Almaz Fried Chicken, a new Indonesian fast-food chain, has opened 37 outlets across Indonesia in just a few months. Most of these are located in Greater Jakarta, with several others on Sumatra Island. This rapid expansion follows a widespread boycott of Israeli-related products.

In early December, Chief Executive Okta Wirawan stated that the chain expects to break even seven months after opening its first outlet in June. The company plans to open 10 more outlets by the end of the year, targeting consumers who previously frequented Western chains like KFC.

“Our customers feel that by buying Almaz products, they are not only getting quality food but also contributing to a noble cause,” Wirawan told Nikkei Asia. He added that the company is committed to donating 5% of its profits to charity, including aid to Palestinians.

More than a year after the outbreak of the Israeli-Palestinian conflict, customers in Muslim-majority countries such as Indonesia and Malaysia continue to boycott Western brands with links—or perceived links—to Israel. Food chains and consumer goods have been particularly affected, with local operations of major brands like KFC, McDonald’s, Pizza Hut, Starbucks, and Unilever taking a hit.

Conversely, the boycott has spurred the growth of local businesses producing similar products in both Southeast Asian countries. This trend has also benefited consumer goods and cosmetics manufacturers, potentially reshaping the consumer-facing sectors in Indonesia and Malaysia.

In Malaysia, many consumers have turned away from Starbucks and are now patronizing local caffeine suppliers like ZUS Coffee and Gigi Coffee. Independent cafes are also experiencing a surge in popularity.

“Since the boycott, we have seen more customers coming to independent cafes like ours,” said a barista at Artisan Roast Coffee in Kuala Lumpur. He noted that young Malaysians are embracing the coffee-drinking trend, with sales increasing by about 10% to 20%.

In Indonesia, Fore Coffee is quickly capitalizing on this opportunity. Two months after the Israel-Hamas conflict began, Fore obtained halal certification to support its rapidly expanding operations.

“Indonesia is the largest Muslim country, so having this halal certification impacts our sales quite significantly,” Fore co-founder and CEO Vico Lomar told Nikkei Asia in December. “Maybe the boycott itself is helping local people to like local products,” he added.

According to a consumer survey published by GlobalData in July, nearly half of respondents worldwide have joined boycotts against certain brands due to recent wars and conflicts. In Malaysia and Indonesia, however, the figure is much higher, at around 70%.

The share prices of Indonesian and Malaysian listed companies affected by the boycott of Israel have fallen significantly since October 2023.

Indonesia and Malaysia have long been staunch supporters of Palestine. Neither country has diplomatic relations with Israel. At a recent meeting of several Muslim-majority countries in Egypt, Indonesian President Prabowo Subianto condemned the double standards of Western countries on human rights concerning Palestine. “Human rights are not for Muslim peoples. This is the reality. This is very sad,” he said.

Malaysian Prime Minister Anwar Ibrahim has intensified his criticism of the United States for its support of Israel. He has rejected pressure to recognize Hamas as a terrorist group and has banned Israeli ships from entering Malaysian ports.

The People’s Bank of China (PBoC) plans to cut interest rates this year as it makes a historic shift towards a more orthodox monetary policy to align with the U.S. Federal Reserve and the European Central Bank.

In a statement to the Financial Times, the PBoC said it is likely to cut interest rates from the current 1.5 per cent level “at an appropriate time” in 2025. The bank added that it would prioritize “the role of interest rate adjustments” and move away from “quantitative targets” for credit growth, which would mean a transformation in Chinese monetary policy.

Most central banks, like the Fed, have a single policy variable, the benchmark interest rate, which they use to influence credit demand and activity in the economy. In contrast, the PBoC not only sets a large number of different interest rates but also provides informal guidance to banks on how much they should expand their loan books.

While this guidance has been the most important tool in managing the economy for decades – as credit has been channeled to high-growth sectors such as manufacturing, technology, and property – officials within the PBoC now believe reform is urgent.

“Interest rate reform will probably be the real focus of the PBoC in 2025,” said Richard Xu, chief China financial analyst at Morgan Stanley in Hong Kong. “China’s economic development urgently needs to move away from a mindset that focuses solely on expanding the market size [of banks’ loan books],” he added.

Loan demand has collapsed due to a prolonged slowdown in the property market. The PBoC also fears that loan growth targets will lead to indiscriminate lending without considering risk, which in the long run means waste.

“In line with the requirements of high-quality development, these quantitative targets have been phased out in recent years,” the central bank said. “The PBoC will pay more attention to the role of interest rate control and improve the formation and transmission of market-oriented interest rates.”

As part of the regime change, the PBoC announced last year that its main policy instrument would be the seven-day reverse repo rate instead of the interest rates it has used to date.

The reduced emphasis on credit growth targets could rein in overcapacity in China, which has led to domestic bad debts and disruptions in global industries such as steel.

But the central bank is struggling to implement the change in interest rates because the government wants to channel money into the high-tech and manufacturing sectors, which were easier under the old credit expansion system.

Even as it tries to make a structural change in policy, the PBoC is also under pressure to revitalize the Chinese economy. The central bank has cut the seven-day interest rate twice and the five-year rate, which affects mortgage prices, three times through 2024 as part of its most aggressive stimulus package since the Covid-19 pandemic.

