In accordance with new trade regulations, Indonesia intends to prohibit the sale of products via social media, the country’s deputy trade minister told a parliamentary hearing on September 12.
Ministers have repeatedly asserted that e-commerce sellers using predatory pricing on social media platforms jeopardize offline markets in Southeast Asia’s leading economy.
Current commerce regulations do not specifically address social media transactions.
“Social media and social commerce cannot coexist,” said Jerry Sambuaga, deputy minister of trade, citing the example of sellers using “live” features on the short video platform TikTok to sell products.
Mr. Sambuaga stated, “Revisions currently being made to the trade regulations will prohibit this firmly and explicitly.”
In response, TikTok stated that segregating social media and e-commerce into separate platforms would hinder innovation and that the company hoped the government would provide a level playing field.
Representative of TikTok Indonesia Anggini Setiawan told Reuters on Wednesday, “It would also harm Indonesian merchants and consumers.”
TikTok, which has 2 million sellers in Indonesia, has stated in the past that it has no plans to launch a cross-border business there, despite officials’ concerns that the company’s e-commerce drive could flood the country with Chinese goods.
Facebook, which also includes a marketplace feature on its platform, did not respond to an email from Reuters requesting comment.
ByteDance, a Chinese tech titan, owns TikTok. The company reported that its app had 325 million monthly active users in Southeast Asia, of which 125 million were in Indonesia. According to the corporation, there are two million small businesses using TikTok Shop in Indonesia.
Indonesia, with a population of over 270 million, accounted for nearly $52 billion in e-commerce transactions last year, of which 5% took place on TikTok, primarily through live broadcasting, according to data from the consultancy Momentum Works Indonesia.
According to a report published by Google, Temasek Holdings, and Bain & Company in 2022, Indonesia’s e-commerce industry is projected to reach $95 billion by 2025.