TEMPO.CO, Jakarta - The government must be very cautious in allowing TikTok Shop to resume operations in Indonesia. It must not let the excuse of restraining disruptive technologies give rise to a policy that only benefits one particular business group.
After being banned on October 4, TikTok Shop plans to resume operations in Indonesia. ByteDance Ltd, TikTok’s parent company, is to cooperate with GoTo Gojek Tokopedia. TikTok Shop will partner with Tokopedia, which is the e-commerce business owned by GoTo.
The government revoked TikTok Shop’s business permit because of concerns that the online platform was having an adverse effect on micro, small, and medium-sized enterprises (MSMEs). The presence of TikTok Shop, according to Cooperatives and Small and Medium Enterprises (SMEs) Minister Teten Masduki, caused major business problems for the Tanah Abang retail market and several online stores. Through Trade Ministry Regulation No. 31/2023, the government banned social media companies from being involved in e-commerce.
TikTok had a live shop service that offered several everyday products. It is this service that the government says disrupted trade by selling goods, including imported products, directly to consumers at extremely low prices. In a very short time, TikTok Shop, which had 99.8 million users in Indonesia—the highest number in the world after the United States—signed up many consumers in this country.
At first glance, the government’s courage in halting the operations of TikTok Shop showed that the state was taking the side of MSMEs. But this appreciation will disappear if the government’s move was only a cover for providing privileges to GoTo, a digital services holding company partly owned by Garibaldi Thohir, older brother of State-Owned Enterprises (SOEs) Minister Erick Thohir. After all, it is no secret that TikTok Shop was a strong competitor for Tokopedia and other local e-commerce companies.
Indications of a conflict of interest in the issuing of this ban appeared. A cabinet meeting that discussed the new regulation—Trade Minister Regulation No. 31/2023—that halted the operations of TikTok Shop was attended by former tourism and creative economy minister Wishnutama Kusubandio, who is on the GoTo Board of Commissioners and is also the chairman of commissioners of Telkomsel—a GoTo shareholder.
What is certain is that the planned cooperation will benefit GoTo, which has seen its value plummet because of competition in the digital industry sector.
Just before reports emerged of the plan to merge the companies, GoTo’s share price on the Indonesia Stock Exchange rose sharply from Rp91 to Rp105, before closing at Rp101 in trading on Tuesday, December 5.
The red carpet the government is rolling out for the partnership between TikTok Shop and GoTo does not provide any solution for the basis of the government’s decision to ban the Chinese company, because TikTok Shop is only taking advantage of its parent platform, TikTok, as a social media to sell its products. But the transactions will be different because they will take place through Tokopedia. There will be no change for the traders of Tanah Abang market, as they will continue to lose money. Apart from this, the merger with TikTok will make GoTo even bigger and could turn it into an online retail market monopoly. If this happens, other companies will face difficulties because of unfair competition as a corporation will have benefited from government policy.
Rather than giving rise to unfairness in economic activities, the government should refuse to allow the cooperation between TikTok Shop and GoTo. TikTok Shop can resume operations as long as it establishes a new entity as an e-commerce company.
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