Indonesia mulls banning social media merchandise sales, TikTok expresses concern

Indonesia is contemplating prohibitive measures against merchandise transactions conducted via social media platforms such as TikTok as stated by the deputy trade minister during a parliamentary hearing recently. The move is aimed at e-commerce vendors who employ predatory pricing strategies on social platforms, thereby jeopardising traditional marketplaces in Southeast Asia’s largest economy.

Social media and social commerce cannot be combined, declared Jerry Sambuaga, the deputy trade minister, citing instances of vendors utilising live functionalities on social media platforms such as TikTok for product sales. Revisions to the trade regulations that are currently underway will firmly and explicitly ban this, he added.

In response, TikTok has expressed its concerns, stating that bifurcating social media and e-commerce could potentially stifle innovation. The social media platform is advocating for a balanced competitive environment.

It would also disadvantage Indonesian merchants and consumers, noted Anggini Setiawan, a spokesperson for TikTok Indonesia.

The platform, which currently hosts 2 million sellers in Indonesia, previously confirmed that it does not intend to expand its cross-border business in Indonesia. This decision was made in the wake of officials’ apprehension that TikTok’s e-commerce expansion could potentially inundate the nation with Chinese goods.

Interestingly, Facebook, another major platform with a marketplace feature, refrained from commenting on the development.

TikTok, a subsidiary of Chinese tech behemoth ByteDance, disclosed that its app has an active monthly user base of 325 million in Southeast Asia, with 125 million from Indonesia alone. They further reported that TikTok Shop hosts 2 million small businesses in Indonesia.

Indonesia, home to a population exceeding 270 million, witnessed e-commerce transactions worth nearly US$52 billion in the previous year, as reported by Momentum Works.

TikTok accounted for 5% of these transactions, primarily through live-streaming. The nation’s e-commerce sector is projected to expand to US$95 billion by 2025, as per a recent industry report by Google, Temasek Holdings, and Bain & Company.

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