Indonesia Considers Regulations on Social Media E-commerce

Updated: Dec 30, 2023

[Edited] Indonesia's President Joko Widodo announced that the country may issue a regulation this week regarding the use of social media for e-commerce.

Indonesian President Joko Widodo — Credits: REUTERS

The move aims to address the threats posed to offline markets in Southeast Asia's largest economy. The government has expressed concerns about e-commerce sellers using predatory pricing on social media platforms, with TikTok being specifically mentioned as an example.

President Widodo, commonly known as Jokowi, stated in a video address on Monday, "We just... decided on the use of social media for e-commerce. Tomorrow it will perhaps come out." He emphasized the need for technology to create new economic potential rather than harm existing economies.

The president did not provide specific details about the regulation or mention any particular companies. The formulation of the regulation is being carried out by the trade ministry.

Currently, trade regulations in Indonesia do not specifically cover direct transactions on social media. Deputy Trade Minister Jerry Sambuaga previously stated that "social media and social commerce cannot be combined" and vowed to ban the mixing of the two, citing TikTok's "live" features that enable people to sell goods.

In response to the potential regulation, a TikTok Indonesia spokesperson highlighted the importance of social commerce for local sellers and its role in connecting them with local creators who can drive traffic to their online shops. The spokesperson stated, "While we respect local laws and regulations, we hope that the regulations take into account its impact on the livelihoods of more than 6 million sellers and close to 7 million affiliate creators who use TikTok Shop."

TikTok, owned by Chinese tech company ByteDance, reported having 325 million active users in Southeast Asia, with 125 million of them located in Indonesia.

The Indonesian government's consideration of a regulation on social media e-commerce reflects its efforts to protect offline markets and ensure fair competition. By addressing concerns about predatory pricing and the impact on local economies, the regulation aims to strike a balance between technological advancements and the preservation of existing economic structures.

Indonesia may issue a regulation on the use of social media for e-commerce.
The move is intended to protect offline markets in Southeast Asia's largest economy.
Concerns have been raised about e-commerce sellers using predatory pricing on social media platforms, with TikTok being mentioned as an example.

Source: REUTERS