- Temu Indonesia ban leads wave of Southeast Asian regulatory actions.
- Region’s $160 billion e-commerce market proves challenging as Indonesia leads regulatory pushback.
Following the ban on Temu in Indonesia in October 2024, the Chinese e-commerce sensation’s meteoric rise has hit a regulatory wall in Southeast Asia. The platform, known for its low prices and aggressive marketing, faces mounting resistance from regional regulators determined to protect domestic markets.
The latest setback came from Indonesia, the region’s largest economy, where authorities ordered Temu’s removal from app stores in October 2024. The decision, after the platform’s registration was rejected earlier this year, marks a decisive shift in how Southeast Asian nations are responding to the influx of Chinese digital retail giants, prioritising local merchant protection over unrestricted market access.
Temu’s journey in Southeast Asia tells a compelling story of ambitious expansion meeting regulatory reality. Since its launch in 2022, the platform has successfully disrupted US and European markets. The company then set its sights on Southeast Asia’s burgeoning digital economy. The company began its regional push through the Philippines and Malaysia in 2023 before expanding into Thailand, Brunei, and Vietnam in early 2024.
But the platform’s signature strategy of rock-bottom prices and massive advertising spend has sparked regional regulators’ concerns. Indonesia’s Trade Ministry views Temu’s business model as potentially destructive to its 64 million micro, small, and medium enterprises (MSMEs).
The country’s response goes beyond just targeting Temu – it has implemented broader measures, including a ban on e-commerce transactions through social media platforms and increased taxation on cross-border digital retail. Vietnam has followed suit, threatening to ban Temu and fellow Chinese e-commerce player SHEIN by the end of November 2024.
Vietnamese authorities cite the platforms’ lack of proper business registration and operational approvals, highlighting the region’s growing scrutiny of unauthorised e-commerce operations. The pushback comes as Southeast Asia’s digital retail market reaches new heights of revenue.
According to research from Google, Temasek Holdings Pte, and Bain & Co., online spending will rise about 15% this year to $263 billion in the region. The burgeoning middle class with increased disposable income is helping fuel online shopping and e-commerce growth. The massive market potential explains Temu’s aggressive expansion strategy, despite the regulatory headwinds it’s encountering.
Indonesia’s regulatory response has been particularly comprehensive. Beyond the Temu ban, its crackdown on social commerce forced TikTok Shop to acquire a stake in the struggling local platform Goto to maintain its presence in the market. The move demonstrates Indonesia’s commitment to protecting its digital retail ecosystem while ensuring foreign platforms contribute meaningfully to the local economy.
For Temu, whose parent company PDD Holdings (formerly Pinduoduo) has operated successfully in China since 2015, the Southeast Asian regulations present a new challenge. Unlike its relatively smooth expansion in Western markets, the platform must now navigate a complex web of protectionist policies designed to shield local businesses from what regulators view as potentially predatory pricing practices.
The resistance to Temu’s expansion reflects a broader trend in Southeast Asian digital commerce regulation. Countries are increasingly implementing measures to ensure foreign platforms contribute to, rather than disrupt, local economic development. These include:
- Mandatory local business registration,
- Strict tax compliance requirements,
- Consumer protection regulations,
- Data localisation rules,
- Minimum pricing guidelines.
As Southeast Asia’s digital economy continues to evolve, the outcome of Temu’s regulatory challenges could set important precedents for how the region manages foreign e-commerce platforms. The question remains whether Temu can adapt its business model to meet local requirements while maintaining the competitive pricing that fueled its global growth.
For now, Southeast Asian nations appear committed to protecting their domestic digital retail ecosystems, even if it means turning away major global players. Their stance could reshape how international e-commerce platforms approach the region’s promising but increasingly regulated market.
