- Kyle Chua
Indonesia Bans TikTok Shop, E-Commerce Sellers Appeal Decision
Updated: Dec 18, 2023
TikTok announced it's ceasing online retail operation in Indonesia after the country's government decided to ban e-commerce transactions on social networking platforms.
The new regulation, which prohibits social media companies from direct sales of products on their platforms, came into effect in late-September as part of the Indonesian government's bid to protect small businesses in the country from e-commerce competition.
TikTok only had a week to comply and become an independent app without any e-commerce features. If it failed to do so, it would have been forced to shut down in the country.
Indonesia’s Trade Minister Zulkifli Hasan in statement said the aim of the ban is to "prevent the domination of the algorithm and prevent the use of personal data in business interests", which would help foster a fair and health e-commerce system. He added that marketplaces and sellers can only promote goods and services, not conduct sales.
TikTok and other apps like it were also accused by the Indonesian government of predatory pricing, with the majority of the products on sale being foreign imports, specifically from China.
"Our priority is to remain compliant with local laws and regulations," the short-form video giant said in a statement published on its website.
With over 125 million users, Indonesia is TikTok's second largest market after the U.S. It was also among the countries with the largest number of TikTok Shop sales in the first half of 2023, according to FastData. What's more, when it comes to e-commerce-related live broadcasts, the country's users recorded the highest total time and total number of views in Southeast Asia.
Those affected by the closure of TikTok Shop are now appealing the regulation. E-commerce sellers and affiliate creators alike, for example, are now reportedly asking the government to help them sell their products at major retail outlets before it considers a ban on TikTok Shop. They argue that the likes of TikTok have helped them sell their products to more customers by expanding their reach.
SME Association of Malaysia (SME Malaysia) President Ding Hong Sing also said that having such platforms around isn't necessarily bad. "Although online sales activities, which come with many pricing issues and overzealous promotional tactics, are difficult and complicated to govern, these platforms, like TikTok Shop, have allowed microbusinesses to reach out to potential customers directly," he told The Star.
Direct sales, however, can hurt manufacturers who rely on wholesalers, resellers and middlemen, along with supermarkets and retailers, he stressed. That explains why many of these sellers have also moved to selling online.
Ding maintains that both online and physical shopping have their own attractions and fans.
TikTok announced it's ceasing online retail operation in Indonesia after the country's government decided to ban e-commerce transactions on social networking platforms.
The new regulation came into effect in late-September as part of the Indonesian government's bid to protect small businesses in the country from e-commerce competition.
The short-form video giant and other apps like it were accused of predatory pricing, with the majority of the products on sale being foreign imports, specifically from China.