The Effect Of TikTok on The Free Market And What Is The Role of The Government in Handling This Competition?

Globalization is a process of international integration due to the exchange of worldviews, thoughts, cultural aspects such as economic aspects, culture, and language aspects. Globalization can easily be interpreted as a worldwide cultural exchange process with a very short period of time. Without knowing national boundaries, space is no longer a barrier with Globalization making it easier for us to do work, However, there are both positive and negative impacts of globalization. With the existing globalization, it facilitates economic exchanges from various countries around the world and becomes a forum for trading to various countries.

With globalization, it makes it easier for people to shop even though it is cross-country and cross-continent. Tik Tok shop is the embodiment of a free market due to the influence of globalization, Tik Tok started as an application as entertainment now switches its function to a way of promotion and even as a means of selling. according to the data, Tik Tok shop is in 5th place.

Tiktok is the most popular application for social media users around the world, an application created by a Singapore technology company called Bytemod. This Chinese company combines social media and websites to make shopping easier. Tiktok also combines with OVO, GOPAY, SHOPEEPAY, DANA so that it makes it easier to pay for existing purchases. Tik Tok is currently very popular with the public, because of its wide coverage and is very popular among teenagers. In Indonesia alone, there are 10 million people using TikTok as an entertainment medium. with the existence of TikTok, it can be utilized as a promotion. according to data, TikTok's engagement rate reached 17.96%, surpassing Instargram which amounted to 3.86%.

Because umkm is very important for the Indonesian economy. umkm contributes to the economy by creating jobs, reducing poverty and economic growth. however, tiktok requires to always innovate and work as well as possible, the tight competition that is not only in Indonesia makes umkm owners have to think of ways to compete in the global market.

However, the existence of TikTok has created unhealthy competition between MSMEs and existing imported products. imported products with lower prices and good quality make Indonesian umkm products unable to compete in the global market, especially since there is no price stability that controls them. Indonesian umkm have not been able to compete with big brands due to limited costs, if you look at the quality of Indonesian products, they are not inferior to imported products. Although TikTok shop makes an honest revew platform in the bottom column, customer trust is reduced because of uncertainty and consumer skepticism about the product. The government closed Tiktok shop on Wednesday, October 4, 2023 at 17.00. Tik tok was closed because it did not have a license to trade in Indonesia. Tik tok only has a license as a Foreign Trade Company Representative Office (KP3A). Where e-commerce business licenses have been written in the Regulation of the Minister of Trade (Permendag) Number 31 of 2023 concerning Business Licensing, Advertising, Development and Supervision of Business Actors in Trade through Electronic Systems.

The government also considers that TikTok Shop is a way for foreign entrepreneurs to collect data on products that sell well in the market and then produce them individually without any contribution in the form of taxes to the state. TikTok Shop not only threatens the existence of local MSMEs, but also the economy of a country. In this case, the Government has missed the entry of TikTok Shop in Indonesia as evidenced by Tanah Abang, which is a wholesaler under government supervision, experiencing a loss of 50 percent, due to the imported products that enter, with a direct sales model to buyers.

The government made a trade regulation policy N0 50/2020 which was made to create a separation between social media for trade and entertainment The making of this policy is to restore the traditional economy. The government also made regulations that limit foreign trade to sell goods above 100 US dollars this is to create price stability and not cause existing price predators.

With this, the government must create a new strategy so that Indonesian products can compete in the global market, with the opening of this free market it should be an opportunity for Indonesia to introduce its products whose quality is no longer in doubt. existing strategies such as providing funding, providing education, and providing funds with low interest.

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https://thediplomat.com/2023/10/indonesias-losers-reshape-policy-as-tiktok-exits-online-retail/