Indonesia plans to ban social e-commerce, TikTok affected

In Indonesia, which is TikTok’s largest market in Southeast Asia and the overseas debut for its foray into e-commerce, TikTok Shop is facing a storm.

On September 25, 2023, local time, Indonesian Minister of Trade Zulkifli Hasan announced the signing of the revised Minister of Trade Regulation No. 50/2020. This regulation covers business licenses, advertising, guidance, and supervision of commercial actors conducting transactions through electronic systems. In the new regulation, social media will be prohibited as a sales platform.

In February 2021, TikTok Shop was launched as the first e-commerce platform on the Indonesian market. Since then, TikTok has expanded its e-commerce business further into Southeast Asian countries such as Thailand, Vietnam, the Philippines, Malaysia, and Singapore, as well as other overseas markets including the United Kingdom and the United States.

Compared to the European and American regions, TikTok Shop has achieved remarkable success in Southeast Asia, with particular attention to its performance in the Indonesian market. According to estimates by Singaporean research firm Momentum Works, TikTok Shop’s market share in Indonesia is expected to rise from 4.4% to 13.2% in 2023.

However, with the signing of the new regulation, TikTok Shop in Indonesia may face various uncertainties. Indonesian Minister of Trade Zulkifli Hasan recently stated that e-commerce and social media platforms must be separated, and this is to prevent the use of personal data for commercial purposes.

“Social commerce can only promote the promotion of goods or services. Promote goods or services. Direct transactions are not allowed, direct payments are not allowed, and more business activities are not allowed. It can only be used for promotion. It’s like television, you can advertise on television, but you can’t sell, you can’t collect money. Because it’s a digital platform, its job is to promote,” he said.

Furthermore, the new regulation will also regulate the list of goods allowed for trade in Indonesia, treating imported goods equally with domestically produced ones. “For example, food must have a halal certificate,” Hasan said. “In electronic products, there must be a standard to prove that it is the right product, so the treatment is the same as domestic or offline traders.”

When asked if TikTok Shop would be shut down with the revision of the new regulation, Hasan emphasized that this regulation applies to all existing social e-commerce platforms, including TikTok Shop, without mentioning any specific brand.