According to news on September 28, Indonesia’s Trade Ministry said on Tuesday that it is working to regulate the e-commerce market, adding that transactions on social media platforms are prohibited. "We stipulate that promotions can only be conducted on social media, but transactions cannot be conducted," the Indonesian Trade Ministry said.
This means that Indonesian users cannot buy and sell products and services on social media platforms such as TikTok and Facebook. The trade ministry said it would ban social media from doubling as e-commerce platforms to prevent the misuse of public data.
Indonesian Trade Minister Zulkifli Hasan said on Monday: "Social media and e-commerce must be separated so that the algorithms are not completely controlled and personal data can be prevented from being commercially exploited."
Indonesia also said it would regulate overseas goods sold on online platforms and said it would treat them the same as Indonesian domestic goods. Currently, Indonesian users can purchase an increasing number of foreign goods through social media platforms.
On Saturday, Indonesian President Joko Widodo called for regulation of social media, citing the negative impact these platforms have had on local businesses and the economy.
"We know that this has had an impact on micro, small and medium-sized enterprises and related markets. Sales in some markets have started to decline due to the influx of goods," Joko said in a statement.
Indonesia’s approach will affect TikTok’s goal of developing e-commerce locally.
According to data from research company DataReportal, Indonesia is TikTok’s second largest market, with 113 million users, second only to the 116.5 million users in the US market.
In June this year, TikTok CEO Zhou Shouzi said that TikTok plans to invest tens of billions of dollars in Indonesia and Southeast Asia markets in the next few years.
In response to the remarks of the Indonesian Ministry of Trade, a TikTok spokesperson said: "The emergence of social e-commerce is to solve the practical problems faced by local traditional small traders. By cooperating with local content creators, it helps them attract online stores." "We respect local laws and regulations, but hope these regulations can take into account the impact on the livelihoods of the more than 6 million sellers and nearly 7 million related content creators who use TikTok Mall."
Citibank said in a report on Tuesday that Indonesia's measures will be beneficial to Shopee, an e-commerce company owned by Southeast Asian consumer e-commerce company Sea Limited, and other Indonesian domestic companies.
Citibank said in the report: "Given the recent fierce competition between TikTok and Shopee, we believe this is a positive move for Indonesia's traditional e-commerce players, especially SeaLimited."
Citibank said: “Depending on the timing of implementation and the process of transitioning to alternative applications, we believe that any obstacles TikTok sellers encounter during the transition may be beneficial to Shopee and other traditional e-commerce platforms in the coming months.”