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TikTok Eyes Payments Licence as Part of Indonesia E-Commerce Push

Updated: Jan 8

[Edited] In the wake of Indonesia's ban on e-commerce transactions on social media platforms, TikTok and YouTube are reportedly considering applying for e-commerce licenses in the country, joining Meta in this endeavor, according to sources familiar with the discussions.

Credits: Reuters

Indonesia's trade ministry implemented the ban a month ago, citing the need to protect small and midsize offline merchants and marketplaces, as well as ensuring the security of users' data.

With a population of over 270 million, Indonesia recorded nearly $52 billion in e-commerce transactions last year, making it Southeast Asia's largest economy in this sector, as reported by consultancy firm Momentum Works.

The ban particularly affected TikTok, which had previously announced plans to invest billions of dollars in Southeast Asia, with a major focus on Indonesia, where it boasts a user base of 125 million. TikTok aimed to establish its e-commerce service, TikTok Shop, in the country.

Sources familiar with the matter revealed that TikTok, owned by Chinese tech giant Bytedance, is now exploring the best path to apply for an e-commerce license. The company is also engaging in talks with potential local e-commerce partners, including GoTo's Tokopedia, while simultaneously developing a standalone TikTok Shop app specifically for the Indonesian market.

Prior to its suspension of operations in Indonesia this month, TikTok Shop was reportedly delivering around 3 million parcels per day, according to two sources.

When approached for comment, TikTok neither confirmed nor denied its intentions to seek an e-commerce license. Tokopedia, on the other hand, did not immediately respond to requests for comment.

In addition to TikTok, Alphabet's YouTube is also planning to apply for an e-commerce license in Indonesia, as revealed by two sources. However, the specific type of permit YouTube is seeking has not been disclosed. In the United States, YouTube introduced a shopping service that allows creators to promote products and brands on the platform.

A spokesperson for YouTube declined to comment on the matter.

It is worth noting that the plans of TikTok and YouTube to apply for e-commerce licenses in Indonesia have not been previously reported.

Meanwhile, Meta Platforms, the parent company of Facebook and Instagram, has already applied for a type of e-commerce license that permits the promotion of goods on its platforms, but does not allow for direct in-app transactions. Isy Karim, the director general of domestic trade at the Indonesian trade ministry, confirmed Meta's application.

The license being sought by Meta would enable vendors to advertise goods and conduct market surveys, but not facilitate in-app transactions. However, Meta has not responded to requests for comment on this matter.

Isy Karim also stated that neither YouTube nor TikTok have approached the authorities regarding their intentions to apply for e-commerce licenses. If TikTok were to proceed with an application, it would need to establish a domestic unit within the company, according to Isy.

  • TikTok and YouTube are considering applying for e-commerce licenses in Indonesia, following the country's ban on e-commerce transactions on social media platforms.

  • TikTok, with its large user base in Indonesia, had plans to invest heavily in the country's e-commerce sector.

  • TikTok is exploring the best approach to obtaining an e-commerce license and is in talks with potential local partners.

Source: Reuters

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