Understanding the reason Temu’s Short-Lived Journey in Indonesia

Temu, the global e-commerce platform known for its low-cost, factory-direct products, stirred excitement when it appeared poised to enter Indonesia. But that excitement quickly faded when the government decided to ban it. Let’s break down what happened.

A Fast-Moving Start

Temu, operated by PDD Holdings (the company behind Pinduoduo), had been expanding rapidly across Southeast Asia. With its model of direct sales from manufacturers to consumers, it looked like a potential hit in Indonesia. Surprisingly, Temu even made an appearance at the 2024 E-Commerce Expo in Jakarta, which led many to believe their entry into the Indonesian market was imminent

So, Why Was Temu Banned?

However, Temu’s business model raised red flags. Despite excitement from consumers, the government acted quickly due to concerns over the impact on the local economy:

Impact on MSMEs: Temu’s model bypasses local sellers by connecting factories directly to buyers, making it nearly impossible for small businesses to compete. This threatened the survival of many local micro, small, and medium enterprises (MSMEs)

Regulatory Issues: Indonesian laws require e-commerce platforms to operate through local intermediaries. Temu’s method of direct sales violated these rules. Officials emphasized that letting Temu operate would damage the economy

Job Losses: With Temu potentially undercutting local prices, there was a risk of mass layoffs in industries that rely on small-scale production and distribution

The Government’s Response

Despite their efforts, including attempts to register their business, Temu faced resistance.

In response to these concerns, Kominfo (the Ministry of Communication and Information) stepped in. On October 1, 2024, Minister Budi Arie Setiadi announced that Temu would not be allowed to operate in Indonesia. He emphasized that the government wants the digital space to benefit local businesses and help the community thrive, not hurt it. This decision blocked Temu’s app from Indonesian markets

Temu has tried to register in Indonesia multiple times since 2022 but faced legal issues, including conflicts with trademarks. Despite their appearance at the E-Commerce Expo, the ban remained firm

What Does this Ban Mean for You and Local Businesses?

For consumers, the ban means saying goodbye to Temu’s low-cost offerings, at least for now. But on the bright side, it helps protect the local economy from disruption and ensures Indonesian businesses can compete fairly.

This is a major relief for local businesses, especially MSMEs. They can continue to grow without fearing being undercut by a global giant, ensuring fair competition and job security in the marketplace.

Temu’s attempt to enter Indonesia and the swift response from the government show the delicate balance between embracing global commerce and protecting local interests. While the platform’s low prices might seem appealing, the long-term impacts on local businesses could be devastating. By blocking Temu, Indonesia has shown its commitment to safeguarding the livelihoods of its small businesses and ensuring that the digital economy remains fair for all.