TikTok Shop offline activity in Jakarta / Photo credit: TikTok
TikTok Shop will “no longer facilitate ecommerce transactions” in Indonesia starting from 6 p.m. SGT October 4.
This is the worst outcome for TikTok after the Indonesian government announced its latest trade regulations last week, banning direct ecommerce transactions on a social media app.
As Tech in Asia previously reported, to continue operating its ecommerce arm, the social media giant must establish a new entity, obtain an ecommerce license from the Ministry of Trade, and create a standalone TikTok Shop app.
A TikTok Indonesia spokesperson said in a statement that the company “will continue to cooperate with the relevant authorities on the path forward.”
The regulations came following concerns that TikTok Shop might threaten local MSMEs through its algorithms and alleged predatory pricing strategies. The platform has also been blamed for declining sales in traditional markets like the Tanah Abang wholesale center in Jakarta.
Indonesia quickly became the largest contributor to TikTok Shop’s gross merchandise value (GMV) in Southeast Asia soon after the platform’s launch in the country in 2021. A year later, it recorded a GMV of US$2.5 billion – 57% of its GMV in the region, according to Momentum Works research.
Despite the ban on its ecommerce arm, TikTok the social media app still has 125 million monthly active users, ranking second globally.
See also: TikTok Shop ban in Indonesia: Who is it really protecting?
Editing by Putra Muskita, Thu Huong Le, and Dhania Putri Sarahtika
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