Karim explained that TikTok Shop has a permit as a Foreign Trade Company Representative Office (KP3A) that cannot conduct transactions. Minister of Trade Regulation Number 31 of 2023 stipulates that TikTok Shop can only conduct promotions, market surveys, and bridge consumer protection.
"Because TikTok Shop has a KP3A permit, they are not allowed to make transactions. The transaction feature is closed, but the TikTok Shop permit still exists," Karim stated at the 5th Indonesia Fintech Summit and Expo 2023 in Jakarta, Friday.
He noted that TikTok Shop had initially applied for a permit as a social media platform, which is under the Ministry of Communication and Information. However, with passage of time, he stated that it actually became an e-commerce platform.
Karim remarked that the e-commerce platform sector is under the provisions of the Ministry of Trade. He also noted that TikTok Shop could conduct its transaction activities again but had to apply for an e-commerce permit.
"Actually, it is legal. Hence, if TikTok Shop wants to carry out transactions, it has to change to e-commerce. For e-commerce, of course, there are requirements that must be met," Karim elaborated.
According to Karim, one of the rules that must be fulfilled to obtain an e-commerce permit is to establish a business entity in Indonesia.
Moreover, e-commerce should comply with the rules for setting a minimum price for each transaction from overseas merchants of US$100.
However, he noted that the minimum price setting only applies to several categories, as regulated by the latest trade minister's regulation.
"Hence, for e-commerce, you have to create a business entity in the country, which means having legality, having a NPWP (tax id), having an NIB, and so on," he explained.
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Translator: Bagus Ahmad Rizaldi, Cindy Frishanti Octavia
Editor: Azis Kurmala
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