The new rules come just three months after TikTok pledged to invest billions of dollars in Southeast Asia, largely in Indonesia, over the next few years to accelerate the building of its TikTok Shop e-commerce platform.
The Indonesian government said the regulation, which will take effect immediately, is aimed at protecting offline merchants and markets, adding that predatory pricing on social media platforms is threatening small and medium-sized businesses.
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| A vendor livestreams on social media at ICT shopping mall in Jakarta, Indonesia. |
TikTok Indonesia said it was “deeply concerned” about the new rule, as it could “directly impact the livelihoods of over 6 million accounts,” local sellers who operate on TikTok Shop.
According to Indonesian Trade Minister Zulkifli Hasan, this is a government move to ensure “fair and just” business competition, while ensuring the protection of user data.
The new regulations also require e-commerce platforms in Indonesia to set a minimum price of $100 for certain items purchased directly from abroad. All products offered must meet local standards.
Zulkifli also added that TikTok has one week to comply with the regulations or face the risk of being shut down.
TikTok is the only company affected by the trading ban, and the new rules are unlikely to hurt digital market growth, according to research firm BMI.
The e-commerce market in Indonesia is dominated by domestic technology companies such as Tokopedia (GoTo), Shopee (Sea) and e-commerce giant Lazada (Alibaba).
According to data from consultancy Momentum Works, e-commerce transactions in Indonesia reached nearly $52 billion last year, and of that, 5% took place on TikTok.
Indonesia is one of the few markets where the Chinese company has launched TikTok Shop as the app looks to capitalize on its large user base there.
Indonesia has 125 million monthly active users, almost as many as in the entire European region and second only to the US with more than 150 million users. Earlier this month, the short video sharing platform also launched its online shopping service TikTok Shop in the US market.
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