a number of legal aspects that should be considered in relation to calls or invitations to boycott pro-Israeli products or Israeli products in Indonesia, among others, in relation to provisions on prohibited goods from being imported, franchising, to antitrust/anti-monopoly. How do the provisions sound?

Please take a look at the review below for a further explanation.

ULASAN LENGKAP

This article is an English translation of Ajakan Boikot Produk Israel di Indonesia, Adakah Hukumnya?, written by Bernadetha Aurelia Oktavira, S.H. and was published on Tuesday, 14 November 2023.

All legal information available on Klinik hukumonline.com has been prepared for educational purposes only and is general in nature (read the complete Disclaimer). In order to obtain legal advice specific to your case, please consult with Justika Partner Consultant.

Indonesian Ulema Council Fatwa on Boycott of Pro-Israel Products

You need to know according to the official dictionary of the Indonesian language (Kamus Besar Bahasa Indonesia), boikot or boycott means to reject cooperation. Whereas, according to KBBI, the meaning of boycott as a verb (memboikot), is to conspire to refuse to cooperate (deal in trade, talk, participate, and so on).

Following on from your question, it is true that recently there have been calls to boycott Israeli products in Indonesia through social media, even accompanied by a list of pro-Israeli products. This is due to the conflict between Israel and Palestine that has resulted in many injuries and even deaths.

In response to the conflict between Israel and Palestine and the call to boycott Israeli products in Indonesia, the Fatwa Commission of the Indonesian Ulema Council (Majelis Ulama Indonesia/”MUI”) issued MUI Fatwa No. 83/2023 on the law of supporting the Palestinian cause.

The legal provisions in the MUI fatwa are:

1. Supporting the cause of Palestinian independence against Israeli aggression is obligatory.
2. Support as mentioned in point (1) above, including by distributing zakat, infaq and sadaqah for the benefit of the Palestinian people's cause.
3. Basically, zakat funds must be distributed to mustahik who are in the vicinity of the muzakki. In the event of an emergency or urgent need, zakat funds may be distributed to mustahik who are further away, such as for the Palestinian cause.
4. Supporting Israeli aggression against Palestine or those who support Israel either directly or indirectly is haram.

Furthermore, there are MUI fatwa recommendations, which are as follows:

1. Muslims are urged to support the Palestinian cause, such as raising funds for humanitarian causes and movements, praying for victory, and performing ghaib prayers for the Palestinian martyrs.
2. The government is urged to take firm steps to help the Palestinian cause, such as through diplomacy at the UN to stop the war and to impose sanctions on Israel, sending humanitarian aid, and consolidating Organisations of Islamic Cooperation (“OIC”) countries to pressure Israel to stop its aggression.
3. Muslims are urged to avoid as much as possible transactions and the use of products affiliated with Israel, and those that support colonization and Zionism.

But how is the position of MUI's fatwa in Indonesia? Summarized from the Position of MUI's Fatwa in Indonesian Legal System, MUI's fatwa is not a state law that has sovereignty that can be enforced for all people, MUI's fatwa also has no sanction and does not have to be obeyed by all citizens. So, MUI's fatwa is only binding and obeyed by the Muslim community who feel they have a bond with MUI itself.

The Law of Boycotting Pro-Israel Products

We will explain one by one the legal aspects of boycotting pro-Israel products or Israeli products in Indonesia as you asked. First, if it is assumed that the product in question is an imported or foreign product, you need to know that there are a number of provisions for goods prohibited from importation including:[1]

1. certain types of sugar;
2. certain types of rice;
3. ozone-depleting substances;
4. used bags, used sacks, and used clothes;
5. goods with a refrigerated-based system which use Chlorofluorocarbon (CFC) and Hydrochlorofluorocarbon 22 (HCFC-22) both in empty or full condition;
6. certain drug ingredients and foods;
7. toxic and hazardous materials (bahan berbahaya dan beracun/B3);
8. registered hazardous and toxic waste (B3 waste), and non-hazardous and toxic waste (non-B3 waste);
9. hand tools (finished form); and
10. medical devices containing mercury

Furthermore, you can see the details of prohibited goods in Appendix II of Minister of Trade Regulation 40/2022. Meanwhile, importers must also meet the criteria for business licensing in the field of imports as stipulated in the Minister of Trade Regulation 20/2021 and its amendments.

Second, in addition to the provision of prohibited imported goods, the call to boycott pro-Israel products is closely related to foreign franchises. Franchise is a special right owned by an individual or business entity to a business system with business characteristics in order to market goods and/or services that have proven successful and can be utilized and/or used by other parties based on a franchise agreement.[2] One of the franchisors can come from abroad.[3]

The provisions for organizing franchises must also comply with GR 42/2007 and Minister of Trade Regulation 71/2019. The franchise itself must meet the following criteria:[4]

1. Having a Distinctive Business Characteristic

This means a business that has advantages or differences that are not easily imitated compared to other similar businesses, and makes consumers always look for these characteristics. For example, about the management system, the way of selling and service, or the arrangement or distribution method which is a special characteristic of the franchisor.

