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TikTok completes nearly every parameter of e-commerce regulation
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(Courtesy of Tokopedia)
T
ikTok and Tokopedia have made headway in their integration process as the Trade Ministry reveals the two companies’ e-commerce collaboration, the “Shop | Tokopedia” application, complies with Trade Ministry Regulation No. 31/2023.
This means that TikTok has complied substantially with almost every provision in the regulation related to the transition or migration process from a previous system to a new one.
Isy Karim, the Trade Ministry’s director general of domestic trade, said the new app’s front-end processing generally complied with the regulation because all transactions were conducted via Tokopedia.
“In terms of the back end, all activities related to Shop | Tokopedia have been moved to Tokopedia’s domain,” he said to the Jakarta Post.
In addition, Isy said, merchant operations such as the seller center, affiliate center and brand center were all included on Tokopedia’s domain.
“They have also informed their sellers and partners that the transactions are conducted [by] Tokopedia,” he added.
The director general said he was upbeat about the progress TikTok had made in the migration process.
“Generally speaking, nearly all of the required parameters in the provisions under [Regulation] No. 31/2023 have been fulfilled,” Isy said.
Under the provision on "Business Licensing, Advertising, Guidance and Supervision of Business Actors in Trade via Electronic Systems" in Trade Ministry Regulation No. 31/2043, issued on Sept. 26, 2023, social commerce platforms are prohibited from conducting electronic commerce-like sales transactions, in particular payment transactions for buyers and sellers.
The government moved to issue the regulation in order to "regulate fair trade” and "protect small and medium enterprises [SMEs] in a fair manner".
Earlier, Trade Minister Zulkifli Hasan revealed that the government’s efforts to regulate e-commerce was manifested in the steps taken by TikTok and Tokopedia in establishing their collaboration, which promised substantial benefits for Indonesia.
Zulkifli also expressed the hope that the government’s measures as regards TikTok, Tokopedia and other digital platforms would help advance the country’s e-commerce ecosystem, so it would generate great benefits for the development of SMEs and industries for advancing the country’s economy.
“The government granted a transition period of three to four months after their collaboration, or until April 2024,” the minister said on Dec. 12, 2023, when opening the Buy Local 12.12 event held by TikTok and Tokopedia in Jakarta.
"Let me explain first, this is Tokopedia's e-commerce collaboration with TikTok. The e-commerce is [via] Tokopedia, we are giving it a three- to four-month trial period because [synchronizing] technology is not easy," the minister said in his opening speech.
At the end of January, Tokopedia’s parent company, publicly listed PT GoTo Gojek Tokopedia, Tbk. (GoTo), and TikTok announced the completion of their investment deal.
In a public disclosure published on Jan. 31 on the Indonesia Stock Exchange, TikTok purchased 75 percent shares in Tokopedia through investing in the Indonesian e-commerce platform.
This strategic partnership consisted of three schemes: First, Tokopedia bought the local assets of TikTok Shop for US$340 million; second, TikTok took over 75.01 percent of newly issued Tokopedia shares, valued at $840 million; and third, TikTok will issue promissory notes worth $1 billion to Tokopedia to be used as working capital.
GoTo management said Tokopedia and TikTok Shop Indonesia would be merged under PT Tokopedia, “which is now jointly owned by GoTo and TikTok as strategic partners in Indonesia”.
“Today marks the completion of a partnership with TikTok that will continue to bring benefits to Indonesia and its MSMEs [micro, small and medium enterprises]. It is also a big step forward for the GoTo Group,” GoTo Group CEO Patrick Walujo stated in a press release.
“Having reached positive adjusted EBITDA for the fourth quarter of 2023, we can now look forward to accelerating our progress, driven in part by supportive ecosystem partners,” Patrick said, referring to the group’s earnings before interest, taxes, depreciation and amortization.
In the same statement, Stephanie Susilo, E-commerce Executive Director at TikTok Indonesia, said the company was proud to formally welcome Tokopedia, its stakeholders and all its units.
"We see this moment as an important achievement in realizing our commitment to contribute further to Indonesia’s MSME industry and the growth of the digital economy, together with GoTo as our partner," she said.
