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Indonesian govt gives TikTok a week to spin TikTok shop into separate app

Indonesian govt gives TikTok a week to spin TikTok shop into separate app

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TikTok Shop Indonesia has been given a one-week deadline to become a standalone app. If it fails to abide by the deadline, the app’s "Shop” wing runs the risk of being shut in the country, according to Reuters. This consequence comes as a result of Indonesia’s decision to ban all eCommerce transactions on social media platforms.

The Reuters article also quoted the Indonesian government saying that the move is aimed at protecting offline merchants and marketplaces, especially as predatory pricing on social media platforms have become a threat to small and medium-sized enterprises.

Don't miss: TikTok Shop faces backlash from ID government over unreleased Project S

This comes shortly after TikTok stated that it would invest billions of dollars in Southeast Asia over the next few years, as it doubles down on the region’s eCommerce capabilities. The app aimed to do so through its “TikTok Shop” wing.

In reaction to the announcement, a spokesperson from TikTok Indonesia said that they were deeply concerned with how this ban would impact the livelihoods of 6 million people who were local sellers on TikTok Shop.

Indonesian Trade Minister, Zulkifli Hasa, reportedly said that the regulation aims to ensure “fair and just” business competition, along with increased user data protection. A regulation document reviewed by Reuters stated that the new regulation also requires Indonesian eCommerce platforms to set a minimum price of US$100 for items that are purchased from abroad and resold. Moreover, the products will also need to meet the criteria of local standards.

The Indonesian government's decision against TikTok does not come without precedent.

Earlier this year in August, TikTok faced much backlash from the Indonesian government for Project S or TikTok’s Global Selling Program. The programme is TikTok’s e-Commerce initiative that enables global merchants to easily sell their products to TikTok users globally through TikTok Shop.

The program aimed to help Chinese merchants sell goods globally and is in its trial phase in the UK with plans to expand the service to the United States this month, according to a report by Reuters.

The report also revealed that Indonesia's Minister of Cooperatives and Small and Medium Enterprises, Teten Masduki, met with TikTok to express concern over its launch that could hurt small businesses. Special advisor to Masduki also confirmed the minister’s comments to Reuters, emphasising that such a program would put small businesses at a disadvantage against other sellers through predatory pricing.

As a result of the government’s stance against the unreleased initiative, Anggini Setiawan, head of communications, TikTok Indonesia, told Reuters it had made the deliberate decision to not launch the cross-border initiative in Indonesia.

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