Indonesia plans to ban social e-commerce, TikTok affected

Previously, there were reports suggesting that Indonesia might ban social media platforms from conducting e-commerce transactions.

According to media reports, several Indonesian government officials had been advocating for the separation of social media and e-commerce, claiming that this was to prevent companies like TikTok from engaging in monopolistic practices that could harm small and medium-sized businesses in the country.

According to data released by the Indonesian E-Commerce Association, as of October 2021, Indonesia had over 64.2 million micro, small, and medium-sized enterprises, accounting for 61% of the country’s GDP. However, only 29.6% of these businesses had undergone digital transformation.

In an effort to protect local small businesses, Indonesia’s Ministry of Trade announced in July of this year that it was in the process of revising regulations related to online trade. One of the rules was to set a minimum price of 1.5 million Indonesian rupiahs (approximately $100 USD) for imported goods sold on the country’s e-commerce platforms.

Indonesian cross-border sellers had already started shifting away from cross-border operations and toward domestic businesses when Indonesia increased customs duties on cross-border parcels in early 2020.

On September 12, 2023, the Deputy Minister of Trade in Indonesia stated during a parliamentary hearing that Indonesia was planning to prohibit the trading of goods on social media platforms based on new trade regulations.

In response to the potential restrictions that Indonesia might impose on social e-commerce, TikTok had previously expressed concerns that separating social media and e-commerce onto different platforms would hinder innovation. TikTok hoped that the government would provide a fair competitive environment, emphasizing that the company had contributed to the success of millions of local businesses over the years.