TikTik announced that it will be stopping its e-commerce transactions in its TikTok Shop app in Indonesia after the country brought in a ban on e-commerce trade on social media.
In a press release, TikTok, owned by ByteDance (BDNCE), said, “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 by 17:00 GMT+7, October 4.”
TikTok noted that it will continue to cooperate with the relevant authorities on the path forward.
The Indonesian government has said the ban, imposed in September, is aimed at protecting offline merchants and marketplaces, adding that predatory pricing on social media platforms is threatening small and medium-sized enterprises.
Indonesia also seeks to keep its 64.2 million micro, small and medium enterprises that contribute 61% of its gross domestic product from getting hurt by social commerce companies.
Ministers have previously said that e-commerce sellers using predatory pricing on social media platforms are threatening offline markets in Indonesia.
With the new rule, Indonesia is the first country in Southeast Asia to push back against TikTok. Navigating this conflict with Indonesia will be pivotal for the company as governments across the world assess how Southeast Asia’s largest nation moves to curb the social media giant’s burgeoning e-commerce presence, just months after TikTok’s chief executive Shou Zi Chew visited Jakarta, pledging to pour billions of dollars into Southeast Asia in the years ahead.
TikTok’s decision is in line with the government’s grace period to comply with the new rule at one week, to avoid the threat of closure. It was unfortunate for the social app as Indonesia is one of the largest markets for TikTok Shop and was the first to pilot the app’s e-commerce arm.
