The Indonesian trade minister on Wednesday announced that Indonesia has banned online trade made through social media.
The government added that small and medium-sized businesses are at risk from predatory pricing on social media platforms and that the action, which is effective immediately, is intended to protect offline retailers and marketplaces.
The decision was made only three months after TikTok announced its intention to spend billions of dollars over several years in Southeast Asia, mostly in Indonesia, to develop its TikTok Shop e-commerce platform.
With 125 million active monthly users in Indonesia, TikTok, owned by China’s ByteDance, has been attempting to turn the sizable user base into a significant e-commerce revenue generator.
A spokeswoman for TikTok Indonesia stated that the company would take a positive direction moving ahead and expressed that it was “deeply concerned” by the announcement, “particularly how it would impact the livelihoods of the 6 million” local vendors that are part of TikTok Shop.
The regulation is meant to ensure “fair and just” corporate competition, Indonesian Trade Minister Zulkifli Hasan told reporters on Wednesday. He also added that it was meant to safeguard user data safety.
The likes of domestic IT company GoTo’s Tokopedia, Sea’s Shopee, and Chinese e-commerce giant Alibaba’s Lazada dominate Indonesia’s e-commerce market.
According to data from consultant Momentum Works, e-commerce transactions in Indonesia totaled close to $52 billion last year, and 5% of those sales happened on TikTok.
TikTok opened TikTok Shop in a select few countries, including Indonesia as a way to capitalise on its substantial user base in the country.
