TikTok Shop Comes Again: Must Have A Positive Impact On Indonesian MSMEs, Not The Other Way

Illustration - TikTok Shop has reopened in Indonesia since December 12, 2023 and is expected to develop the MSME business. (Between/Aditya Pradana Putra)

JAKARTA TikTok Shop has officially reopened. The commemoration of the national online shopping day (Harbolnas) which was held on December 12, 2023, marks a comeback-commerce that is now working with PT GoTo Gojek Tokopedia Tbk (GOTO).

Rumors of TikTok Shop's return have actually been smelled since a month ago. And, the rumors came true after TikTok Shop poured USD 1.5 billion or approximately IDR 23.2 trillion into Tokopedia and became the controlling shareholder of 75.01 percent. Thus, the Tokopedia and TikTok Shop Indonesia businesses will be combined under PT Tokopedia.

Prior to this, TikTok Shop was closed by the Government of Indonesia on October 4, 2023 for banning online shopping transactions on social media platforms.

TikTok Shop is considered to have violated the Regulation of the Minister of Trade Number 31 of 2023 concerning Business Licensing, Advertising, Development, and Supervision of Business Actors in Trade through the Electronic System, which prohibits buying and selling transactions on social media.

Complaints from traders at Tanah Abang Market were motivated by the enactment of the regulation in September 2023. At that time, traders at Tanah Abang Market admitted that their income had dropped dramatically after being hit by a wave of the COVID-19 pandemic and the onslaught of digital stores.

TikTok Shop's decision to collaborate with Tokopedia raises the question, can this trigger an industrial-commerce monopoly in the COUNTRY?

According to the Director of the Digital Center of Law and Economic Studies (Celios) Nailul Huda, there will be no e-commerce monopoly with the cooperation between TikTok Shop and Tokopedia, because the market share is still the same.

"I don't think it's a monopoly, because Shopee's share can still be said to be the same as Tokopedia. TikTok's presence will be a Tokopedia weapon to fight Shopee's live shopping," Nailul told VOI.

Before TikTok Shop officially reopened in Indonesia, Nailul Huda said collaboration with Tokopedia would have a positive impact.

The plan to reopen the Tiktok Shop will certainly provide a positive view, because it can be used by people to sell. That's a huge potential, as long as TikTok meets existing regulations," Nailul explained on November 30, 2023.

Nailul added that the return of the TikTok Shop could be an option for people to trade online. Moreover, TikTok Shop has loyal users who have been waiting for their return in the past two months.

The ecosystem on Tiktok is one of Tiktok's strengths, especially if Tiktok Shop wants to join the e-commercial. This will be one of the weapons to compete with the e-commercela," Nailul explained.

Online shopping trends have increased in recent years, especially since the COVID-19 pandemic. Unfortunately, the surge in online shopping activities is not directly proportional to the increasing consumption of MSME products. This is also what is alleged to make the involvement of MSME actors in the Harbolnas 2023 event not very significant.

The low involvement of MSMEs in the 2023 Harbolnas event received attention from the Secretary General of the Indonesian MSME Association (Akumindo) Edy Misero. He said that MSME players who are digitally literate in Indonesia have reached 23 million, but only 517 thousand of them participate in Harbolnas activities. This means that Harbolnas' activities, whose transaction value is predicted to reach IDR 25 trillion, are only slightly enjoyed by MSMEs.

Edy said that at least MSMEs enjoy Harbolnas because our people prefer foreign products that are much cheaper.

"How do we educate the Indonesian people to love and be proud that Indonesian products have occurred during the era of President Suharto, since decades ago, but the results are like this," said Edy.

"What we have to do is have to pay the law, we have to shop for national products, local products," he added.

The difficulty of MSME actors competing with imported products that continue to meet domestically, was also acknowledged by the Minister of Cooperatives and Small and Medium Enterprises (Menkop UKM) Teten Masduki. This makes people choose to shop at traders who peddle their products at a lower price, even seem illogical.

As a result, about 90 percent of imported products marketed in e-commerce in Indonesia are apparently sold by MSME players who do not have their own products or resellers. MSMEseller actors are forced to practice this because their production results have difficulty competing in terms of prices with imported products.

With the reopening of TikTok Shop in Indonesia, it is highly hoped that MSME players will no longer be left out on online buying and selling platforms. This is not an easy matter indeed, because cooperation from various parties, including the Indonesian government, is needed. Nailul Huda explained what needs to be done so that the MSME business remains enthusiastic amid the onslaught of cheap imported products.

One of Huda's concerns is the importance of tagging or markers on a product sold in e-commerce. With this tagging, it is hoped that prospective buyers will find it easier to recognize local products, which are imported products. Because so far according to Huda, there are still many online stores that sell imported goods, but still referred to as local products.

"So far, there has been no tagging where it comes from, where is it? Previously, we had conveyed to the Ministry of Trade the need for tagging to find out the proportion of imported goods and local goods in e-commerce," Huda explained.

"There are a lot of imported goods that die-commerce and harm MSMEs," said Huda emphasized.