Indonesia’s Minister of Cooperatives and SMEs Teten Masduki expressed his concern about the presence of Project S TikTok Shop in the country. According to Teten, the service could be a threat to domestic MSME products.
Teten said that TikTok Shop combines social media, cross-border business, and online retail. There are concerns that TikTok can easily perform market intelligence using its algorithm.
“They know exactly the market in Asia, the market in Indonesia. What is most in demand, starting from fashion, food, cosmetics,” Teten said at ‘The Leader’ discussion streamed via Tempodotco’s YouTube channel on Thursday, 13 July.
The minister said that TikTok Shop can send goods directly from China via online retail according to market demand, at a much lower price.
“Especially if it’s [China’s] own brand product. Surely, TikTok’s algorithm will direct [users] to their products. This is more than just a marketplace. Our MSMEs would definitely lose [the competition],” Teten said.
To protect domestic MSMEs, the Ministry of Cooperatives and SMEs encourages the Ministry of Trade to revise the Trade Minister’s Regulation No.50/2020 on Provisions for Business Licensing, Advertising, Guidance and Supervision of Business Actors in Trading Through Electronic Systems, so that it can include the trade of foreign products via social commerce sites.