Indonesia's e-commerce boom hits local traders

Indonesia's e-commerce boom hits local traders

As clothing shop owner Hendri Tanjung struggle to hawk tunics to Indonesian buyers outside his market shop, he says customers are turning to cheaper versions on TikTok, pummeling his income.

The 35-year-old sells his wares at Tanah Abang, Southeast Asia's largest textile market, where buyers are desperately calling out to passersby.

Many of its thousands of merchants selling products made in factories, or by tailors and weavers, complain about the impact of TikTok's booming e-commerce arm on their business.

But government ministers in Southeast Asia's biggest economy have threatened to ban it outright because of its impact on local sellers, including those at Tanah Abang, who rely on offline buyers.

Hendri said a tunic he sells at Rp 60,000 can be found on Tiktok Shop for Rp 40,000, undercutting his business.

t know where they source their products to sell at such low prices. Ours are our own products, and we cannot sell them at that price, he said.

After a monthly income drop of more than 80 percent from Rp 30 million to Rp 5 million in recent months, he was forced to lay off five of his 30 employees.

In the archipelago nation, laws do not cover transactions through social media platforms like TikTok, Facebook or Instagram.

President Joko Widodo said new regulations on social media transactions could come as early as Tuesday.

The draft regulation, expected to be presented soon after Widodo said Monday it was being finalized in the trade ministry, will aim to curb what Jakarta says are monopolistic practices.

Experts say that such regulation would create a level playing field for local businesses.

TikTok Indonesia's head of communication, Anggini Setiawan, told AFP earlier this month.

TikTok's second-largest market, with 125 million users, according to company figures. ByteDance, the world's tech giant, is headquartered in China.

It represented 42 percent of Tik Tok's $4.4 billion regional gross merchandise value last year, according to Singapore-based consultancy Momentum Works.

In June, TikTok's chief executive, Shou Zi Chew, visited Jakarta, pledging to pour billions of dollars into Southeast Asia in the next few years.

Atinah, a 21-year-old who sells clothing, said she could no longer hope for high weekend sales at her Tanah Abang shop, which used to bring in around Rp 10 million per day.