They are fuelled by the desire to get a slice of the archipelago’s US$51.9 billion e-commerce pie. - Reuters
JAKARTA: From setting up teams to discuss new commercial ideas to applying for new licences, social media companies are finding workarounds to the Indonesian government banning them from buying and selling goods online.
They are fuelled by the desire to get a slice of the archipelago’s US$51.9 billion (S$70.3 billion) e-commerce pie.
On Sept 27, the government banned commercial transactions on social media platforms, saying it was done to ensure “fair and just” competition and protect user data.
Companies were given a week to comply with the new rules, which were widely seen as unofficially targeting video-sharing platform TikTok and its e-commerce arm TikTok Shop.
It quickly gained momentum after entering the market in 2021, and several leaders, including Indonesia President Joko Widodo, have pointed out that it had adversely affected micro, small and medium enterprises in the country
But over a month on, according to media and research reports, firms like Beijing-based ByteDance, which owns TikTok, have not given up the fight to sell goods on their platforms.
The company has put together technology and product teams in Singapore in an effort to get around the Jakarta-imposed ban, reported the Financial Times on Oct 27.
A suggestion was for ByteDance to create a separate platform for online shipping, in a bid to satisfy Indonesian regulations.
Separately, Reuters reported on the same day that TikTok was keen to apply for an e-commerce licence and find the best way to do so, including partnering with local e-commerce firms.
TikTok has said that it could neither confirm nor deny this.
Facebook, another social media platform affected by the ban, has taken action as well.
Meta, which owns Facebook, chat messaging platform WhatsApp, and photo and video sharing platform Instagram, has applied for an e-commerce licence, according to local media reports quoting Rifan Ardianto, director for trade through electronic systems and trade in services at Indonesia’s Trade Ministry.
Rifan added there had been no further developments since Oct 27.
Reuters has also reported that Alphabet, the company that owns Google and YouTube, has applied for a similar e-commerce licence, but YouTube has denied this.
The company launched its first official channel for live shopping in South Korea in June.
With a population of more than 270 million – half of them under 30 – many see Indonesia as a key market for e-commerce, including live-shopping.
A report by Singapore-based venture firm Momentum Works found that Indonesia was the biggest online spender in South-east Asia in 2022, accounting for 52 per cent of the region’s total gross merchandise value (GMV), which refers to the value of goods sold via e-commerce platforms
The total GMV in 2022 for South-east Asia was reported to be US$99.5 billion and Indonesia’s figure was US$51.9 billion, almost 13 times that of Singapore’s US$4 billion.
Chief executive of Momentum Works Jianggan Li said that it was natural for social media companies to want to tap into the “natural traffic” they have, referring to the users who interact on their platforms, given how a key success factor of any e-commerce platform is how many people are on it.
His company found that prior to the ban, TikTok was doing very well in Indonesia and the region.
In 2021, TikTok’s GMV in South-east Asia was US$600 million, and this grew by US$3.8 billion to US$4.4 billion in 2022.
In contrast, Indonesian e-commerce platform Tokopedia’s GMV went up by only US$2.9 billion in the same timeframe, while the numbers for online shopping firm Lazada, whose headquarters is in Singapore, fell by US$900 million.
“TikTok Shop was very successful in growing its GMV and operations prior to the ban. It is a big lesson for them that to operate successfully in a large country like Indonesia, which has its own dynamics, priorities and agenda, they need much more than just good operations,” Li told The Straits Times. - The Straits Times/ANN
