Indonesia will ban commodity transactions on social media

JAKARTA (Reuters) – Indonesia plans to ban goods transactions on social media as part of new trade rules, the deputy trade minister said at a parliamentary hearing on Tuesday.

Ministers have repeatedly said e-commerce sellers using predatory pricing on social media are threatening offline markets in Southeast Asia’s largest economy.

Current trade regulations do not directly cover face-to-face transactions on social media.

“Social media and social commerce cannot be mixed,” Jerry Sambuaga, deputy trade minister, told parliament, citing the example of merchants using “live” features on short-video platform TikTok to sell goods.

“Currently ongoing trade regulation changes will firmly and clearly prohibit this,” Sambuaga said.

In response, TikTok said separating social media and e-commerce into separate platforms would hinder innovation and expressed hope the government would provide the company with a level playing field.

“It would also harm Indonesian businesses and consumers,” TikTok Indonesia spokeswoman Anggini Setiawan told Reuters on Wednesday.

TikTok, which has 2 million sellers in Indonesia, had previously said it had no plans to start cross-border operations in Indonesia after officials expressed concerns that the company’s e-commerce expansion could flood the country with Chinese products.

Facebook Meta, which also has a marketplace feature on its platform, also did not respond to an emailed request for comment from Reuters.

TikTok is owned by Chinese tech giant ByteDance. The company said its app had 325 million monthly active users in Southeast Asia, including 125 million in Indonesia. The company said there were 2 million small businesses on TikTok Shop in Indonesia.

Indonesia, with a population of more than 270 million, completed e-commerce transactions worth nearly $52 billion last year, according to data from consulting firm Momentum Works. Of this, 5% took place on TikTok, mainly via live broadcast.

Indonesia’s e-commerce sector will grow to $95 billion by 2025, according to a 2022 industry report by Google, Temasek Holdings and Bain & Company.

(Reporting by Dewi Kurniawati; additional reporting by Stefanno Sulaiman; Editing by Alex Richardson)