Indonesia Signals Tighter Scrutiny on Chinese E-Commerce Giants Like TikTok Shop and Shopee Amid Dominance Fears

Indonesia's Finance Minister Purbaya Yudhi Sadewa has voiced strong concerns over the dominance of Chinese e-commerce platforms flooding the market with low-cost imports.

He warned that without intervention, the country risks handing its domestic market directly to China, prompting strategies to boost local products.

Government Concerns and Historical Context

Public complaints about cheap Chinese goods on local platforms have escalated, marking the first time a senior minister publicly addresses foreign e-commerce influence.

In 2023, a similar signal from the Minister of Cooperatives led to an abrupt ban on TikTok Shop, surprising its parent ByteDance and resulting in the acquisition of Tokopedia.

Current Market Landscape

Shopee commands a 46% market share in Indonesia as of 2024, while TikTok Shop has more than doubled its gross merchandise value to close the gap at 11%.

Despite cross-border B2C e-commerce being small, 70-80% of goods sold on domestic platforms are still manufactured in China.

Platforms like Shopee and TikTok Shop have adapted by employing local teams, training MSMEs, and limiting certain imports to align with government priorities.

Regional Trends and Future Implications

Neighboring countries like Thailand have imposed VAT on small imports, and Vietnam's new e-commerce law shifts tax burdens to platforms starting July 2026.

The new Indonesian administration, amid global uncertainties, expects foreign players to engage closely with regulators to avoid past pitfalls.

While no outright ban is anticipated, tighter oversight aims to protect domestic suppliers and foster a competitive local ecosystem.

Momentum Works analysts predict that successful navigation of these regulations will require balancing aggressive growth with deep local compliance.