Indonesia to Now Prohibit Online Transactions on Social Media Platforms

Indonesia has banned e-commerce transactions on social media platforms, as announced by the trade minister on Sept 27, a move seen as a blow to the popular short video app TikTok, according to Reuters. The move, which takes effect immediately, is intended to protect offline merchants and marketplaces, according to the government, which added that predatory pricing on social media platforms threatens small and medium-sized businesses.

According to the report, Indonesia Trade Minister Zulkifli Hasan told reporters that the regulation is intended to ensure "fair and just" business competition, as well as user data protection.

He warned against using social media as an e-commerce platform, shopping platform, and bank all at the same time.

TikTok, owned by China's ByteDance, has 125 million active monthly users in Indonesia and is attempting to convert the large user base into a significant e-commerce revenue source.

A spokesperson for TikTok Indonesia told Reuters that the company would take a constructive approach and was "deeply concerned" about the announcement, "particularly how it would impact the livelihoods of the 6 million" local sellers active on TikTok Shop.

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