13-9-2023 (JAKARTA) Indonesia is gearing up to enact stringent trade regulations that would prohibit goods transactions through social media platforms, according to statements made by the deputy trade minister during a parliamentary hearing held on Tuesday.
Government officials have repeatedly voiced concerns over e-commerce vendors employing aggressive pricing tactics on social media, which they argue pose a significant threat to the country’s traditional offline markets. Indonesia, Southeast Asia’s largest economy, is now poised to address this issue with new trade regulations.
At present, the existing trade regulations do not explicitly encompass direct transactions conducted on social media platforms. “Social media and social commerce must be kept separate,” affirmed Jerry Sambuaga, the deputy trade minister, citing instances of sellers using the “live” features on popular short video platform TikTok to peddle their wares. “The ongoing revisions to our trade regulations will unequivocally and firmly outlaw this practice,” Sambuaga declared.
Responding to these proposed changes, TikTok expressed concerns that the segregation of social media and e-commerce into distinct entities could stifle innovation. The company hopes the government will ensure a level playing field for its operations.
TikTok Indonesia spokesperson Anggini Setiawan stated, “Such a move could also put Indonesian merchants and consumers at a disadvantage.” TikTok, which boasts a staggering 2 million sellers in Indonesia, previously asserted that it had no intentions of introducing cross-border e-commerce operations in Indonesia, as officials feared such a move could inundate the country with Chinese products.
Meta’s Facebook, another tech giant with a marketplace feature on its platform, did not respond to Reuters’ request for comment via email.
TikTok, a subsidiary of Chinese tech giant ByteDance, disclosed that its app boasts 325 million active users in Southeast Asia, with 125 million of them located in Indonesia. Furthermore, the company revealed that there are currently 2 million small businesses operating on TikTok Shop in Indonesia.
According to data provided by consultancy firm Momentum Works, Indonesia, with its population exceeding 270 million, accounted for nearly $52 billion worth of e-commerce transactions last year. Approximately 5% of these transactions were facilitated through TikTok, primarily via live-streaming.
A 2022 industry report by Alphabet’s Google, Temasek Holdings, and Bain & Company projected that Indonesia’s e-commerce sector is set to expand to $95 billion by 2025, underscoring the significant growth potential of this market.
