e-Commerce Malaysia advocates for constructive engagement with TikTok Shop

• Malaysia’s digital marketplace differs from Indonesia due to foreign-owned e-platforms
• Banning TikTok Shop restricts growth of local businesses, 78.4% of which are micro SMEs 

e-Commerce Malaysia, a chapter of the National Tech Association of Malaysia (PIKOM), advocates a thoughtful and constructive approach towards TikTok Shop. This approach entails examining the platform’s influential role and considering its broader implications for the Malaysian digital economy landscape. 

Communications and Digital Minister Fahmi Fadzil’s careful considerations regarding TikTok Shop highlight valid concerns. These concerns draw parallels with Indonesia’s recent ban on TikTok Shop, driven by issues related to predatory pricing and data security.

Ganesh Kumar Bangah (pic), chair of e-Commerce Malaysia, a chapter of PIKOM and Advisor to PIKOM, emphasised that banning  TikTok Shop in Malaysia inadvertently limits the growth and reach of local businesses, especially micro SMEs which constitute a significant 78.4% of businesses in the nation and have become the largest segment of TikTok Shop users.

He notes that TikTok Shop has catalysed a significant shift in 'social commerce,' connecting creators and businesses directly with consumers for e-commerce. This innovative approach seamlessly integrates content creation with commerce, providing an accessible and engaging platform for SMEs, creators, and e-commerce enablers.

It has also proved to be a powerful platform to help level the playing field for small brands to compete against established market players, said Ganesh, estimating that Tik Tok Shop helps generate an average income of approximately RM1,500 for 200,000 influencers in Malaysia, with the vast majority of them coming from sub-urban to rural areas. At the worst case scenario, banning Tik Tok Shop will take away this income stream and hamper the promotinal efforts of the small and non-brand that rely on the platform 

Providing context to the fact that Indonesia has banned Tik Tok Shop, with some calls in Malaysia to follow suit, Bangah points out that the Malaysian digital marketplace landscape differs from Indonesia due to the prominence of foreign-owned e-commerce marketplaces like Lazada and Shopee here versus Indinesia having an incentive to protect some of its large homegrown marketplaces. Therefore, outright bans on platforms like TikTok Shop could stifle the entrepreneurship among the rakyat and local businesses, particularly among the B40 demographic. 

Instead, e-Commerce Malaysia believes that TikTok Shop's role and responsibility within the local business environment should be addressed.

e-Commerce Malaysia's recommendations include the following:

• Community Engagement: TikTok Shop should prioritise proactive dialogue with industry associations, creator communities and e-commerce enablers regarding local policies. Decisions with potential adverse impact on the local business environment should be made collaboratively.
• Upholding and Fostering Local Capacities: TikTok Shop should also prioritise the capacity building of local creators and e-commerce enablers over foreign ones through workshops, training and platform tools that enable local players to navigate and leverage the digital market effectively and ethically.
• Community Investment: TikTok Shop should also partner with local communities, industry associations and government agencies to co-fund capacity development programmes for local creators and SMEs
• Prioritisation of Local Brands and Enablers: TikTok Shop should prioritise local brands and e-commerce enablers over foreign owned ones by ensuring that local consumer traffic is channeled to local brands and e-commerce enablers rather than foreign owned ones.

Consequently, the government, while safeguarding local interests, can formulate policies that do not merely exclude global platforms like TikTok Shop, but instead encourage them to integrate constructive community investment and engagement into their operational framework.

This approach guarantees that as these platforms extract value from our markets, they also inject valuable resources, knowledge, and opportunities back into our local economies. These measures encompass:

• Balanced Regulatory Measures: En policies that ensure a level playing field in our digital marketplace, preventing any entity from exploiting the market through predatory pricing or compromising consumer data protection. Our goal is to nurture a digital economy where all participants, local and foreign, contribute equitably and do not exploit the system to the detriment of others.
• Inclusivity in Prosperity: Develop strategies that ensure the economic benefits flowing from global platforms are equitably distributed among local entities, with a particular focus on safeguarding and empowering the B40 segment and which includes rural communities and sellers from the kampung.

e-Commerce Malaysia and PIKOM envision a future where global and local digital entities coexist and collaborate, mutually strengthening one another, fostering a thriving, equitable and sustainable digital economy.

In shaping this digital future, policies should not only safeguard but also skilfully harness global innovations to nurture and enhance our local digital landscape. 

“Therefore, we wholeheartedly offer our expertise and advocacy, committing to collaborate with the government and international platforms. Our collective effort is dedicated to consistently nurture a future where Malaysia stands robustly positioned within the global digital arena, benefiting our economy and societal development in this thriving digital age,” stated Ganesh.