Indonesia Set To Prohibit Social Media Sales, Stirring Concerns Over Innovation And Fair Competition

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Indonesia is gearing up to enact fresh trade regulations that will clamp down on the practice of selling products via social media, as revealed by the deputy trade minister during a recent parliamentary hearing.

Government officials have consistently voiced concerns over e-commerce vendors resorting to aggressive pricing strategies on social media platforms, which they believe pose a threat to traditional markets within Southeast Asia’s largest economy.

Existing trade guidelines currently lack specific provisions for direct transactions conducted through social media channels.

Deputy Trade Minister Jerry Sambuaga stressed the need to separate social media and social commerce; exemplifying cases where sellers employ live-streaming features on platforms like TikTok to peddle their wares. Sambuaga stated that ongoing revisions to trade regulations will unequivocally outlaw such practices.

In response, TikTok expressed apprehension that the demarcation between social media and e-commerce could stifle innovation and urged the government to ensure a level playing field for all entities.

TikTok Indonesia’s representative, Anggini Setiawan, conveyed that this move could adversely affect Indonesian merchants and consumers.

TikTok, with a considerable seller base of 2 million in Indonesia, has previously disavowed any intention of introducing cross-border e-commerce in the country; addressing concerns that such a move might inundate the market with Chinese products.

Meta’s Facebook, which also incorporates a marketplace feature on its platform, did not provide any comment in response yet.

TikTok, owned by the Chinese tech giant ByteDance, disclosed having 325 million active monthly users in Southeast Asia, with 125 million of them located in Indonesia. Furthermore, the platform reported hosting 2 million small businesses on TikTok Shop in Indonesia.

Last year, Indonesia, with its population exceeding 270 million, contributed nearly $52 billion to e-commerce transactions; with approximately 5% occurring on TikTok, primarily through live-streamed events, according to consultancy firm Momentum Works.

The Indonesian e-commerce sector is positioned to experience growth of a projected $95 billion by 2025, per a 2022 industry report from Alphabet’s Google, Temasek Holdings, and Bain & Company.

 

 

 

 

 

 

 

 

 

 

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