By Dr. Syazwani Yahaya
Consider a local SME producing and selling sambal through traditional retail channels. The business may suddenly find itself competing with TikTok sellers offering similar products at highly discounted prices, supported by livestream promotions, vouchers and free shipping. As consumers increasingly discover and purchase products through TikTok Shop, the traditional SME faces a difficult choice: reduce prices and risk its profit margins, or lose customers to digital competitors.
Yet, there is another side to the story. Digital platforms have also created opportunities for entrepreneurs to reach consumers without the cost of maintaining extensive physical retail networks. The success of Malaysian entrepreneur Khairul Aming provides a striking illustration. His August 2026 launch of Sambal Nyet Bilis generated RM3.5 million in gross merchandise value, with 150,000 jars sold and a peak audience of 388,000 concurrent viewers during a TikTok livestream, according to Malaysian media reports. While such results are exceptional rather than representative of the average SME, they demonstrate the potential of social commerce to create new opportunities for local entrepreneurship.
This creates a difficult question for policymakers: how can Malaysia address the competitive pressures faced by traditional SMEs while preserving the digital opportunities that enable new businesses to emerge?
Indonesia confronted a similar dilemma in 2023.
The country introduced regulations restricting e-commerce transactions on social media platforms, citing concerns about protecting small businesses, preventing unfair competition, and addressing the use of personal data. The regulation required social media platforms to separate social networking from e-commerce activities The policy subsequently led to a different arrangement for TikTok Shop in Indonesia. In January 2024, TikTok completed the acquisition of a 75.01 per cent stake in Tokopedia for US$840 million, integrating its Indonesian shopping business into the local e-commerce platform. Indonesia’s experience highlights an important policy dilemma. Digital disruption inevitably creates both opportunities and competitive pressures. The answer, however, may not be to eliminate the technology itself.
Consider the earlier disruption caused by ride-hailing platforms such as Uber. Traditional taxi operators faced significant competitive pressure as consumers embraced smartphone-based booking, greater convenience and more transparent pricing. Rather than simply eliminating digital platforms, governments increasingly focused on regulation, consumer protection and helping existing transport operators adapt to technological change. The same principle can apply to m-commerce.
Malaysia should focus on creating a level playing field between traditional and digital businesses. This could include stronger seller verification, consumer protection, greater transparency regarding imported products, fair taxation and customs enforcement, and
measures to address potentially unfair pricing practices.
At the same time, traditional SMEs need support to participate in the digital economy. Training in mobile commerce, digital marketing, livestream selling and online customer engagement could help existing businesses move beyond dependence on physical retail channels.The scale of Malaysia’s digital commerce ecosystem demonstrates why simply restricting digital platforms would not be a straightforward solution. According to TikTok Shop, its #JomLokal initiatives support 400,000 local sellers and creators across about 800,000 locally sold products.
TikTok Shop also reported that #JomLokal sellers recorded 140 per cent year-on-year sales growth in June 2026 compared with June 2025.
The platform also reported that LIVE sales in Malaysia grew 48 per cent year-on-year and now account for nearly one-third of platform sales. TikTok Shop has committed up to RM250 million in cumulative support during 2026 for local sellers and creators through its #JomLokal initiatives.
These figures are platform-reported rather than independent national statistics, but they nevertheless illustrate the scale of digital commerce opportunities available to Malaysian businesses.
Indonesia’s experience therefore provides a useful reference point, but Malaysia’s circumstances are different. Indonesia’s much larger domestic market gives it greater scope to develop locally focused digital commerce ecosystems, while Malaysia’s total population was
estimated at 34.4 million in the first quarter of 2026.
Malaysia can draw lessons from Indonesia’s experience while developing a policy approach suited to its own economic structure, SME ecosystem and digital-market conditions.
The real question is not:
“Should Malaysia shut TikTok Shop?”
It is: “How can we ensure that both traditional and digital SMEs can compete, adapt and prosper in the new economy?”
The future of m-commerce should not be about choosing between traditional businesses and digital entrepreneurs. It should be about creating an ecosystem where both can evolve.
Malaysia does not need to choose between protecting its SMEs and embracing digital innovation. The challenge is to design policies that make both possible.
Dr. Syazwani Yahaya Universiti Utara Malaysia
