(Bloomberg) -- Sea Ltd. gained a further 5% after Indonesia introduced sweeping regulations that will curb arch-foe TikTok’s efforts in Southeast Asia’s biggest e-commerce arena.
Most Read from Bloomberg
-
Tech Giants Buoy Stocks as Treasury Yields Slide: Markets Wrap
-
Kevin McCarthy Ousted as US House Speaker by Republican Dissidents
-
Wall Street Fear Gauge Ratchets Up After Jobs Data: Markets Wrap
-
McCarthy Ouster Means More Turmoil as Next Shutdown Fight Looms
Singapore-based Sea, whose Shopee dominates regional online commerce, has gained more than 17% or $3.4 billion of market value since Jakarta officials first outlined rules this week prohibiting social commerce companies from facilitating direct e-commerce payments on their platforms.
That means ByteDance Ltd.’s TikTok, the only social media company that sells goods directly on its app, will need to separate the shopping feature from its popular video-scrolling service. The mandate is part of newly tightened trade regulations that will kick in immediately, and businesses that don’t comply risk getting shuttered, Ministry of Trade officials said on Wednesday.
Indonesia is the first and largest market for TikTok Shop, and online shopping has become the social media app’s fastest-growing feature with a burgeoning fan base in the country. TikTok started the shopping feature in Indonesia in 2021 and its instant success has encouraged it to expand into online retailing in other markets, including the US.
Read more: TikTok Threat to Amazon Emerges With $20 Billion Shopping Pilot
“We view it as positive to Shopee and Tokopedia with a less competitive market environment in Indonesia,” Jefferies analyst Thomas Chong wrote.
Indonesia’s new policy is aimed at ensuring local e-commerce services such as GoTo Group’s Tokopedia won’t get squeezed out. The country also seeks to keep the 64.2 million micro, small and medium enterprises that contribute 61% of its gross domestic product from getting hurt by social commerce companies.
With the new rule, Indonesia is first among countries in Southeast Asia to push back against TikTok. Navigating this conflict with Indonesia will be pivotal for the company as governments across the world assess how Southeast Asia’s largest nation moves to curb the social media giant’s burgeoning e-commerce presence, just months after the firm said it will invest billions of dollars into the region. TikTok is already facing possible bans and scrutiny in the US, Europe and India over national security concerns.