2. Proven to Provide Profits

Referring to the franchisor's experience that has been owned for approximately 5 years and has had business tips to overcome problems in the course of its business, and this is evidenced by the profitable survival and development of the business.

3. Have Standards for Services and Goods and/or Services Offered Made in Writing

A business needs written standards so that franchisees can conduct business within a clear and common framework (Standard Operating Procedures).

4. Easy to Teach and Apply

Easy to implement by franchisees who do not have experience or knowledge of similar businesses in accordance with the continuous operational and management guidance of the franchisor.

5. Ongoing Support

Continuous support from the franchisor to the franchisee such as operational guidance, training and promotion.

6. Registered Intellectual Property Rights

Such as trademarks, copyrights, patents, licenses, and/or trade secrets (confidential information) that have been registered and have certificates or are in the process of registration.

Thus, as long as the foreign product still meets the provisions of laws and regulations such as the implementation of franchises or does not include goods prohibited from import, the product can still be traded in Indonesia.

Third, the call to boycott pro-Israel products is also related to the boycott stipulated in Article 10 section (1) Anti-Monopoly Law, which states:

Business actors are prohibited from entering into an agreement with their competing business actors which could prevent other business actors from engaging in the same business, either for domestic or overseas market purposes.

Moreover, business actors are prohibited from entering into an agreement with their competing business actors for refusing to sell any goods and or services from other business actors, so that such act:[5]

1. causes a loss or may be suspected of potentially causing a loss to other business actors; or
2. limits other business actors in selling or buying any goods and or services from the relevant market

For violations of Article 10 Anti-Monopoly Law, the Commission may impose administrative action in the form of a stipulation to cancel the agreement either in part or in its entirety.[6]

In addition to the cancellation of the agreement, a fine may also be imposed under the following conditions:[7]

1. a maximum of 50% of the net profit obtained by Business Actors in the Relevant Market, during the period of violation of the Law; or
2. a maximum of 10% of the total sales in the Relevant Market, during the period of violation of the Law.

Thus, as long as the call or invitation to boycott Israeli products in Indonesia does not lead to a violation of the Anti-Monopoly Law, then the call or invitation is not a violation of the law, and it is an option for the community to react wisely.

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This is our answer, hopefully, you find it useful.

Legal Basis:

1. Law Number 5 of 1999 on Prohibition of Monopolistic Practices and Unfair Business Competition;
2. Regulation of the Government in Lieu of Law Number 2 of 2022 on Job Creation which has been enacted into law under Law Number 6 of 2023;
3. Regulation of the Government Number 42 of 2007 on Franchise;
4. Regulation of the Government Number 44 of 2021 on the Implementation of the Prohibition of Monopolistic Practices and Unfair Business Competition;
5. Regulation of the Minister of Trade Number 71 of 2019 on the Organization of Franchise;
6. Regulation of the Minister of Trade Number 18 of 2021 on Goods Prohibited from Being Exported and Goods Prohibited from Being Imported as amended by Regulation of the Minister of Trade Number 40 of 2022 on the Amendment to Regulation of the Minister of Trade Number 18 of 2021 on Goods Prohibited from Being Exported and Goods Prohibited from Being Imported.

Reference:

1. Boikot, accessed on 13^th November 2023, at 21.00 Western Indonesian Time (zone);
2. Memboikot, accessed on 13^th November 2023, at 21.02 Western Indonesian Time (zone);
3. MUI Fatwa No. 83/2023, accessed on 13^th November 2023, at 21.10 Western Indonesian Time (zone).

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[1] Article 2 section (3) Regulation of the Minister of Trade Number 18 of 2021 on Goods Prohibited from Being Exported and Goods Prohibited from Being Imported.

[2] Article 1 number 1 Regulation of the Government Number 42 of 2007 on Franchise (“GR 42/2007”).

[3] Article 4 letter a Regulation of the Minister of Trade Number 71 of 2019 on the Organization of Franchise.

[4] Article 3 GR 42/2007 and its Elucidation.

[5] Article 10 section (2) Law Number 5 of 1999 on Prohibition of Monopolistic Practices and Unfair Business Competition (“Anti-Monopoly Law”).

[6] Article 118 number 4 Regulation of the Government in Lieu of Law Number 2 of 2022 on Job Creation which amended Article 47 section (2) letter a Anti-Monopoly Law jo. Article 7 section (2) Regulation of the Government Number 44 of 2021 on the Implementation of the Prohibition of Monopolistic Practices and Unfair Business Competition (“GR 44/2021”).

[7] Article 12 section (1) GR 44/2021.