Mass Layoffs in Tokopedia

THE inefficiencies within Tokopedia are further evidence that the government has given the company special treatment, including when it banned Chinese trading platform TikTok Shop from operating in Indonesia, only to allow it to resume operations after it bought shares in Tokopedia’s parent company.

It is reported that Tokopedia will let go 450 employees following a request from ByteDance Inc, TikTok’s owner. These layoffs will take place only five months after Tokopedia acquired a 75.01 percent shareholding in GoTo Gojek Tokopedia worth US$1.5 billion, or around Rp23.42 trillion.

No department, including advertising and operations, will escape these redundancies. Although the reason given for these efficiencies is considerable duplication of work, it could also be a sign that Tokopedia has not been operating on an ideal scale. As evidence for this, TikTok, which has a far greater market share, has been able to produce a much more efficient working system.

This misfortune that has befallen Tokopedia could have been predicted sooner if the government had not banned TikTok Shop from operating in Indonesia. The reason given for the ban was to protect small-scale traders, as repeatedly stated by Cooperatives and Small and Medium Enterprises Minister Teten Masduki. But this has proved to be wide of the mark. It is understandable that some have claimed that the ban went ahead based on a ‘request’ from a certain party using the excuse of protecting small businesses.

The government is still closing its eyes and allowing small and medium-scale businesses to suffer as a result of a flood of imports from China. This is despite the fact that last year e-commerce companies also functioned as social media was the main reason for opposing TikTok Shop. Now, Trade Minister Regulation No. 31/2023 banning social commerce is still in force, but TikTok Shop—now renamed Shop Tokopedia—is still being allowed to operate.

It is entirely understandable that some are suspicious that there are hidden motives behind this inconsistency, especially since one of the GoTo Gojek Tokopedia shareholders is Garibaldi Thohir, older brother of State-Owned Enterprises Minister Erick Thohir. There have been many indications that the company enjoys special privileges. One of these is Telkom Indonesia becoming a GoTo Gojek Tokopedia shareholder.

Now the honeymoon is over. ByteDance Inc., which has injected tens of trillions of rupiah of capital, wants to ensure that its huge investment is safe. The measures to reduce inefficiencies through rationalization need to be carried out. These layoffs—like those made by many companies, especially after mergers or acquisitions—are unavoidable.

Similarly, there is no avoiding rationalization of the workforce in companies carrying out restructuring, changing their business strategy or trying to adapt to changes in market trends, especially at a time of global economic uncertainty that has led to many companies going bankrupt.

Given the events at Tokopedia, the government should be ashamed and refrain from repeating the crooked practice of buying and selling policies simply to save a company affiliated with a member of the government. In order to create healthy business competition, there must be no more opportunity for conflicts of interest in decision-making.