Will Indonesia's E-commerce Ban Create A Domino Effect?
Jayson 17 Oct 2023 11:21
At the end of last month, the Indonesian Ministry of Trade issued Trade Minister Regulation No. 31 of 2023, which prohibits the use of social media as a platform for the sale of goods. Affected by this, TikTok's e-commerce business: "TikTok Shop", has shut down its local business on October 4.
TikTok has 125 million monthly active users in Indonesia and regards Indonesia as one of its important markets. Previously, TikTok had promised to invest billions of dollars in Southeast Asia in the next few years to vigorously build its e-commerce platform.
At the same time, more than 6 million local large and small online merchants and more than 7 million live-streaming practitioners, as well the short video creators are all affected by this ban, their business ecological networks are facing "zeroing" almost overnight.
Indonesia's booming "live streaming" e-commerce model has come to an abrupt end, which will have a wide-ranging impact on the region and even the world. What signal does this action of the Indonesian government send to the international community?
First, try to standardize the Indonesian cross-border e-commerce market.
This time the Trade Minister's Regulation No. 31 is an amendment to the Trade Minister's Regulation No. 50 of 2020, which aims to regulate the conduct of enterprise registration, advertising, enterprise development, and supervision in e-commerce trade.
For example, defining businesses that transact through electronic systems, such as local marketplaces or marketing and social commerce platforms, to make business development and regulation easier.
Secondly, avoid vicious competition and winner-take-all.
Shopee, Tokopedia, TikTok Shop, etc. are several leading e-commerce companies in Indonesia. Among them, TikTok Shop has gained momentum in recent years, bringing greater competitive pressure to other e-commerce companies. On the other hand, the prices of e-commerce products relying on social media are relatively low, and the Indonesian government is worried that this will disrupt the Indonesian domestic market.
Third, protect data security and safeguard national interests.
Data security has always been a shortcoming of cross-border e-commerce. In this regard, there is a certain gray space in all countries. 2023-2024 is a political year in Indonesia. Candidates are closely focused on the 2024 general election, and issues related to security often receive high attention and are easily hyped.
Against this background, many ministers have publicly emphasized maintaining data security, and data problems in cross-border e-commerce are often easily amplified. From this perspective, it is not surprising that cross-border e-commerce that is not registered in Indonesia is banned.
TikTok has 125 million monthly active users in Indonesia and regards Indonesia as one of its important markets. Previously, TikTok had promised to invest billions of dollars in Southeast Asia in the next few years to vigorously build its e-commerce platform.
At the same time, more than 6 million local large and small online merchants and more than 7 million live-streaming practitioners, as well the short video creators are all affected by this ban, their business ecological networks are facing "zeroing" almost overnight.
Indonesia's booming "live streaming" e-commerce model has come to an abrupt end, which will have a wide-ranging impact on the region and even the world. What signal does this action of the Indonesian government send to the international community?
First, try to standardize the Indonesian cross-border e-commerce market.
This time the Trade Minister's Regulation No. 31 is an amendment to the Trade Minister's Regulation No. 50 of 2020, which aims to regulate the conduct of enterprise registration, advertising, enterprise development, and supervision in e-commerce trade.
For example, defining businesses that transact through electronic systems, such as local marketplaces or marketing and social commerce platforms, to make business development and regulation easier.
Secondly, avoid vicious competition and winner-take-all.
Shopee, Tokopedia, TikTok Shop, etc. are several leading e-commerce companies in Indonesia. Among them, TikTok Shop has gained momentum in recent years, bringing greater competitive pressure to other e-commerce companies. On the other hand, the prices of e-commerce products relying on social media are relatively low, and the Indonesian government is worried that this will disrupt the Indonesian domestic market.
Third, protect data security and safeguard national interests.
Data security has always been a shortcoming of cross-border e-commerce. In this regard, there is a certain gray space in all countries. 2023-2024 is a political year in Indonesia. Candidates are closely focused on the 2024 general election, and issues related to security often receive high attention and are easily hyped.
Against this background, many ministers have publicly emphasized maintaining data security, and data problems in cross-border e-commerce are often easily amplified. From this perspective, it is not surprising that cross-border e-commerce that is not registered in Indonesia is banned.
