TikTok Suspends Online Shopping Service in Indonesia Following New Regulations
Social media app TikTok has announced that it will suspend its online shopping service in Indonesia to comply with new regulations set by the country’s government. The decision will go into effect at 17:00 Jakarta time (10:00 GMT).
Indonesia, the largest economy in Southeast Asia, has introduced these regulations to protect local physical and online retailers. The country was the first to pilot TikTok’s e-commerce service in 2021 and quickly became one of the app’s biggest markets for its TikTok Shop feature.
Last week, Indonesia announced new regulations that required TikTok to separate its shopping feature from the popular video-sharing service within the country. Zulkifli Hasan, Indonesia’s trade minister, stated, “Now, e-commerce cannot become social media. It is separated.” He also warned social media platforms to comply with the new rules within a week or risk losing their operating licenses in the country.
This move comes after President Joko Widodo expressed concerns about the unregulated nature of e-commerce, highlighting the need for regulations to prevent any potential negative impact. As a result, TikTok has made the decision to no longer facilitate e-commerce transactions through its TikTok Shop in Indonesia.
Online retailing has experienced significant growth in Indonesia in recent years. The country’s central bank predicts that the value of e-commerce sales will increase more than sixfold between 2018 and next year, reaching 689 trillion Indonesian rupiah ($44bn; £36.5bn).
TikTok Shop had been gaining market share since its launch two years ago but faced tough competition from established platforms like Tokopedia, Shopee, and Lazada. With over 278 million people in Indonesia, TikTok has amassed 125 million users, including 6 million sellers and numerous creators who earn money by promoting goods through the TikTok Shop.
TikTok’s CEO, Shou Zi Chew, previously visited Indonesia in June and pledged to invest billions of dollars in the region over the next few years. However, the growth of online retailers has negatively impacted physical store owners like Sukmamalingga, who has been operating a Muslim clothing store at Tanah Abang Market in Jakarta for almost a decade. He lamented that his customers from various regions in Indonesia no longer shop at his store, even though he frequently shares photos of new clothing models.
The Indonesian government reveals that there are more than 64 million micro, small, and medium-sized enterprises, which contribute to nearly two-thirds of the country’s economy.
TikTok’s decision to suspend its e-commerce service in Indonesia demonstrates its compliance with the new regulations while also acknowledging the concerns of local retailers. The impact of this move on TikTok’s future growth and user engagement in Indonesia remains to be seen.