Jakarta. Trade Minister Zulkifli Hasan has given the green light for a collaboration between ByteDance Ltd, the Chinese parent company of video-sharing app TikTok, and Indonesia's PT Gojek Tokopedia Tbk (GOTO) to establish an e-commerce platform.

"Collaboration is permitted, excluding ventures that are entirely new," said Zulkifli following the launch of "the National White Paper on Digital Economic Development Strategy" in Jakarta on Wednesday.

This represents a shift in the government's stance, which had previously imposed a ban on TikTok Shop, TikTok's e-commerce arm, due to concerns about predatory pricing negatively impacting local micro, small, and medium enterprises (MSMEs). The government feared that local MSMEs would struggle to compete with the cross-border commerce facilitated by TikTok Shop.

The Trade Minister emphasized that collaboration is acceptable as long as it adheres to existing regulations, specifically Minister of Trade Regulation 31/2023 on Licensing, Advertising, Development, and Supervision of Commerce Companies Utilizing Electronic Systems.

Indonesia has imposed a ban on social media companies venturing into e-commerce or social commerce. TikTok Shop faced restrictions as the government aims to maintain the balance between online trading and traditional offline market activities to safeguard local businesses. While TikTok can still endorse products, establishing its e-commerce platform is prohibited.

Trade Minister Zulkifli Hasan (Zulhas) clarified that collaboration with foreign industries is permissible. The government remains committed to supporting the empowerment of MSMEs and local e-commerce entities, with a focus on enhancing consumer protection. 

"In essence, we arrange it so that social commerce supports Indonesia's economic growth. It can be a supporter for MSMEs and our industry to dominate the market," he stated.

However, Zulhas stated that TikTok Shop has not yet applied for a new permit for e-commerce operations. "A new permit, not yet. A new permit (probably) not, but collaboration with a local entity," he said.

Previously Bloomberg reported, that ByteDance Ltd has agreed to invest in a business unit of PT GoTo Gojek Tokopedia Tbk (GOTO) and partner in online shopping services. This move marks the beginning of international e-commerce collaboration with the largest economy in Southeast Asia, as reported by Bloomberg on Tuesday.

Nevertheless, details of this collaboration are expected to be announced next week, with the final details still under discussion and subject to change before being officially confirmed. This agreement also depends on regulatory approval in Indonesia, and there is still a risk of failure if not approved. This investment is considered the first step for TikTok Shop, a subsidiary of ByteDance's video service that has successfully expanded its online shopping business from the United States to Europe.