Indonesia Shuts the Door on Temu To Protect Local Businesses

Indonesia has firmly rejected the entry of e-commerce platform Temu, citing fears that it could harm the country's micro, small, and medium enterprises (MSMEs). The decision comes after Temu's repeated attempts to register for operations in Southeast Asia's largest economy.


Temu, operated by PDD Holdings, the parent company of Chinese online retailer Pinduoduo, has faced scrutiny from Indonesian authorities due to its business model. The platform's direct-from-factory sales approach violates the country's trade regulations, which require an intermediary or distributor.


Minister of Communications and Informatics Budi Arie Setiadi emphasized the potential negative impact of Temu on Indonesia's economy and society. He stated that allowing Temu to operate could destroy micro, small and medium enterprises and hinder the country's economic growth if it was left unchecked.


The Indonesian government has been cautious about the entry of foreign e-commerce platforms, particularly those with aggressive business models that could disrupt the domestic market. In October 2022, Indonesia also banned TikTok Shop for similar reasons, although it later allowed TikTok to re-enter the market through its acquisition of a stake in Tokopedia.


Temu's entry into Indonesia has been closely watched by local businesses and policymakers, as its success in other Southeast Asian countries has raised concerns about its potential impact on the Indonesian market.