Change in laws forces TikTok to shut its online shopping feature in Indonesia

After Indonesia decided to separate social media and online shopping, TikTok has decided to shut its online shopping section in the country.

TikTok, a social media app, has suspended its online buying operation in Indonesia in order to comply with new restrictions in the country.

Indonesia which is South East Asia’s largest economy changed its law last week following intentions to protect its local merchants who own physical shops.

The change will be implemented at 17:00 Jakarta time (10:00 GMT).

This online shopping feature of the popular video-streaming app was introduced in 2021 and Indonesia was the first country to witness it. Later, it quickly became one of TikTok Shop’s largest markets.

Last week, Indonesia issued restrictions that would require TikTok to separate its retail function from the country’s most popular video-sharing site.

Indonesia’s trade minister, Zulkifli Hasan, announced the limits, saying, “Now, e-commerce cannot become social media.” It has been separated.”

He also gave social media platforms a week to comply with the new guidelines or face losing their operating license in the country.

The announcement comes after Indonesian President Joko Widodo stated last month, “We must be cautious with e-commerce.” It can be highly beneficial if there are regulations, but it can be detrimental if there are none.”

“Our priority is to remain compliant with local laws and regulations,” TikTok stated on Tuesday.

“As such, we will no longer facilitate e-commerce transactions in TikTok Shop Indonesia,” it stated.

In recent years, online retailing in Indonesia has skyrocketed. According to the country’s central bank, the value of e-commerce sales will have climbed more than sixfold between 2018 and next year, reaching 689 trillion Indonesian rupiah ($44 billion; £36.5 billion).

TikTok Shop has steadily increased its market share in Indonesia’s online retail business, which is dominated by platforms such as Tokopedia, Shopee, and Lazada.

TikTok has 125 million users in the country of over 278 million people. This includes 6 million vendors and millions more producers who make money by promoting products on TikTok Shop.

Shou Zi Chew, the company’s top executive, visited Indonesia in June, promising to invest billions of dollars in the region over the next three to five years.

According to government statistics, there are more than 64 million micro, small, and medium firms in Indonesia, accounting for about two-thirds of the country’s GDP.

The new laws are just another setback for TikTok, which has been scrutinized in the United States, the European Union, and the United Kingdom, where Parliament has blocked the app from its network due to security concerns.