Global Courant
Jakarta, Indonesia – Tanah Abang is the largest textile and clothing market in Southeast Asia, known by traders throughout Asia and even as far away as Africa. But business is not good these days: visitor traffic has halved compared to before the pandemic.
According to stallholders at the nearly 300-year-old market in Central Jakarta, TikTok Shop, the e-commerce feature of the world’s most popular video-sharing app, is to blame.
“TikTok is really bad for my business,” Hairun Nisa, whose family has been selling men’s casual wear at Tanah Abang for 20 years, told Al Jazeera.
“It’s different from other forms of e-commerce because on TikTok people sell their products through video and can interact with consumers in real time.”
“It’s not like before, when this market was always busy,” added Roni Waskito, who has been selling shoes at Tanag Abang since 2010 and who also blames TikTok for the decline in business.
Business in Tanah Abang’s textile and clothing market has fallen sharply since the pandemic (Al Jazeera)
TikTok Shop amassed 6 million sellers in Indonesia within a year of its launch in 2021 and captured about 5 percent of Indonesia’s booming $52 billion e-commerce market last year.
According to Singaporean research firm Momentum Works, the e-commerce platform was on track to increase sales by about 350 percent this year – until the Indonesian government banned it on October 5.
Jakarta has justified the ban as necessary to protect the country’s 64 million micro, small and medium enterprises (MSMEs), including traders at markets such as Tanah Abang.
Indonesian Trade Minister Zulkifli Hasan has accused the platform of facilitating predatory pricing practices and an influx of cheap imported goods and of failing to comply with the law.
“Transactions are not allowed on social media. Like television, social media is only for advertising,” Hasan told local media during a recent visit to Tanah Abang
The ban in Indonesia, where TikTok has 125 million users — more than any country except the United States — is just the latest in a series of setbacks for the app.
The US, UK, Canada, Australia, New Zealand, Taiwan and several European Union countries have banned the app on government devices over concerns that Chinese owner ByteDance could share sensitive user data such as geolocation with Beijing to boost its military and political further ambitions. .
India banned TikTok outright in 2020 over similar security fears, while Pakistan and Afghanistan raised concerns about “immoral” content when banning the app.
TikTok declined the opportunity to comment on the Indonesian ban, saying only that it has complied with the law.
Evo Syah, founder of women’s clothing brand Videlin Official, fears he will have to let go of his staff after Indonesia’s ban on TikTok Shop (Al Jazeera)
Some of the estimated six million sellers who previously made a living through TikTok Shop have been less restrained in their response.
“We are very sad because the government has closed our TikTok store and our sales have dropped to almost nothing,” Evo Syah, the founder of Videlin Official, a women’s clothing brand based in Bali, told Al Jazeera.
“We used to have at least 200 sales a day. Now we have 10 or 20 using (Singaporean e-commerce portal) Shopee. For now, I will try to keep my employees; I have 10 full-time employees. But if things continue like this, I may have to make a tough decision and let them go. The government must listen to our voice.”
Golda Pradeksa, the founder of Alya the Label, a Bali-based women’s clothing retailer that sold exclusively through TikTok, said that while she felt sorry for traditional retailers losing sales, banning the platform was not the solution.
“I’m really disappointed because now I have to redo all my content and go to Shopee and I don’t know if it will work because Shopee doesn’t have the same interactivity between sellers and buyers as TikTok,” Pradeksa told Al Jazeera.
“The retail world is evolving every day,” she added.
“Shop owners need to catch up with the changes or they will be left behind. But there is no reason why they cannot have both offline and online stores as it gives them the opportunity to sell not only locally but also globally. It’s just what I do. I sell Videlin online and my first fashion label from a store in Bali.”
According to Fithra Faisal Hastiadi, a former spokesperson for the Ministry of Commerce and an independent economist who has been highly critical of the ban, many stallholders at Tanah Abang were already mixing offline and online sales before the ban.
“It was the wrong move,” Hastiadi told Al Jazeera. “The government argues that TikTok’s model – social media combined with e-commerce – has been the biggest disruptor in traditional markets such as Tanah Abang. But that is not entirely true.”
Hastiadi said the drop in sales in markets like Tanah Abang is the result of the reduced purchasing power of low- and middle-income earners and a decline in the number of wholesale buyers from Africa and other parts of Asia since the COVID-19 pandemic.
According to him, arguments that cheap Chinese products are suddenly displacing local products are disingenuous, because Chinese products have been flowing into Indonesia for more than a decade.
When it comes to e-commerce, Hastiadi said platforms like Shopee and its Indonesian equivalent Tokopedia have done more to disrupt traditional markets than TikTok.
He said TikTok Shop’s rivals had likely lobbied the Indonesian government to ban the platform, which had quickly encroached on their market share since it entered the market.
“In economics we have theories that help us understand the motives of actors,” he said. “The trend emerging from previous scenarios shows that those being disrupted try to convince those in power to ban or restrict the disruptors.”
Shoe seller Roni Waskito has noticed only a slight improvement in sales since Indonesia banned the TikTok Shop (Al Jazeera)
When contacted by Al Jazeera, Shopee and Tokopedia did not confirm or deny that they had lobbied the Indonesian government to ban TikTok Shop.
When Al Jazeera visited Tanah Abang a week after the ban, vendors did not report much of an improvement in human traffic or sales.
“It has gotten a little better. But still not as good as before,” shoe seller Waskito told Al Jazeera.
“I haven’t noticed any change, but I think it’s too early to tell,” menswear retailer Nisa added. “But hopefully things will get better for us soon.”
