Industry And Cluster | News & Insights

Indonesia’s Stance on E-commerce Revolution: TikTok Shop Ban Sparks Diverse Opinions

Published: October 23, 2023

Tanah Abang, the largest textile and clothing market in Southeast Asia, is grappling with declining foot traffic, much to the dismay of traders. 

They are pointing fingers at TikTok Shop, the e-commerce feature of the popular video-sharing app, for their dwindling businesses. In the words of stallholders with decades of experience, TikTok is rocking their business boat.

Hairun Nisa, a veteran seller of men’s casual clothing, laments, “TikTok is really bad for my business.” She explains that the unique selling method of the platform, which enables sellers to interact with consumers using videos in real time, sets it apart from other e-commerce avenues. Meanwhile, Roni Waskito, a shoe seller at Tanah Abang since 2010, agrees that TikTok has played a significant role in the market’s decline.

Within a year of its launch in Indonesia, TikTok Shop attracted a massive six million sellers and captured approximately five percent of the country’s booming $52 billion e-commerce market last year. The platform’s success seemed unstoppable, with projected sales growth of around 350 percent this year. 

However, on October 5, the Indonesian government stepped in, banning the app. This move, according to Jakarta, was intended to safeguard the interests of the country’s 64 million micro, small, and medium enterprises (MSMEs), including the merchants at Tanah Abang.

Trade Minister Zulkifli Hasan asserted that TikTok Shop facilitated predatory pricing practices, flooded the market with cheap imported goods, and failed to comply with the law. Hasan made it clear that social media platforms were meant solely for advertising, not conducting transactions.

Indonesia’s ban on TikTok, a platform with 125 million users in the country, is the latest blow to the app, which has already faced bans in the US, UK, Canada, Australia, New Zealand, Taiwan, and several EU countries over concerns about data security and potential Chinese influence. India, Pakistan, and Afghanistan have also banned TikTok for various reasons.

While TikTok declined to comment on the Indonesian ban, a significant number of the estimated six million sellers who relied on TikTok Shop for their livelihood expressed their dismay. 

Evo Syah, founder of Videlin Official, a women’s clothing brand based in Bali, shared the dire impact of the ban on his business. Once boasting a daily average of 200 sales, Syah now struggles to achieve 10 or 20 sales a day through alternative platforms like Shopee. Concerned about the future, Syah shares his apprehension over potential layoffs, stating, “The government should listen to our voice.”

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