E-commerce platforms have also created new market opportunities for micro, small, and medium-sized enterprises (MSMEs), whose contribution to national employment and economic resilience is substantial (Winanti, 2020b). The Indonesian government, together with regional economic initiatives, has prioritised the integration of MSMEs into global digital commerce and value chains. Such integration requires regulatory adaptation and strong domestic policies (Winanti, 2020b).
The growing dominance of foreign digital platforms has raised concerns regarding data governance, unequal competition, economic sovereignty, and foreign market dependence. The influence of TikTok Shop and Shopee in Indonesia was reflected in a 2023 consumer survey involving 8,700 respondents (Lestari, 2025): Shopee represented 53.22 percent of e-commerce users, while TikTok Shop 27.37 percent. Many products sold through these and other platforms originated from overseas sellers, predominantly China, and were priced significantly lower than domestic goods. Traditional marketplaces and local merchants expressed concerns over predatory pricing practices and of foreign platforms dominating the domestic e-commerce. To address these concerns, Minister of Trade Regulation Number 31/2023 was introduced. This article argues that the Regulation illustrates how Indonesia, as other states in the Global South, increasingly employs neo-mercantilist strategies to govern e-commerce by combining protectionist regulation, selective openness, and conditional market access to preserve economic sovereignty, while remaining engaged with the norms of trade liberalism within the global digital economy.
The 2023 Ban on Shopee and TikTok Shop and the Subsequent Reopening: Neo-Mercantilism within the Digital Economy
Indonesia’s Minister of Trade Regulation No. 31/2023, issued in September 2023, prohibited social media platforms from conducting direct online transactions. E-commerce platforms were barred from selling their own products unless MSMEs were involved and producer information was disclosed transparently (BPK, 2023). The policy’s rationale includes the protection of MSMEs, prevention of predatory pricing practices, and promotion of a fair and healthy digital trade ecosystem. A neo-mercantilist lens explains how the Regulation, alongside related policies, reflects a strategy aimed at safeguarding economic sovereignty through conditional market access. Within International Political Economy neo-mercantilism advocates strategic state intervention to protect domestic industries, reduce dependency, and preserve economic sovereignty (Hauge et al., 2025).
TikTok Shop suspended its operations in October 2023. Indonesia further strengthened restrictions on cross-border e-commerce across multiple platforms and introduced minimum price thresholds for imported goods. Earlier in 2021 the government prohibited cross-border transactions for thirteen product categories, including Muslim clothing, batik, and kebaya (Ministry of Cooperatives, 2021). Neo-mercantilism views digital platforms such as TikTok Shop and Shopee not merely as commercial tools, but as strategic instruments of economic security, political sovereignty, and technological autonomy (Rolf & Schindler, 2025). By shaping data flows, algorithmic visibility, market access, and consumer behaviour, they function as strategic infrastructures requiring state intervention to safeguard national economic interests, particularly MSMEs, from the growing dominance of foreign actors.
Nevertheless, neo-mercantilist principles do not advocate complete economic isolation (Steinberg, 2023), instead promoting selective openness and conditional market access. Indonesia’s Trade Regulation No. 31/2023 reflects ‘selective openness’ by allowing foreign digital platforms to operate only under conditions aligned with national economic interests. Their activities are restricted to prevent domination of domestic retail markets and local traders. Imported goods are subject to minimum FOB price requirements and restrictions on low-cost imports competing with MSMEs. Foreign electronic traders must appoint and establish local representatives and offices and comply with Indonesian standards. Conditional market access includes provisions on transparency and regulatory compliance, promoting fair competition, and protecting MSMEs through producer and product disclosure, including product origin, certification, licensing information, and halal certification.
TikTok Shop resumed operations in December 2023 after acquiring a 75.01 percent stake in Tokopedia through a partnership arrangement (Puspitaningrum & Immanuel, 2024). Together, TikTok-Tokopedia and Shopee control more than 80 percent of Indonesia’s e-commerce market (BPK, 2023). TikTok’s re-entry was permitted only after complying with state regulatory requirements, restructuring its business model, and collaborating with Tokopedia. This reflects Indonesia’s strategy of selective openness and conditional market access, aimed at protecting domestic economic interests, prioritising MSMEs, maintaining oversight of foreign platform transactions, and resisting the full liberalisation of e-commerce.
Of relevance, Winanti (2020b) highlighted that although trade liberalisation and international trade agreements create opportunities for economic expansion, they may render emerging economies vulnerable as market openness exposes them to intensified international competition. This is evident in Indonesia’s digital economy where MSMEs compete against global digital platforms with superior capital, technological infrastructure, and supply chain advantages. Nevertheless, as Indonesia remains integrated within the global capitalist system through international trade and investment, state intervention is intended to preserve economic sovereignty (Winanti, 2020a). Consequently, foreign actors may participate in Indonesia’s digital economy through ‘conditional’ rather than unrestricted market access, raising questions about its compatibility with trade liberalism.
Between Neo-Mercantilism and Trade Liberalism
Although lacking a binding multilateral agreement on e-commerce the WTO promotes market openness, non-discrimination, and digital trade liberalisation (WTO, 2025). Consequently, national measures that restrict foreign e-commerce activities while privileging domestic suppliers may be regarded as inconsistent with trade liberalisation principles. As WTO rules on e-commerce and digital trade continue to evolve, states retain considerable regulatory autonomy in consumer protection, platform governance, and data management. Nonetheless, the Joint Statement Initiative (JSI) of 26 March 2026 was adopted by 66 of the 166 WTO members as a pathway towards a future e-commerce agreement (WTO, 2026). Indonesia did not adopt the JSI and has opposed the moratorium on customs duties for electronic transmissions (Horseman, 2024). It also imposes import duties, excise, and taxes on e-commerce goods through various regulations, including Minister of Finance Regulation No. 199/2019 (BPK, 2019), criticised as being protectionist and inconsistent with WTO principles. This illustrates a broader tension between Indonesia’s neo-mercantilist policy and the trade liberalisation norms within the international political economy.
Given that international trade agreements may expose domestic sectors to intensified competition, while increasing access to global value chains (Winanti, 2020a), Indonesia’s neo-mercantilist strategy of ‘selective openness’ and ‘conditional market access’, exemplified by the TikTok Shop and Shopee cases, reflects an attempt to balance economic sovereignty with participation in the global digital economy. Further research is required to assess how this strategy will operate considering the WTO’s evolving framework on e-commerce and digital trade.
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