These moves came in the context of President Xi Jinping’s commitment to achieve 5 percent economic growth despite problems in China’s property sector and trade tensions with the U.S.

PBoC governor Pan Gongsheng and his predecessors Yi Gang and Zhou Xiaochuan pushed for risk-based pricing of loans in recent meetings with officials from some of China’s largest banks, according to participants.

Bankers attending the meetings warned of possible confusion in pricing long-term loans as the market is used to the PBoC’s guidance, noting the difficulty of switching to the new system.

For international investors, if the PBoC succeeds, Chinese monetary policy will start to resemble the system they are used to in the U.S., Europe, or Japan.

For the first time in two decades, the central bank also bought government bonds on the open market in 2024 to inject money into the financial system, following the Fed’s policy.

Analysts said the PBoC still lacks some key ingredients for an interest-rate-based system, such as a program of routine, public meetings to make policy decisions.

Without such guidance, “market participants may find themselves guessing what will happen next,” said Haibin Zhu, China economist at JPMorgan Chase.

Anti-corruption investigators and police in South Korea suspended their efforts to arrest ousted President Yoon Suk Yeol on Friday following a physical altercation with presidential security guards.

The Corruption Investigation Office for Senior Officials (CIO) stated in a message to reporters that attempting to arrest Yoon by entering his residence was deemed “almost impossible.”

The CIO halted the operation at 1:30 p.m. local time, citing concerns for the safety of its staff, who faced “deterrence” while attempting to execute the arrest order.

“Further measures will be decided after evaluation,” the office said, expressing regret over the “suspect’s refusal to comply with legal procedures.”

Earlier in the day, investigators entered Yoon’s residence in Seoul’s Yongsan district after police dispersed protesters gathered on a nearby street. The protesters had vowed to protect the suspended president from arrest.

The CIO’s action followed the issuance of a court-approved warrant for Yoon’s detention on Tuesday. If investigators eventually succeed in detaining Yoon, it would mark the first time a sitting South Korean president has been arrested.

Yoon and his legal team have dismissed the investigation as illegitimate and refused to cooperate.

Footage from state-funded broadcaster KBS showed investigators entering the gate of Yoon’s compound. KBS and cable news channel YTN reported that more than 2,700 police personnel were mobilized, with dozens of investigators and officers entering the compound. Clashes and physical altercations with Yoon’s security guards ensued. Yonhap News Agency reported that two of Yoon’s lawyers later entered the residence.

According to police, the CIO deployed 30 officers, while the police provided 120 officers at the official residence. Approximately 80 officers entered the residence, with the remainder stationed outside.

Yoon Kab-keun, one of the lawyers who reportedly entered the residence, condemned Friday’s operation as unlawful and vowed to take legal action.

“We have filed a complaint against the arrest warrant with the Constitutional Court and the court that issued the order. We will also pursue legal action against the illegal implementation of the arrest warrant,” the lawyer said in a message sent to Nikkei Asia on Friday.

U.S. flag unfurled during demonstrations in support of Yoon

Meanwhile, during protests outside the residence, a supporter of Yoon in his 60s waved South Korean and U.S. flags, declaring that “freedom and democracy must be protected.”

The U.S. maintains approximately 28,000 troops in South Korea under a security pact aimed at deterring North Korea.

Yoon has been suspended from office since National Assembly lawmakers removed him on December 14 over the short-lived martial law he declared on December 3. The Constitutional Court has begun deliberating whether to uphold or overturn the legislative action, a process that could take up to six months.

The conservative former attorney general, elected to a five-year presidential term in 2022, shocked South Korea and the international community when he abruptly declared martial law in the middle of the night and ordered the military to storm the legislature.

Lawmakers quickly convened and voted to reject the proclamation. Yoon withdrew it early the next day. The first attempt to impeach Yoon failed on procedural grounds due to a boycott by lawmakers from Yoon’s ruling People’s Power Party (PPP). However, the second attempt succeeded as enough PPP members joined opposition colleagues to vote in favor.

The South Korean prime minister was installed as acting president, but opposition lawmakers later removed him due to disagreements over the appointment of Constitutional Court judges. Deputy Prime Minister Choi Sang-mok, who also serves as finance minister, is currently acting as head of state.

Yoon’s dismissal is supported by a significant portion of the South Korean public, though his core supporters remain opposed.

“Our economy is ruined”

A former prosecutor general, Yoon gained prominence for leading high-profile investigations into public figures, including conservative former President Park Geun-hye, who was impeached in 2017 over an influence-peddling scandal. Given Yoon’s background as a prosecutor, critics in South Korea have condemned his refusal to cooperate with a legal investigation into his own conduct.

“It is highly contradictory for Yoon Suk Yeol, a former chief prosecutor, to lead the obstruction of justice,” the left-leaning Kyunghyang Shinmun newspaper wrote in an editorial on Friday.

Also on Friday morning, one month after Yoon declared martial law on December 3, the conservative Chosun Ilbo published an editorial highlighting how prolonged domestic chaos has jeopardized South Korea’s export-oriented economy and contributed to the depreciation of the won.

“Economic sentiment is freezing due to political uncertainty,” Chosun wrote, adding, “Bad politics can no longer be allowed to ruin our economy.”