Indonesia bans e-commerce transactions on social media

FILE PHOTO: Printed TikTok logos are seen in this illustration taken February 15, 2022. REUTERS/Dado Ruvic/Illustration/File Photo

JAKARTA (Reuters) -Indonesia has banned e-commerce transactions on social media platforms, the trade minister said on Wednesday, in a move intended to protect traditional retail and which will mostly impact short video platform TikTok and its shopping platform.

The government says the move is aimed at protecting offline merchants and marketplaces in Southeast Asia's biggest economy, adding that predatory pricing on social media platforms is threatening small and medium-sized enterprises.

Trade Minister Zulkifli Hasan told reporters the regulation, which takes effect immediately, is intended to ensure "fair and just" business competition, adding it was intended also to ensure data protection of users.

He warned of letting social media become an e-commerce platform, shop, and bank all at the same time.

The regulation also requires e-commerce platforms in Indonesia to set a minimum price of $100 for certain items that are directly purchased from abroad, according to the regulation document reviewed by Reuters, and that all products offered should meet local standards.

Zulfikli did not mention TikTok, although his deputy Jerry Sambuaga named TikTok's "live" features as an example of people selling goods on social media.

BMI, a unit of Fitch Solutions, said earlier on Wednesday that TikTok will be the only business affected by the transaction ban because its model relies on social e-commerce, although "it will not harm the digital marketplace industry's growth."

A TikTok Indonesia spokesperson did not immediately respond to a request for comment on Wednesday. On Monday the spokesperson said the government should consider "the livelihood of more than six million" local sellers active on TikTok Shop.

The company said its app had 325 million Southeast Asian users that were active every month, and 125 million of them were in Indonesia - on a par with its user figures for Europe and not too far behind the U.S., where it has 150 million.

Indonesia, with a population of more than 270 million, accounted for nearly $52 billion worth of e-commerce transactions last year, according to data from consultancy Momentum Works. Of that, 5% took place on TikTok, principally through live-streaming, it said.

TikTok is owned by Chinese tech company ByteDance.

(Reporting by Dewi Kurniawati, Stefanno Sulaiman, Fransiska Nangoy, Stanley Widianto; Editing by Kanupriya Kapoor, Alexandra Hudson)

Subscribe now to our Premium Plan for an ad-free and unlimited reading experience!


Next In Tech News

Govt to continue blocking morally compromised social media platforms, says Fahmi
GlobalFoundries names chip industry veteran Hollister as CFO
US military spaceplane poised for 7th launch, first atop SpaceX Falcon Heavy
Tucker Carlson's streaming service to charge $9 per month
Crypto market eyes interest rates and expected bitcoin ETFs in 2024
China-led team creates soft ‘octopus’ arm in reach for intuitive human-robot interaction
Nvidia to expand partnership with Vietnam, support AI development - CEO
Apple shutters third-party apps that enabled iMessage on Android
Tesla’s Dojo supercomputer head exits in blow to efforts
TikTok to invest $1.5 billion in GoTo's Indonesia e-commerce business

Others Also Read