- Written by Mariko Oi
- business reporter
Social media app TikTok is suspending its online shopping services in Indonesia to comply with new rules in Southeast Asia’s largest economy.
The measures will come into effect at 17:00 Jakarta time (10:00 GMT).
The government says the regulation is aimed at protecting local brick-and-mortar and online retailers.
Indonesia was the first country to pilot the app’s e-commerce services in 2021 and has become one of TikTok Shop’s largest markets.
Last week, Indonesia announced regulations forcing TikTok to separate its shopping functionality from the country’s popular video-sharing service.
Indonesia’s Trade Minister Zulkifli Hasan announced the measure, saying, “Currently, e-commerce cannot become social media. E-commerce is separated.”
He also told social media platforms they have one week to comply with the new rules or risk losing their license to operate in the country.
The announcement comes after Indonesian President Joko Widodo said last month: “We need to be careful with e-commerce. With regulation it can be very good, but without regulation it can be bad.” It was conducted.
“Therefore, we will no longer promote e-commerce on TikTok Shop Indonesia,” it added.
Online retail industry in Indonesia has been growing rapidly in recent years. E-commerce sales are expected to increase more than sixfold from 2018 to next year, reaching 689 trillion Indonesian rupiah ($44 billion, Ā£36.5 billion), according to the country’s central bank.
TikTok Shop has been gaining market share since entering Indonesia’s online shopping market two years ago, which is dominated by platforms such as Tokopedia, Shopee and Lazada.
The country of over 278 million people is home to 125 million TikTok users. This includes his 6 million sellers and millions more creators who use his TikTok Shop to promote their products and earn money.
In June, the company’s CEO Shou Zi Chew visited Indonesia and pledged to invest billions of dollars in the region over the next three to five years.
The growth of online retailers has had a big impact on brick-and-mortar owners like Sukumalinga, who has run a shop selling Muslim clothing such as kaftans in Jakarta’s Tanah Abang market for nine years.
“My customers from regions of Indonesia no longer shop with me, even though I frequently send photos of new models of clothes,” he told BBC News Indonesia.
According to government statistics, there are more than 64 million small and medium-sized enterprises, known as MSMEs, accounting for almost two-thirds of Indonesia’s economy.
Additional reporting by Kinawati Pasarib of BBC News Indonesia