Liputan6.com, Jakarta - The government of Indonesia has decided to outlaw TikTok Shop in Indonesia after growing discontent from small businesses. The presence of TikTok Shop, in which celebs could also promote their brands, was seen as taking away the consumers from traditional markets.
The TikTok Shop must close on 3 October 2023. Businesses that violate the regulation can lose their business permits.
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Deputy Minister of Trade Jerry Sambuaga stressed that the recent revision of Minister of Trade Regulation about electronic commerce aims to shield small and medium-sized enterprises (SMEs) from platforms like TikTok Shop.
"In essence, this measure safeguards SMEs, echoing the sentiments of Minister Teten Masduki and the President, who have both underscored the importance of protecting SMEs and preventing predatory pricing," saidWamendag Jerry.
Teten Masduki is the minister for cooperatives and SMEs.
Jerry also explained that the revision explicitly states that social media cannot also function as e-commerce to make transactions. The government says that allowing TikTok to operate both functions concurrently would create an atmosphere of unfair competition in the online marketplace.
"TikTok, as a social media platform, cannot engage in sales simultaenously. This aligns with regulations from Ministry of Informations and Ministry of Trade," he said.
Therefore, the government has undertaken the regulation of online commerce through the revision of Minister of Trade Regulation (Permendag) Number 50 of 2020.
"Our focus lies in regulating the platform itself. When TikTok functions as a social media platform, it must adhere to the prescribed rules," he concluded.
In addition, Zulkifli Hasan, Indonesia's Minister fof Trade, emphasized the need to maintain a clear demarcation between social media and commerce platforms to prevent the misuse of personal data for business purposes.
"This measure is in place to prevent the exploitation of personal data for business interests," Zulkifli stated.
TikTok Shop Denies Harming Local SMEs
TikTok Indonesia already spoke out in response to the government's moven to ban TikTok Shop and similar platforms from selling products. TikTok Shop is said to have emerged as a solution for marketing local Indonesian SME products.
"It is important to emphasize once again that social commerce was born as a solution to the real challenges faced by SMEs, helping them collaborate with local creators to increase traffic to their online stores," stated the TikTok Indonesia spokesperson when contacted by Liputan6.com on Monday (25/9/2023).
He stated that TikTok Indonesia will adhere to the prevailing rules and regulations in Indonesia with regard to the regulations to be endorsed by Minister of Trade Zulkifli Hasan, prohibiting the sale of products.
"We will uphold the laws and regulations that are in effect in Indonesia," he affirmed.
Minister Teten Masduki, also highlights the abundance of imported products that are reducing the market share of local SME products.
Comedian and host Ruben Onsu, one of the celebs who used TikTok Shop to sell products, rejected the argument that TikTok Shop was wrong. He believed the social media app was opening opportunities for many people.
'Now the application is getting the blame. Doesn't that open opportunities for all?" said Ruben.
Nonetheless, TikTok Indonesia is calling on the government to evaluate the consequences of enforcing rules against product transactions on this popular social-commerce platform. This is particularly important considering the extensive user base of TikTok Shop.
"We also implore the government to consider the repercussions on the livelihoods of 6 million local sellers and almost 7 million affiliate creators who are dependent on TikTok Shop," he firmly stated.
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E-Commerce Association Awaits Comprehensive Rules on the TikTok Shop and Similar Platforms Sales Ban
Previously, the Indonesian E-commerce Association (IdEA) said they would try to review and adhere the new government rule.
IdEA's Chairman, Bima Laga, emphasized that comprehensive rules are necessary to determine their future course of action. This is crucial given that these regulations will address matters related to both e-commerce and social commerce.
Bima emphasized that the effects of the regulations on sales transactions across all e-commerce platforms will become apparent once the comprehensive rules have been studied. This includes future aspects related to trade supervision on online platforms.
He noted that ongoing communication with the government, particularly with the Ministry of Trade, which is responsible for issuing these regulations, has been taking place.
While a deeper understanding of the rules is necessary, Bima says that they will adhere to the government's established regulations.
"We are in communication. Essentially, both us and our members will comply with the prevailing regulations," he clarified.
Tira Santia, Ilyas Istianur Praditya, Arief Rahman Hakim, and M Altaf Jauhar contributed to this report.
