Last night, a Jakarta Globe story “Indonesia plans to ban TikTok Shop” started spreading.
According to the story, Indonesia’s Minister of Cooperatives and SMEs Teten Masduki told the parliament that Indonesia should follow India and the United States in banning TikTok’s ecommerce operations in the country.
The report states that Teten told the parliament on Tuesday that the use of algorithmic recommendations gives TikTok Shop an unfair advantage. Additionally, TikTok having affiliated payment and logistics systems contributes to “monopolistic behavior,” harming Indonesian SMEs.
On the first trading day after the story broke, the stock price of Shopee’s parent Sea Group rose by 5.12%.
Some of our thoughts:
- The report contains a few factual inaccuracies. For instance, the US has not stopped TikTok Shop, and TikTok Shop in Indonesia doesn’t yet have its own payment and logistics;
- Minister Teten has been very active this past year. He was the main driving force behind Indonesia’s plans to restrict foreign imports through e-commerce, as well as the recent backlash against TikTok’s “Project S” consignment model;
- The Ministry of Cooperatives and SMEs does not regulate TikTok Shop, nor does it have the authority to ban it. The more relevant department would be the Ministry of Communication and Information Technology (KomInfo), which temporarily took down TikTok in 2018 for content-related issues;
- Additionally, a recent report by Reuters stated that TikTok has applied for a payment license in Indonesia. It seems that Bank of Indonesia (BI) is quite satisfied with TikTok’s application process;
- Aside from the Jakarta Globe, no other mainstream Indonesian media reported the story;
- As elections are coming up in Indonesia next February, a lot of issues will be raised. Do expect a lot of debates and sometimes accusations, but really try to understand the local political landscape to discern which is of genuine concern, which is noise;
- TikTok Shop has been growing rapidly in Indonesia and throughout Southeast Asia. This year’s GMV could well exceed the US$15 billion target, as we indicated in our TikTok Shop Playbook and E-commerce in Southeast Asia 2023 reports;
- As for why Sea Group’s stock price rose, could it be because of Free Fire’s return to India?
