TikTok Shop Prohibition Not Automatically Restore Conventional Market Celebration

TikTok, a social media platform that is now entering online trading and will be banned in Indonesia because it is considered destroying MSMEs. (Unsplash/Olivier Berge)

JAKARTA - Traders at Tanah Abang Market and many conventional markets in Indonesia have complained in recent months. The reason is the same, there are few buyers who have made incomes decline sharply since the COVID-19 pandemic. The presence of TikTok Shop is accused of being one of the causes of the loss of sales turnover at Tanah Abang Market and other conventional markets.

Tanah Abang, located in Central Jakarta, is known as one of the largest wholesale centers in Southeast Asia. Visitors who come not only from Jakarta, Depok, Tangerang, Bekasi, but also from outside the area.

Generally, buyers at Tanah Abang Market make wholesale purchases to then resell them. Therefore, Tanah Abang Market is arguably never empty of visitors.

But this has changed drastically since the COVID-19 pandemic that hit Indonesia in 2020. Even when the pandemic was over, Tanah Abang Market never returned to its original state.

Trene-commerce or online shopping is increasingly in demand by the public. Only through a smartphone in your hand, people can already have their dream item by clicking several times.

Tanah Abang Market was born from a request by a VOC official named Justinus Vinck to establish a market on his land in 1733. This means that Tanah Abang Market has existed since the Dutch colonial era.

Long story short, Tanah Abang Market has grown into a complete facility as we have seen today since its management was taken over by Pasar Jaya Regional Company (PD). Tanah Abang Market was built in 1973. In the 1990s, the circulation of money in this market reached Rp. 10 billion per day.

But Tanah Abang Market, which is not like the Tanah Abang Market in the past. The buying and selling activity in the largest market in Jakarta has slumped. Apart from the pandemic, the onslaught of technological developments is also claimed to be one that allows people to shop online.

According to a digital economy observer, Ignatius Untung Surapati, similar conditions do not only occur in Tanah Abang Market. Several other locations such as ITC Fatmawati, ITC Ambassador and other offline stores also have the same fate.

"We don't just talk about Tanah Abang Market, there is ITC Fatmawati's cellphone center, ITC Ambassador, it's not as busy as before," Untung explained during a discussion with the title 'Dampak Social Commerce at MSMEs in Indonesia', Friday, September 15.

According to Untung, the rapid development of technology encourages traders to switch to selling online. The sale and purchase of goods through the marketplace is more popular because the seller has included product prices.

Live streaming shopping is being loved by the public lately. One of the marketplace platforms that people love is TikTok Shop.

A much cheaper price than in offline stores has made people switch shopping online. Traders at Tanah Abang Market admit that it is difficult to compete with prices sold on TikTok Shop.

Center of Economic and Law Studies (CELIOS) researcher Muhammad Andri Perdana said offline traders had difficulty competing with TikTok Shop due to imported cross-border goods.

Cross border is the entry of imported goods into the territory of a country without going through the customs inspection process. The presence of platforms such as TikTok Shop allows border cross-border import goods to be sent directly to consumers from abroad at a lower price.

The cross-border trading practice is troubling MSME players, because one of the negative impacts is only benefiting foreign traders. This is because they sell products at very low prices.

This is because of dumping politics, where exported goods are sold cheaper to control the market in the country. In fact, the goods sold may not be good goods, so they are added in Indonesia. With import cross borderkita, we cannot confirm whether the goods sold are good. TikTok also sells goods directly to retail, "said Andri when contacted by VOI.

To protect MSMEs, the government plans to ban TikTok Shop. Trade Minister Zulkifli Hasan held a meeting with State Secretary Minister Pratikno, last Monday (11/9) to discuss plans to ban TikTok Shop in Indonesia.

However, Andri has another pandagan. According to him, the government does not need to immediately turn off the TikTok Shop because basically not a few MSMEs are willing to follow technological developments and are helped by utilizing it.

Andri actually encouraged traders at Tanah Abang Market to be more daring to place themselves on different targets, for example targeting the upper middle class.

Since the pandemic, the economic effects have been felt. In 2022 there will also be the highest inflation in the last eight years. People's purchasing power in Indonesia, even the world, has also decreased. So for the middle class people, they choose cheaper goods," Andri explained.

For Tanah Abang Market, it can place themselves in different markets, prioritize quality because now it cannot compete in price. Middle class still likes excesses in offline stores. Moreover, sometimes cheap goods on TikTok Shop cannot be ascertained, not according to expectations.