TikTok Indonesia has announced the cessation of transactions on its e-commerce platform by Thursday, complying with new local regulations. The move follows the Indonesian Ministry of Trade’s directive last week, setting a one-week ultimatum for TikTok to transform into a standalone app without any e-commerce features or face potential shutdown.
In a statement on Tuesday, TikTok expressed its commitment to remaining compliant with local laws and regulations, stating that it will cease facilitating e-commerce transactions on TikTok Shop Indonesia by October 4, 17:00 GMT+7. The company emphasized its continued cooperation with relevant authorities on the way forward.
This decision aligns with President Joko Widodo’s call for social media regulations, citing their impact on domestic businesses, leading to a decline in sales due to an influx of foreign imports flooding the market. Last week, the Indonesian government imposed a ban on e-commerce transactions on social media platforms, including TikTok and Facebook.
The regulatory changes in Indonesia could pose a significant challenge to TikTok’s ambitions in Southeast Asia. TikTok CEO Shou Zi Chew had previously expressed the app’s intention to invest billions of dollars in the region as part of its global business diversification strategy amid escalating pressure from the U.S. Indonesia is TikTok’s largest market in Southeast Asia and its second-largest globally, boasting 125 million users after the U.S.
Sachin Mittal, head of telecom, media, and technology research at DBS Bank, noted that operating TikTok as a standalone app might be challenging, potentially leading to a drop in user engagement as many purchases on the platform are impulsive in nature.