Indonesia to ban shopping on social media platforms like TikTok


  • Indonesia’s trade ministry said on Tuesday it was working to further regulate e-commerce, adding that the country does not allow transactions on social media platforms.
  • “We view this as a positive development for traditional e-commerce players in Indonesia – especially given the latest competitive intensification between C Ltd, TikTok and Shopee,” Citi said.
  • President Joko Widodo said micro, small and medium scale enterprises have seen a decline in sales due to the influx of foreign goods made available through social media.

Two sellers are offering merchandise for sale via TikTok livestream.

Be ismoyo | AFP | getty images

Indonesia’s trade ministry said on Tuesday it was working to further regulate e-commerce, adding that the country does not allow transactions on social media platforms.

“One of the things that is controlled is that the government allows the use of social media only for propaganda and not for transactions,” the ministry said in an official release.

This means that users in Indonesia cannot buy or sell products and services on TikTok and Facebook.

The government said it would also prevent social media companies from operating as e-commerce platforms to prevent misuse of public data.

At a media conference on Monday, Trade Minister Zulkifli Hasan said that “the connection [between social media and e-commerce] must be separated so that the algorithms are not completely controlled” and that it “prevents the use of personal data for commercial purposes”.

Indonesia also said it would regulate what foreign goods could be sold, with these products receiving the same treatment as domestic goods offline. This step has been taken when foreign goods have become increasingly available in Indonesia through social media platforms.

On Saturday, Indonesian President Joko Widodo called for social media regulations, citing the platforms’ impacts on local businesses and the economy.

“Because we know that it affects MSMEs, small businesses, micro enterprises and also the market. There are markets where sales have started to decline,” he said in a statement.

Indonesia’s regulations are set to devastate TikTok’s e-commerce ambitions in the country.

According to Datareport, Indonesia is TikTok’s second-largest market with 113 million users, just behind the US, which has 116.5 million TikTok users.

In June, TikTok CEO Shou Zi Chew said the app was “going to invest billions of dollars in Indonesia and Southeast Asia over the next few years.”

Following the move to Indonesia, a TikTok spokesperson said, “Social commerce was born to solve a real-world problem for local traditional small sellers by connecting them with local creators who can help drive traffic to their online shops.” can help.”

“While we respect local laws and regulations, we hope the rules take into account its impact on the livelihoods of the more than 6 million sellers and more than 7 million affiliated creators who use TikTok Shop,” he said.

The move will benefit competitor Shopee, C Ltd’s e-commerce arm, and Indonesia’s domestic players, Citi said in a report on Tuesday.

“Given the latest competitive intensification between TikTok and Shopee, we view this as a positive development for traditional e-commerce players in Indonesia – particularly C Ltd,” the global investment bank said in its report.

“Based on the timing of implementation and the transition process to a potential alternative app, in our view, any disruption caused to TikTok sellers during the transition will benefit Shopee and other traditional e-commerce platforms in the coming months.” The city said.

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