Indonesia’s Bold Move
In a surprising turn of events, the Indonesian government has taken a firm stance against e-commerce transactions on social media platforms. The decision, primarily aimed at safeguarding small businesses from the fierce competition of e-commerce giants, has particularly affected the Chinese-owned app, TikTok.
TikTok, in its official statement, expressed deep regret over the government’s decision, emphasizing the potential repercussions for the millions of sellers and affiliate creators who rely on TikTok Shop for their livelihood. The statement read, “We deeply regret the government’s announcement, especially how it will impact the livelihoods of the six million sellers and nearly seven million affiliate creators who use TikTok Shop.”
Despite their concerns, TikTok Indonesia has committed to respecting and adhering to the regulations and laws of Indonesia, pledging to take a “constructive path forward.”
Behind the Ban
Indonesia’s Trade Minister, Zulkifli Hasan, after a meeting with President Joko Widodo, announced the ban. The primary objective of this ban is to prevent algorithmic domination and the misuse of personal data for business interests. Hasan elaborated that the ban aims to establish a fair and beneficial e-commerce ecosystem, restricting marketplaces and social media sellers from acting as producers and facilitating payment transactions.
Impact on Local Businesses
During a recent inspection at Jakarta’s largest wholesale market, Tanah Abang, Teten Masduki, Minister of Cooperatives and Small and Medium Enterprises, observed that local sellers faced significant profit losses, unable to compete with cheaper imported products sold online. Masduki accused platforms like TikTok of engaging in “predatory pricing,” harming local businesses.
A Broader Perspective
While TikTok Shop is in the spotlight, Minister of Communication and Informatics, Budi Arie, clarified that the regulation targets all social commerce platforms. This could potentially affect other major e-commerce players in the region, such as Tokopedia, Lazada, and BliBli.
TikTok’s Commitment to Southeast Asia
Earlier this year, TikTok CEO Shou Zi Chew announced plans to invest billions in Indonesia and Southeast Asia. While the specifics of the investment remain undisclosed, the focus would be on training, advertising, and supporting small vendors on TikTok Shop.
TikTok, owned by China’s ByteDance, has faced global scrutiny over concerns of data harvesting and advancing Beijing’s interests. Despite these challenges, Southeast Asia remains one of TikTok’s most significant markets.
Voices from the Ground
Local merchants, like Muhammad Zidan, who rely on TikTok Shop, have voiced their concerns. Zidan highlighted the platform’s role in providing exposure for products and urged the government to find a balanced solution, emphasizing the potential losses they might incur due to the ban.