TikTok Halts E-Commerce Operations in Indonesia to Comply With New Regulations

TikTok, the popular social media app, is suspending its online shopping service in Indonesia following the country’s recent regulations aimed at separating e-commerce from social media platforms. The suspension, which will commence at 17:00 Jakarta time (11:00 WAT), comes after Indonesia became the first country to pilot TikTok’s e-commerce service in 2021, leading to the platform’s significant growth in the region.

The Indonesian government’s decision to enforce these regulations is rooted in the aim to protect local physical and online retailers. Indonesia’s trade minister, Zulkifli Hasan, emphasised that e-commerce must be distinct from social media platforms, giving a one-week ultimatum to social media companies to comply with the new rules or face the risk of losing their licence to operate in the country.

Responding to the regulatory changes, TikTok released a statement on Tuesday, stating, “Our priority is to remain compliant with local laws and regulations,” and announcing the suspension of e-commerce transactions in TikTok Shop Indonesia.

Indonesia has experienced a significant surge in online retailing in recent years, with the value of e-commerce sales expected to increase more than sixfold between 2018 and next year, reaching 689 trillion Indonesian rupiah ($44 billion; £36.5 billion), according to the country’s central bank. TikTok Shop had rapidly expanded its market presence since its launch two years ago, becoming one of the prominent players in Indonesia’s online shopping market, dominated by platforms like Tokopedia, Shopee, and Lazada.

The impact of this regulatory change is widespread. Indonesia, with over 278 million people, houses 125 million TikTok users, including 6 million sellers and numerous creators who earn income by promoting goods through TikTok Shop. The decision is also affecting small businesses, known as micro, small, and medium enterprises, which constitute almost two-thirds of Indonesia’s economy.

This suspension comes as another setback for TikTok, which has faced scrutiny in various parts of the world, including the US, European Union, and the UK. In the UK, Parliament has banned the app from its network due to security concerns.

The future of TikTok’s e-commerce ventures in Indonesia remains uncertain, as the platform navigates these regulatory challenges and adapts to the evolving landscape of social media and online retail in the region.

Kiki Garba.