Indonesia Bans TikTok from Doing Social Media and E-Commerce Business Simultaneously

September 07, 2023, 01.16 AM  | Reporter: Dimas Andi
Indonesia Bans TikTok from Doing Social Media and E-Commerce Business Simultaneously

ILUSTRASI. Russia, Kazan May 28 2019: Tik Tok application icon on Apple iPhone X screen close-up. Tik Tok icon. tik tok application. Tiktok Social media network

TIKTOK - JAKARTA. The Indonesian SME Association (Akumindo) has responded to the government's statement about banning TikTok from simultaneously operating in the social media and e-commerce sectors in Indonesia.

The rejection of TikTok was expressed by the Minister of Cooperatives and SMEs (MenkopUKM) Teten Masduki. This is in line with similar rejections of TikTok by the United States and India.

Teten stated that TikTok can sell, but it cannot be combined with social media. This is because, based on research, people's online shopping activities are navigated and influenced by discussions on social media. Not to mention, the payment and logistics systems could potentially be controlled entirely by TikTok, making it prone to monopoly.

The Secretary General of the Indonesian SME Association, Edy Misero, believes that the controversy over TikTok's social media and e-commerce business began when the Chinese company launched Project S in July 2023.

Read Also: Tik Tok Agresif, E-Commerce Defensif

TikTok's Project S was first launched in the UK through the Trendy Beat feature. In the TikTok app, this feature is present to sell popular products. There is a suspicion that Project S is TikTok's way of collecting data on popular products in a country. Then, these products are produced in China and resold on TikTok Shop.

Such a feature has not yet appeared in the TikTok app in Indonesia, but it still raises concerns about the fate of national SME products. "There is a possibility that foreign products will flood the Indonesian market through e-commerce like TikTok, causing a stir among SME operators," said Edy, on Wednesday (6/9).

In addition, there is a concern that imported products appearing on TikTok will be priced cheaply, causing SME products to lose out in the market. This could happen due to an excess supply of products in the country of origin, such as China, so they decide to export their products to countries with high demand, one of which is Indonesia. Examples are textile products such as clothing or footwear.

Read Also: TikTok Dilarang Jalankan Bisnis Media Sosial dan E-commerce Secara Bersamaan di RI

Akumindo considers the government's statement on TikTok's business as part of efforts to support the sustainability of local SME businesses. Support for SMEs is clearly needed considering the significant contribution of SME-made products to national economic growth.

Amid the TikTok controversy, Akumindo continues to urge the government through the Ministry of Trade (Kemendag) to expedite the revision of Permendag No. 50/2020 on Business Licensing Provisions, Advertising, Guidance, and Supervision of Business Actors in Electronic System Trade.

This revision relates to the prohibition of e-commerce and social commerce platforms like TikTok and others from selling imported goods priced below IDR 1.5 million. If this Permendag revision is successful, it will create a new market that can be utilized by local SME operators.

Furthermore, Akumindo continues to encourage its members to improve the quality and quantity of their products, including urging SME operators to provide products at competitive prices that are acceptable to the Indonesian public.

"SME operators must also hurry to be ready when the new market space opens," he concluded.

Editor: Syamsul Azhar

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