Indonesian Trade Ministry Monitors TikTok-Tokopedia Integration

MERGER - JAKARTA. The government, through the Ministry of Trade (Kemendag), is currently monitoring the integration progress between TikTok and Tokopedia.

The Director General of Domestic Trade at Kemendag, Isy Karim, said that Kemendag is still monitoring the progress of the application development built through the collaboration between TikTok and Tokopedia.

He stated that TikTok and Tokopedia have provided information related to the planned electronic system to be implemented, and a clearer separation process is currently underway.

"As for the progress, it is estimated that only a quarter of the way is left," Isy told Kontan on Monday (26/2).

In the future, Isy said, the TikTok and Tokopedia development application is expected not to have connectivity with TikTok social media. The transaction purchase and payment (e-commerce) facilities will be facilitated and managed by Tokopedia.

"So, the shopping process from product display to transaction order processing is done on two different systems," said Isy.

This integration is given a time frame of 3-4 months until next April. Currently, the system migration progress has reached 75%, while the remaining 25% is yet to be completed.

TikTok has invested more than US$ 1.5 billion to support Tokopedia's operations which was completed on January 31, 2024. These two applications will expand benefits for users and SMEs in the country.

Digital observer and Executive Director of the ICT Institute, Heru Sutadi, said that from the controller's perspective, TikTok now owns 75% of Tokopedia's shares, while GOTO owns 25%, and their ownership will not be further diluted.

According to him, what needs to be noted is that the government has regulated the e-commerce sector through the Negative Investment List (DNI) regulation, which regulates the provisions for foreign investors entering certain sectors including e-commerce, to a certain extent, which can have a majority of shares and which cannot.

"Actually, this e-commerce business is not limited, whether it is domestic or foreign. The problem is why local investors do not take the opportunity to enter and develop e-commerce? That's the question," Heru told Kontan on Friday (23/2).

He stated that as long as TikTok's entry into Tokopedia does not violate the rules, their business does not violate. Of course, in the future, the government must continue to monitor this so that foreign ownership in Indonesian e-commerce can have a positive impact on our economy.

In addition, Heru believes that what needs to be noted is how TikTok as the new controller can commit to what they have promised, how personal data protection is guaranteed, there is no predatory pricing, and so on.

"Because we know, e-commerce transactions in Indonesia have a large value, even if we look from Bank Indonesia, e-commerce transactions in 2023 reached IDR 453.75 trillion, so the economic value is large," said Heru.

Heru emphasized that the government must also continue to monitor how after 4 months (April), the backend system synergy between TikTok and Tokopedia is completed. We must continue to monitor their commitment in promoting local SMEs to be winners, and expand the market abroad, plus their commitment to human resources.

Aside from the pros and cons of foreign and local, Heru said, our joint homework in the future is that there are still many local business owners who have not ventured into digital business.

"This is a joint homework, not only for the government but also for market players including private and SMEs themselves," said Heru.

He added, in the future TikTok and Tokopedia, including GOTO, need to carry out education and cooperation between the three of them in terms of how to educate the public so that SMEs can take advantage of this digital business opportunity and how important data and cyber security are.