- By Mariko Oi
- Business Correspondent
image source, EPA-EFE/REX/Shutterstock
Social media app TikTok is suspending its online shopping service in Indonesia to comply with new rules in Southeast Asia’s largest economy.
The move will take effect at 17:00 Jakarta time (10:00 GMT).
The country’s government says the regulations will help protect local physical and online retailers.
Indonesia became the first country to pilot the app’s e-commerce service in 2021 and became one of TikTok Shop’s biggest markets.
Last week, Indonesia announced regulations forcing TikTok to separate its shopping feature from the popular video-sharing service in the country.
Announcing the measures, Indonesia’s Trade Minister Zulkifli Hasan said: “Right now, e-commerce cannot become social media. It is divided.”
He said on social media platforms that he would have to comply with the new rules or face losing his license to operate in the country.
The announcement came after Indonesia’s President Joko Widodo said last month: “We have to be careful with e-commerce. It’s very good if there are regulations, but if there are no regulations it will be bad.”
“As such, we will no longer facilitate e-commerce transactions on TikTok Shop Indonesia,” it added.
Online retail sales in Indonesia have soared in recent years. According to the country’s central bank, the value of e-commerce sales will reach 689 trillion Indonesian rupiah ($44bn; £36.5bn) between 2018 and next year.
TikTok Shop has been increasing its market share since its launch two years ago in Indonesia’s online shopping market, which is dominated by platforms such as Tokopedia, Shopee and Lazada.
There are 125 million TikTok users in a country of over 278 million people. It has 6 million sellers and millions of creators who make money using TikTok Shop to promote their products.
In June, the company’s chief executive, Sho Ji Siew, visited Indonesia and pledged to invest billions of dollars in the region over the next three to five years.
The growth of online retailers has had a major impact on business shop owners like Sukmamalinga, who has owned a shop selling Muslim clothing such as kaftans in Jakarta’s Tanah Abang market for nine years.
“None of my customers from regions in Indonesia buy, even though I often send photos of new model clothes,” he told BBC News Indonesia.
Government statistics show there are more than 64 million small businesses – known as micro, small and medium enterprises – that account for nearly two-thirds of Indonesia’s economy.
Additional reporting by Kuinawatti Pasaribu, BBC News Indonesia
