JAKARTA, Indonesia: In response to Indonesia’s recent decision to ban e-commerce transactions on social media platforms, TikTok, the popular Chinese-owned video sharing app, has announced the suspension of its online retail operations in Indonesia.
The move comes as a compliance measure with the Indonesian government’s directive to prohibit social media companies from facilitating product sales on their platforms, aimed at protecting small businesses from perceived predatory pricing practices.
The new regulation, announced by the Indonesian government on September 28, is intended to level the playing field for small businesses and market vendors by curbing unfair competition from e-commerce giants. The government is seeking to prevent the potential dominance of algorithms and safeguard personal data from being exploited for business interests, fostering a fair, healthy, and beneficial electronic commerce ecosystem.
TikTok, in a statement released on its website, emphasized its commitment to abide by local laws and regulations. The company declared its decision to cease facilitating e-commerce sales on TikTok Shop Indonesia by 5 p.m. on Wednesday, as per the stipulated regulations.
Indonesia’s Trade Minister, Zulkifli Hasan, emphasized that the ban aims to promote fair trade and prevent damages to local small- and medium-sized businesses caused by predatory pricing practices. The regulation now mandates that marketplaces and sellers can only offer or promote goods and services, promoting fairness in the e-commerce landscape.
The Indonesian government’s decision was preceded by an inspection of Tanah Abang, Southeast Asia’s largest wholesale market. The market’s sellers in Jakarta experienced significant losses, exceeding 50% in profits, attributing it to an inability to compete with imported products sold online at much lower prices. Minister of Cooperatives and Small and Medium Enterprises, Teten Masduki, pointed out TikTok’s involvement in predatory pricing that adversely affected local businesses, supporting the necessity of regulating fair trade both online and offline.
Despite expressing regret over the government’s decision and acknowledging the impact on millions of TikTok Shop sellers, TikTok Indonesia affirmed its respect for the regulations and expressed a commitment to take a constructive path forward. Southeast Asia, with a population of over 675 million people, constitutes one of TikTok’s largest markets, boasting more than 325 million monthly app visitors.
TikTok, a platform owned by China’s ByteDance, faces ongoing scrutiny from various governments and regulators due to concerns about potential data harvesting and ties to the Chinese government. Some countries, including the United States, Britain, and New Zealand, have prohibited the app on government devices, despite TikTok’s consistent denials of sharing data with the Chinese government and its commitment to data privacy and security.
