TikTok puts a halt to e-commerce service in Indonesia amidst ban – Find out why!

TikTok Indonesia recently announced that it will discontinue e-commerce transactions on its platform by Thursday to comply with new local regulations. The move comes after the Indonesian ministry of trade set a one-week deadline for TikTok to become a standalone app without e-commerce features, otherwise facing shutdown.

TikTok stated, “Our priority is to remain compliant with local laws and regulations,” in a statement on Tuesday. The company further added, “As such, we will no longer facilitate e-commerce transactions in TikTok Shop Indonesia by 17:00 GMT+7, October 4, and will continue to cooperate with the relevant authorities on the path forward.”

This decision was prompted by President Joko Widodo’s call for social media regulations to prevent a decline in domestic businesses due to an influx of foreign imports flooding the market.

Last week, the Indonesian government imposed a ban on e-commerce transactions conducted through social media platforms like TikTok and Facebook.

This new regulation is a setback for TikTok’s plans in Southeast Asia. TikTok CEO, Shou Zi Chew, previously announced intentions to invest billions of dollars in the region as part of the company’s global business diversification strategy amidst increasing pressure from the U.S. market. Indonesia is TikTok’s largest Southeast Asian market and second-largest market globally, with 125 million users, following the U.S.

Sachin Mittal, head of telecom, media, and technology research at DBS Bank, has pointed out that operating TikTok as a standalone app may pose challenges, as most purchases made on the platform are impulse buys. He explained that requiring users to log into a separate app could result in a sharp drop in user engagement.