JAKARTA — Indonesia is planning to ban goods transactions on social media under new trade regulations, according to the deputy trade minister who spoke at a parliamentary hearing on Tuesday.
The officials have repeatedly emphasized that e-commerce sellers who utilize predatory pricing on social media platforms are posing a threat to traditional markets in Southeast Asia’s largest economy.
The existing trade regulations do not specifically address direct transactions conducted on social media.
“The combination of social media and social commerce is not viable,” stated Jerry Sambuaga, the deputy minister of trade, providing an example of sellers using live features on TikTok to sell products.
“The ongoing revisions to the trade regulations will explicitly and firmly prohibit this,” added Sambuaga.
Responding to the proposed ban, TikTok argued that separating social media and e-commerce would hinder innovation and requested that the government create a level playing field for the company.
“This ban would also harm Indonesian merchants and consumers,” said TikTok Indonesia spokesperson Anggini Setiawan in an interview with Reuters on Wednesday.
TikTok, which has 2 million sellers in Indonesia, has previously stated that it has no plans to expand its cross-border e-commerce business in the country due to concerns about flooding the market with Chinese products.
Chinese tech giant ByteDance owns TikTok. The company reported having 325 million active monthly users in Southeast Asia, with 125 million users in Indonesia alone. TikTok Shop in Indonesia also hosts 2 million small businesses.
In 2021, Indonesia recorded nearly $52 billion in e-commerce transactions, accounting for 5% of which took place on TikTok, primarily through live-streaming, according to data from consultancy Momentum Works. The country’s e-commerce sector is projected to reach $95 billion by 2025, according to a 2022 industry report by Google, Temasek Holdings, and Bain & Company.
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