TikTok laments Indonesia’s social media commerce ban

TikTok Indonesia has lamented the government's recent decision to ban e-commerce transactions on social media platforms, saying that the move could jeopardise the livelihoods of millions who depend on the short-form video platform for income.

A new Trade Ministry regulation was enacted on Tuesday to ban social media platforms, including ByteDance's TikTok, from acting as marketplaces for online transactions, restricting the platforms to the promotion of goods and services.

The move came following widespread complaints from offline sellers, particularly those that have shops across the country's traditional markets, that their revenues have plummeted because of the growing reach of social media platforms as online marketplaces.

"We deeply regret [the government's decision], especially how the decision will impact the livelihoods of six million sellers and seven million affiliated [content] creators that use TikTok shop," a spokesperson for TikTok Indonesia said on Wednesday evening.

But the spokesperson also said that TikTok will ultimately "respect the regulations and laws" that apply in the country, and that the platform will instead be focusing its attention on a "more constructive path" going forward.

With 113 million users, TikTok is the third-most popular content-sharing platform in Indonesia. This makes the country home to the platform's second-largest audience globally after the United States, accounting for more than half of its total audience in Southeast Asia.

Leveraging the platform's meteoric rise in popularity, TikTok Shop had also become the fifth-largest e-commerce platform in Indonesia by the end of last year despite its recent launch a little more than two years ago, according to data from Singapore-based venture outfit Momentum Works.

TikTok chief executive Shou Zi Chew visited Jakarta in June where he pledged to pour billions of dollars into Southeast Asia in the coming years.

Speaking during a press conference on Wednesday, Trade Minister Zulkifli Hasan said that the new ministerial regulation – the first piece of legislation addressing online commerce in the country – was intended to ensure "fair" competition and the protection of users' personal data.

"Commerce on digital platforms has grown so fast that [some aspects] were previously unregulated. Some countries have banned it outright, but we are regulating it," Zulkifli said. "This regulation aims to create a fair, healthy and beneficial e-commerce ecosystem."

The regulation, a copy of which was published on the Trade Ministry's website, restricts social media platforms from facilitating payment transactions through their electronic systems.

"[We] cannot let social media [platforms] become e-commerce platforms, shops and banks all at the same time," Zulkifli said, without mentioning TikTok or TikTok Shop directly.

Under the new regulation, sellers operating on online marketplaces must adhere to the legal requirements regarding licenses, quality standards, restricted products and tax regulations and obtain halal certification and Food and Drug Monitoring Agency (BPOM) permits.

The regulation also sets a minimum price of US$100 for certain foreign goods to be sold on e-commerce platforms.

Zulkifli said that a cyber monitoring team will be created to oversee the implementation of the regulations. The team will consist of officials from the Trade Ministry, the Finance Ministry, the Communications and Information Ministry, the Cooperatives and Small and Medium Enterprises Ministry, the Industry Ministry and the BPOM.

Sellers that violate the regulation will be given a written warning up to three times by the government, before any administrative sanction, including internet blocks, are applied.

The regulation came into effect after President Joko "Jokowi" Widodo convened on Monday a cabinet meeting to discuss issues related to e-commerce in the country.

The President has previously expressed concern about the growing reach and impact of TikTok Shop, claiming it adversely affected micro, small and medium enterprises (MSMEs) in the country. "TikTok should only be a social media [platform] and not a means of [conducting] business," Jokowi said last week.

Some offline sellers at the Tanah Abang market in Jakarta applauded the government's decision.

"The government should […] dare to innovate given the current situation, where markets are quiet like this," said Stevanie Ahua, a 60-year-old wholesale denim jeans seller, AFP reported.

She said her revenue had dropped by 60 percent in recent months as buyers turned to online shops.

Others such as 29-year-old cookie baker Panji Made Agung in Bali said he was disappointed by the ban.

"For sellers like me, TikTok can be used for soft sales. We can become influencers and sellers at the same time," he said, as reported by AFP.