TikTok suspends online shopping operation in Indonesia

In order to comply with new regulations in the country with the largest economy in SouthEast Asia, the social media app TikTok is stopping its online buying operation in Indonesia.

The change will become effective at 17:00, Jakarta time, which is 10:00, GMT.

According to the government of Indonesia, the legislation will assist in protecting both offline and online shops on a local and national level.

TikTok Shop quickly established Indonesia as one of its most important markets after the country became the first in the world to pilot the app's e-commerce business in 2021.

TikTok is a popular video sharing website in Indonesia, and the government of that nation only last week issued new restrictions that will require the company to separate its shopping function from the rest of the service.

Following the announcement of these measures, Indonesia's Minister of Trade Zulkifli Hasan stated that "Now, e-commerce cannot become social media." It is distinct from that.

In addition to this, he informed the social media sites that they had one week to conform to the new regulations or face having their permission to operate within the country revoked.

President Joko Widodo of Indonesia stated the previous month that they need to be careful with e-commerce as it has the potential to be highly beneficial if there are regulations, but it has the potential to be detrimental if there aren't any regulations.

Tiktok released a statement mentioning that their priority is to remain compliant with local laws and regulations. They stated that they will no longer facilitate e-commerce transactions in TikTok shop Indonesia. 

In recent years, online retailing in Indonesia has exploded. According to Indonesia's central bank, the value of e-commerce sales will have increased by more than sixfold between 2018 and 2019 to reach 689 trillion Indonesian rupiah ($44 billion; £36.5 billion).

TikTok Shop has been gaining market share in Indonesia's online shopping market since its inception two years ago. Over 125 million TikTok users reside in the country of over 278 million individuals.

This includes 6 million merchants and additional millions of creators who earn money by promoting products on TikTok Shop, according to sources. 

In June, the chief executive officer of the company, Shou Zi Chew, traveled to Indonesia and pledged to invest billions of dollars in the region over the next three to five years.

Sukmamalingga has had a store selling Muslim clothing such as kaftans at Tanah Abang Market in Jakarta for nine years. The development of online retailers has had a significant impact on the owners of physical shops such as Sukmamalingga.

"None of my customers from regions in Indonesia shop any longer, despite the fact that I frequently send photos of new clothing models," he told local Indonesian sources. 

According to government statistics, more than 64 million micro, small, and medium-sized businesses account for nearly two-thirds of Indonesia's economic output.

The new regulations are another setback for TikTok, which has faced scrutiny in the United States, the European Union, and the United Kingdom, where Parliament has banned the app from its network due to security concerns.