Indonesia blocks Chinese E-commerce giant Temu to protect local businesses

This photo shows Temu's logo. REUTERS-Yonhap

SEOUL, October 10 (AJP) - Indonesia is maintaining its stance against Chinese e-commerce platform Temu's entry into its market, citing concerns over potential harm to local small and medium-sized enterprises (SMEs). Communications and Information Minister Budi Arie Setiadi recently emphasized that Temu's business model could be detrimental to Indonesia's economic landscape, particularly affecting smaller businesses.

The Indonesian government has rejected Temu's attempts to register in the country since September 2022, with officials arguing that the platform's direct-to-consumer model from Chinese factories conflicts with local trade regulations requiring intermediaries. Authorities fear that this approach could enable foreign companies to undercut domestic businesses by maintaining artificially low prices.

The move follows Indonesia's earlier restrictions on TikTok Shop, which was effectively shut down last year to protect the local e-commerce sector. TikTok subsequently invested $1.5 billion in Indonesia's largest e-commerce firm, Tokopedia, to resume its online shopping operations in the country.

While Temu has successfully expanded into other Southeast Asian markets such as the Philippines, Malaysia and Thailand, Indonesia remains firm in its protectionist stance. The government insists that its online space should be filled with entities that make society more productive and profitable, rather than those that could potentially harm local SMEs.

AJP