TikTok to halt e-commerce deals in Indonesia after ban

Short-video app TikTok said it will halt transactions on its platform in Indonesia from Wednesday following the country’s new ban on e-commerce trade on social media.

TikTok, which is owned by China’s ByteDance, suggested in a statement on Tuesday that it will make an effort at coordination with officials from the Indonesian government regarding its future plans.

“Our priority is to remain compliant with local laws and regulations. As such, we will no longer facilitate e-commerce transactions in TikTok Shop Indonesia,” the company said.

The Indonesian government has said the ban, imposed last week, is aimed at protecting offline merchants and marketplaces, adding that predatory pricing on social media platforms is threatening small and medium-sized enterprises.

It was unclear from the statement whether TikTok will create a new e-commerce app, that will operate separately from its social media app.

TikTok’s decision is in line with the Indonesian government’s grace period. It had given offenders one week to comply with the new rule, to avoid the threat of closure.

At a Jakarta wholesale market, vendors such as Nilam, who goes by one name and sells locally made pants, fear being left out of pocket. She said she earns 80% of her revenue on TikTok Shop and does not know how she can replace the platform. “I’m very confused as to where I’ll earn money,” Nilam said, adding that she hopes TikTok Shop will be able to reopen.

TikTok had pledged to invest billion of dollars in Southeast Asia, mainly in Indonesia, over the next few years in a major push to build its e-commerce platform TikTok Shop.

The company has 125-million active monthly users in Indonesia and has been looking to translate the large user base into a major source of e-commerce revenue.

E-commerce transactions in Indonesia amounted to nearly $52bn last year and of that, 5% took place on TikTok, according to data from consultancy Momentum Works.