In an effort to control direct sales on significant platforms, which Jakarta claims are damaging millions of small businesses, Indonesia has outlawed goods transactions on social media platforms, according to new legislation the country’s trade minister announced on Wednesday.
Demands for legislation governing social media and e-commerce have increased recently as offline vendors have begun to worry that the sale of cheaper goods on TikTok Shop and other platforms will jeopardize their ability to make a living.
One of the largest markets for TikTok Shop is Indonesia, which was also the first country to test the e-commerce component of the app.
“Now, e-commerce cannot become social media. It is separated,” Trade Minister Zulkifli Hasan said at a press conference in the capital, Jakarta, adding that the trade legislation went into effect on Tuesday.
Social commerce networks would have a week to adhere to the new regulation, according to Hasan. As a means of ensuring “equality in business competition,” he asserted that “any government would protect local small businesses.”
According to the regulatory document obtained by AFP, social commerce companies are no longer “permitted to facilitate payment transactions in their electronic systems.”
Hasan remarked, without mentioning TikTok by name, “Social commerce can place ads like TV, but it mustn’t be transactional.
(They can’t open shops; they can’t directly sell.” According to him, businesses that disobeyed would first receive warnings before having their authorization to conduct business in Indonesia removed.
Before the new restriction, the archipelago nation’s laws did not include direct transactions made through social media sites like TikTok, Facebook, or Instagram.
The new law is just another blow for TikTok, which has recently come under increasing scrutiny in the US and other countries over concerns about the security of user data and possible Beijing connections.
As opposed to other nations, which ban, we regulate, Hasan stated.
The region’s first nation to take action against the platform’s rising use for social media commerce is currently Indonesia.
A trade regulation that was amended at the ministerial level and released in 2020 did not require legislative approval. TikTok Indonesia stated that the firm was “deeply concerned” about the regulation since it would have an effect on millions of TikTok Shop vendors and creators. In a statement, it stated, “We respect local laws and regulations and will be pursuing a constructive path forward.”
A request for comment from Meta, which owns Facebook and Instagram, went unanswered.