TikTok has suspended its online shopping service in Indonesia after the government introduced new regulations requiring social media platforms to separate their e-commerce features. The suspension took effect at 17:00 Jakarta time (10:00 GMT) on Tuesday, October 4, 2023.
Indonesia's trade minister, Zulkifli Hasan, announced last week that social media platforms must separate their shopping features from their video-sharing services or risk losing their operating licences. “Now, e-commerce cannot become social media. It is separated,” he said. The move aims to protect local physical and online retailers, which have been struggling to compete with the rapid growth of e-commerce.
Indonesia was the first country to pilot TikTok Shop in 2021 and became one of its largest markets. The platform has 125 million users in the country, including 6 million sellers and millions of creators who earn money promoting goods. TikTok's chief executive, Shou Zi Chew, visited Indonesia in June and pledged to invest billions of dollars in the region over the next three to five years.
The new regulations are part of a broader effort by President Joko Widodo to regulate the e-commerce sector. “We need to be careful with e-commerce. It can be very good if there are regulations but can turn bad if there aren't any,” he said last month. The value of e-commerce sales in Indonesia is expected to reach 689 trillion Indonesian rupiah ($44bn; £36.5bn) next year, more than six times the 2018 figure.
The growth of online retailers has hit physical shop owners hard. Sukmamalingga, who sells Muslim clothing at Tanah Abang Market in Jakarta, told BBC News Indonesia: “None of my customers from regions in Indonesia shop anymore, even though I often send photos of new models of clothes.” The government says there are more than 64 million micro, small and medium enterprises in Indonesia, accounting for almost two-thirds of the economy.
TikTok said in a statement: “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 suspension is another setback for the app, which faces scrutiny in the US, EU and UK over security concerns.
