TikTok, the popular short video app owned by China’s ByteDance, has announced that it will temporarily halt transactions on its platform in Indonesia starting Wednesday. This move comes in response to Indonesia’s newly imposed ban on e-commerce trade through social media platforms.
In a statement issued on Tuesday, TikTok expressed its commitment to complying with local laws and regulations, stating, “Our priority is to remain compliant with local laws and regulations. As such, we will no longer facilitate e-commerce transactions in TikTok Shop Indonesia.” The company also noted its intention to work closely with the Indonesian government to address the situation.
Indonesia’s government introduced the ban on e-commerce trade via social media platforms last week, citing its aim to protect offline merchants and marketplaces. The government contends that predatory pricing practices on social media platforms pose a threat to small and medium-sized enterprises.
The statement from TikTok did not clarify whether the company plans to create a new, separate e-commerce app distinct from its core social media offering.
TikTok’s decision to suspend transactions aligns with the Indonesian government’s grace period, allowing companies to comply with the new regulation within one week to avoid potential closure.
Local vendors, such as Nilam, who primarily sell products through TikTok Shop, expressed concerns about the ban’s impact. Nilam, who operates at a Jakarta wholesale market and relies on TikTok Shop for 80% of her revenue, voiced her uncertainty about finding an alternative platform, saying, “I’m very confused as to where I’ll earn money.” She remains hopeful that TikTok Shop may reopen in the future.
TikTok had previously committed to investing billions of dollars in Southeast Asia, with a primary focus on Indonesia, as it sought to build its e-commerce platform, TikTok Shop. The platform boasts 125 million active monthly users in Indonesia and had been working to translate its vast user base into a significant source of e-commerce revenue.
According to consultancy Momentum Works, e-commerce transactions in Indonesia reached nearly $52 billion in the previous year, with TikTok accounting for 5% of this activity.
As the situation unfolds, businesses and users are closely monitoring developments, with an eye on the potential impact of this regulatory change on the e-commerce landscape in Indonesia.
