The impact of closing the Tiktok Shop is estimated not to be long

Tiktok complies with Minister of Trade Regulation No. 31/2023. They closed trade transactions. However, observers estimate that the impact on traders will not last long.

The following article was translated using both Microsoft Azure Open AI and Google Translation AI. The original article can be found in Dampak Penutupan Tiktok Shop Diperkirakan Tak Lama

KOMPAS/MEDIANA

TikTok Shop

JAKARTA, KOMPAS — Tiktok stated that it would not facilitate buying and selling goods transactions within Tiktok Shop Indonesia as of October 4 2023 at 17.00 WIB. This announcement was made by Tiktok to follow up on Minister of Trade Regulation Number 31 of 2023 concerning Business Licensing, Advertising, Guidance and Supervision of Business Actors in Trade via Electronic Systems which was promulgated on September 26 2023.

In the company's official statement, Tiktok said that the company's main priority is to respect and comply with the regulations and laws that apply in Indonesia. Tiktok will continue to coordinate with the Indonesian Government regarding the company's future steps and plans.

Researcher from the Center of Economic and Law Studies (Celios), Yeta Purnama, when contacted separately, expressed her opinion that the closure of Tiktok Shop would have an impact on the sustainability of micro, small, and medium-sized enterprises (MSMEs) that have had accounts on Tiktok. However, she believes that the impact will not last long as sellers are expected to expand to other online sales channels.

The government needs to enforce the separation of social commerce and marketplace business models for all social media platform companies, not just Tiktok. Yeta believes that this will create equality of treatment in the e-commerce market.

KOMPAS/PRIYOMBODO

A child watches TikTok on a grave.

In the Momentum Works (research firm and venture builder) report entitled "Ecommerce in Southeast Asia" (June 2023), Shopee, Lazada, and Tokopedia remain the top three marketplaces in Southeast Asia. Meanwhile, Tiktok Shop, part of Tiktok, is considered to have developed into an important player in the Southeast Asian e-commerce market.

Momentum Works CEO Jianggan Lie believes, regardless of how social commerce and e-commerce are separated, Tiktok's huge consumer traffic will continue to be utilized for the e-commerce market, both by Tiktok and other parties.

"It's not too late for Tiktok to get involved and turn the situation around. However, they must be bold and have a local approach," said Lie.

The impact will not last long as the sellers are expected to start exploring other online selling channels.

Previously, Minister of Trade Zulkifli Hasan said that there were several main rules regulated in the trade regulation. One of them is defining various business models for trading through electronic systems (PMSE), starting from marketplace) to social commerce. Through this definition, guidance and supervision of PMSE can be carried out optimally, including related to licensing, taxation and other trading provisions.

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One of the brands in Tiktok Shop.

Also read: Minister of Trade Regulation No 31/2023 Determines 6 Online Trading Business Models

According to the trade regulation, social commerce is defined as a social media organizer that provides certain features, menus or facilities that enable traders to offer goods and services. To maintain healthy competition, PMSE organizers, including social commerce, are required to ensure that there is no interconnection between electronic systems used within and outside the PMSE system. PMSE organizers are also prohibited from controlling data.

"Social commerce is prohibited from facilitating payment transactions on electronic systems and can only promote goods/services," said Zulkifli. Both marketplace and social commerce platforms are prohibited from becoming producers.

PMSE organizers, including market places and social commerce,who violate the rules will be given three written warnings within a period of 14 calendar days from the date the previous warning letter was issued. If PMSE perpetrators still do not carry out their obligations within a period of time, they will be subject to administrative sanctions in the form of temporary blocking of PPMSE services by the relevant authorized agency.

Previously, Minister of Cooperatives and Small and Medium Enterprises Teten Masduki said that the policy of separating social commerce from e-commerce was not to close traders' access to promotions. through social media, but rather to regulate so that market monopoly does not occur.

"This is how it is, the issue with Tiktok Shop is not banned, but regulated. We have decided that there should be no merging of social media and e-commerce because it has the potential to monopolize the market. If that happens, it could be dangerous," he said, on Thursday (28/9/2023).

With this regulation, said Teten, the government aims to bring equality to the business field. Because if not, market monopolies can erode UMKM players, especially those who are not yet connected to the digital system.

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Provinces such as West Papua, Papua, North Kalimantan, and Bengkulu have shown a greater growth in the online trading sector compared to Jakarta, which has grown twice as high as the national average.

Public consultation

The Ministry of Communication and Informatics has begun public consultations on the draft Ministerial Regulation (RPM) on Public Electronic System Providers on Tuesday (3/10/2023) until Monday (16/10/2023). The draft RPM has been previously synchronized within the scope of the Directorate General of Information and Communication Applications of the Ministry of Communication and Informatics.

The RPM material on the Implementation of Public Electronic System consists of nine chapters which include topics on the classification of electronic system data, organizer registration, and agency domain names. In an official statement from the Ministry of Communication and Informatics on Tuesday, the ministry stated that the basis for RPM preparation was Government Regulation Number 71 of 2020 regarding the Implementation of Electronic Systems and Transactions.

The Director General of Domestic Trade at the Ministry of Trade, Isy Karim, once said that there would be coordination with the Ministry of Communication and Information after Minister of Trade Regulation No. 31/2023 was promulgated. According to him, in the Ministry of Communication and Information system there will be processing of permits for organizers of electronic systems for social media, social commerce and e-commerce.

Also read: One ​​Voice, the Government Regulates "Social Commerce"