Indonesia is planning to ban goods transactions on social media under new trade regulations, the deputy trade minister told a parliamentary hearing on Tuesday.
Ministers have repeatedly said that e-commerce sellers using predatory pricing on social media platforms were threatening offline markets in Southeast Asia’s biggest economy.
Current trade regulations do not specifically cover direct transactions on social media.
“Social media and social commerce cannot be combined,” Jerry Sambuaga, deputy minister of trade, told the parliament, using the example of sellers using “live” features on the short video platform TikTok to sell goods.
“Revisions to the trade regulations that are currently under way will firmly and explicitly ban this,” Sambuaga said.
In response, TikTok said that separating social media and e-commerce into different platforms would hamper innovation and it hoped the government will provide a level playing field for the company.
“It would also disadvantage Indonesian merchants and consumers,” TikTok Indonesia spokesperson Anggini Setiawan told Reuters on Wednesday.
TikTok, which has 2 million sellers in Indonesia, has previously said it had no plans to roll out a cross-border business in Indonesia after officials expressed concerns the firm’s e-commerce push could flood the country with Chinese products.
Meta’s Facebook, which also has a marketplace feature in its platform, also did not respond to Reuters’ request for comment in an e-mail.
TikTok is owned by Chinese tech giant ByteDance. The company said that its app had 325 million Southeast Asian users that were active every month, of whom 125 million were in Indonesia. The company has said that there were 2 million small businesses on TikTok Shop in Indonesia.
Indonesia, with a population of more than 270 million, accounted for nearly $52 billion worth of e-commerce transactions last year, according to data from consultancy Momentum Works. Of that, 5% took place on TikTok, principally through live-streaming, it said.
Indonesia’s e-commerce sector is expected to grow to $95 billion by 2025, according to a 2022 industry report by Alphabet’s Google, Temasek Holdings and Bain & Company.