Southeast Asian Development Frustrated? After Indonesia, Malaysia is considering introducing a TikTok e-commerce ban

The development of Tiktok's e-commerce business in Southeast Asia may face crises.On October 11th local time, according to foreign media reports, the Malaysian government is considering a policy similar to the Indonesian government to ban e-commerce transactions on social media platform TikTok

The development of Tiktok's e-commerce business in Southeast Asia may face crises.

On October 11th local time, according to foreign media reports, the Malaysian government is considering a policy similar to the Indonesian government to ban e-commerce transactions on social media platform TikTok. The background of this policy is to respond to consumers' concerns about pricing competition and data privacy issues on TikTokShop.

According to reports quoting Malaysia's Minister of Communications and Digital Affairs, Fahmi Fadzil, several large stores have filed complaints about the prices of products offered on the TikTok platform, and major retailers have also expressed concerns about pricing competition for products sold through the platform.

The Malaysian government has requested TikTok to provide an explanation on this matter. Fahmi Fadzil said, "I think TikTok needs to come forward and clarify, because one of the reasons why TikTokShop is banned in Indonesia is due to concerns that predatory pricing could threaten local entrepreneurs." Fahmi also emphasized that TikTok should provide an explanation for personal data protection, which is a concern for users when shopping on the platform.

This also means that Malaysia is considering following Indonesia's example and implementing a ban on TikTok e-commerce.

On September 27th, the Indonesian Ministry of Trade held a press conference demanding that social media (such as TikTok, Facebook, Instagram, etc.) be prohibited from engaging in e-commerce transactions within the same product, and proposed that TikTokShop must be reorganized into a standalone application (App) within a week, otherwise the service will be shut down.

The new regulations also require Indonesian e-commerce platforms to set a minimum price of $100 for products purchased directly from abroad, and all products should comply with local standards; This is to avoid a large influx of cheap foreign products to protect Indonesia's micro and small enterprises. Affected by the new regulations, on October 4th, TikTok announced the closure of the TikTokshop Indonesia station.

Indonesian regulatory agencies have been investigating TikTok for a long time, fearing that TikTokShop will monopolize the market. Several government officials have also made public statements on relevant matters, such as President Zoko's statement that social commerce platforms such as TikTokShop have led to a decline in the business of small and medium-sized enterprises and traditional markets.

Southeast Asia is an important destination for Tiktok e-commerce to go to sea. Previously, a head of a leading live streaming company told the surging news reporter that TikTok e-commerce began testing in Indonesia as early as 2021, as Indonesia has the highest e-commerce penetration rate, fastest growth rate, largest population, and young purchasing power in the Southeast Asian market, making it the easiest market to achieve results.

Previously, on June 15th, TikTok CEO Zhou Shouzi publicly stated that TikTok would reinvest in the Southeast Asian market and invest over $12 million in the region over the next three years to support over 120000 local merchants and enterprises. According to him, TikTok currently has approximately 8000 employees in Southeast Asia, compared to around 100 when it first entered the market six years ago.

Third party data shows that TikTok's GMV (total commodity transaction volume) in Southeast Asia has increased from $600 million in 2021 to $4.4 billion in 2022.

The social e-commerce ban released by Indonesia is also seen as a huge challenge for TikTok in the Southeast Asian market.

It is worth noting that after Indonesia, multiple Southeast Asian countries are following up on the investigation of TikTok. Foreign media reports indicate that Vietnam has completed a nearly five month investigation into TikTok. According to the investigation results released by the Vietnamese Ministry of Information and Communications (MIC), TikTok has violated multiple regulations regarding the storage of network information for Vietnamese content distribution.

According to the investigation, TikTok's local content evaluation process is incomplete, leading to further dissemination of illegal content through algorithms. At the same time, the company has failed to fully protect children's privacy and has taken action to detect content that is harmful to children.

The Vietnamese government requires TikTok to remove all content that violates Vietnamese laws and prevent it from being republished, add content that complies with local laws to its community guidelines, and provide information to address violations on the platform.

According to public data, approximately 77.5% of online users aged 16 to 64 in Vietnam use TikTok. In the third quarter of last year, TikTok ranked third among the most popular social media platforms in Vietnam.

According to third-party data, Shopee currently dominates the Southeast Asian market, with a GMV of approximately $47.9 billion last year, accounting for 48% of the total GMV in the region. The second ranked company is Lazada, a subsidiary of Alibaba, with a GMV of approximately $20.1 billion last year. Although TikTok e-commerce is not as large as the first two in terms of overall size, its rapid development speed was once seen as a powerful catcher.

According to Bain Consulting's prediction, the e-commerce market size in Southeast Asia will reach 234 billion US dollars in 2025, making it a must-have place for major domestic internet giants to go overseas. This time, Southeast Asian countries are considering issuing new policies on e-commerce, which may affect the local cross-border e-commerce competition pattern.

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