Indonesia has banned goods transactions on social media platforms as it aims to protect small businesses from e-commerce competition.
Calls had grown in recent months for a regulation governing social media and e-commerce, with offline sellers seeing their livelihoods threatened by the sale of cheaper products on TikTok Shop and other platforms.
Indonesia is one of the world’s biggest markets for TikTok Shop and was the first to pilot the app’s e-commerce arm.
“Now, e-commerce cannot become social media. It is separated,” the trade minister, Zulkifli Hasan, told a news conference, adding that the trade regulation came into force on Tuesday.
Hasan said social commerce platforms would have a week to comply with the new rule.
“Any government would protect local small businesses,” he said, describing the regulation as a way to ensure “equality in business competition”.
The regulation means social commerce companies are now “prohibited to facilitate payment transactions in its electronic system”, according to the regulation document.
“Social commerce can place ads like TV, but it mustn’t be transactional. [They] can’t open shop, can’t directly sell,” Hasan said, without mentioning TikTok by name.
Companies that did not comply could eventually have their licences to do business in Indonesia revoked.
Indonesia, with 125 million users, is TikTok’s second-largest global market after the United States, according to company figures. But the country has now become the first in the region to act against the platform’s growing popularity in social media commerce.
TikTok Indonesia said the company was “deeply concerned” about the policy, which would affect millions of sellers and creators using TikTok Shop.
“We respect local laws and regulations and will be pursuing a constructive path forward,” it said.
Meta – which owns Facebook and Instagram – did not respond to a request for comment.
Hasan appeared to confirm the companies would have to choose between separate social media and e-commerce licences.
“It’s clear … there are no permits for social commerce. If [they] want social commerce, please, only for promotion and ads. If [they] want to sell, there are e-commerce [permits].”
The regulation also sets a minimum price of $100 for certain foreign goods bought from Indonesian sellers on e-commerce platforms, according to the regulation document.
Indonesia’s e-commerce market is dominated by platforms such as Tokopedia, Shopee and Lazada but TikTok Shop gained a significant market share since launching in 2021.
Experts said the transaction ban would hit the coffers of social media platforms such as TikTok, which takes a commission from every sale.
“They will definitely incur losses,” said Tauhid Ahmad, the executive director of the Jakarta-based Institute for Development of Economics and Finance.
Jakarta wholesale jeans seller Stevanie Ahua applauded the government’s decision, saying her revenue had dropped by 60% in recent months as buyers turned to online shops.
Bur cookie baker Panji Made Agung in Bali said he was disappointed by the ban.
“For sellers like me, TikTok can be used for soft selling. We can become influencers and sellers at the same time,” he said.