TikTok Shop to return to Indonesia with local e-commerce partnerships following October closure

INDONESIA: TikTok plans to reopen its TikTok Shop in Indonesia after its closure on 4 October 2023.

The social media platform intends to re-enter the Indonesian market by partnering with local e-commerce companies.

As confirmed by Temmy Satya Permana, Assistant Deputy of Financing and Investment for Small and Medium Enterprises (UKM) at the Ministry of Cooperatives and Small and Medium Enterprises (Kemenkop UKM), TikTok’s return has been in the works.

Speaking at the Ministry in South Jakarta on Friday (17 Nov), Temmy stated, “(Will TikTok Shop reopen?) Yes, they will. The information I received from TikTok is that they will reopen and comply with Indonesian regulations.”

Despite the confirmation, Temmy refrained from divulging extensive details about the Chinese company’s plans. He mentioned having come across various leaked versions of TikTok Shop’s revival in the media but couldn’t confirm the specifics, including the potential e-commerce partner.

“But I’m not sure. But there is a possibility that they will join (an e-commerce platform). It’s likely because if they create their own PT (limited liability company), it seems unlikely,” he commented.

Regulatory breach forces TikTok Shop closure in September

In October, TikTok Shop faced closure due to violations of regulations, primarily the prohibition of integrating e-commerce with social media platforms. Additionally, TikTok operated without the necessary selling permits.

Temmy explained that the previously submitted permits by TikTok were only for the Representative Office of Foreign Trade Company (KP3A), and their actual selling activities violated regulations.

TikTok now needs a business entity with online selling permissions to resume operations. Temmy expressed that it wouldn’t be an issue if TikTok eventually operated under the umbrella of another e-commerce parent company.

He emphasized that whatever scheme TikTok adopts must adhere to and align with Indonesian regulations. “As long as it’s B2B (business to business), it’s not a problem. As long as everyone follows the rules, there’s no issue. It’s up to the public’s judgment,” he stated.

Anticipating the return of TikTok Shop, Temmy expects increased competition among e-commerce players to enhance service quality.

A meeting between the Minister of Cooperatives and Small and Medium Enterprises, Teten Masduki, and TikTok CEO Shou Zi Chew is scheduled for 20 November 2023. Temmy mentioned the request for the meeting but noted a lack of response from the CEO.

In additional information, Minister Teten Masduki disclosed earlier discussions between TikTok and Indonesian e-commerce companies regarding potential partnerships.

This initiative comes a month after the government banned TikTok from selling and conducting transactions through TikTok Shop. TikTok has engaged with five companies, including GoTo Tokopedia, Bukalapak.com, and Blibli.

Before these developments, Tesar Sandikapura, Chairman of the Indonesian Digital Empowerment Community (Idiec), perceived TikTok Shop’s actions as a safeguard against Indonesian government scrutiny. He sees the collaboration as a strategic move while awaiting TikTok’s ability to establish its e-commerce platform.

The reopening of TikTok Shop in Indonesia holds the promise of a new chapter for the social media giant, navigating the regulatory landscape hand-in-hand with local e-commerce leaders.