TikTok Indonesia said it will end transactions on its e-commerce marketplace by Thursday, in order to comply with new local regulations.
The announcement comes after the Indonesian ministry of trade last week set a one-week deadline for TikTok to become a standalone app, without any e-commerce feature, or risk being shut down.
“Our priority is to remain compliant with local laws and regulations,” said TikTok in a statement on Tuesday.
“As such, we will no longer facilitate e-commerce transactions in TikTok Shop Indonesia by 17:00 GMT+7, October 4, and will continue to cooperate with the relevant authorities on the path forward,” it said.
The move comes after President Joko Widodo recently called for social media regulations. He said the influx of such platforms has contributed to a sales decline for domestic businesses by flooding the market with foreign imports.
The new regulation could deal a major blow to TikTok’s Southeast Asian ambitions. CEO Shou Zi Chew previously said that the app will invest billions of dollars into the region as it looks to diversify its business globally as U.S. pressure escalates.
Indonesia is TikTok’s largest Southeast Asian market and second-largest market globally with 125 million users after the U.S., according to the company.
Sachin Mittal, head of telecom, media and technology research at DBS Bank, previously said that TikTok “operating as a standalone app may still be challenging.”
He explained logging into a separate app might lead to a sharp drop-out rate as most purchases on TikTok are impulse buys.