Indonesia has implemented a new regulation that bans goods transactions on social media platforms, aiming to regulate direct sales by major tech firms that are seen as harmful to small businesses. The trade minister, Zulkifli Hasan, announced the regulation and stated that social commerce platforms have one week to comply. This move comes as government officials in Indonesia have called for the decoupling of social media and e-commerce, specifically targeting platforms that engage in monopolistic practices. The new regulation means that social media firms can only promote products on their platforms and cannot conduct direct transactions.
Indonesia Bans Goods Transactions on Social Media Platforms. Here’s Why
Indonesia has taken a significant step by implementing a new regulation that prohibits goods transactions on social media platforms. The trade minister, Zulkifli Hasan, expressed concerns about major tech firms harming small businesses. In response, the government has called for the separation of social media and e-commerce, specifically targeting platforms engaging in monopolistic practices. This move aims to regulate direct sales and protect small businesses from unfair competition.
The Impact on Social Commerce and Tech Firms
Under the new regulation, social media firms are no longer allowed to conduct direct transactions but can only promote products on their platforms. This marks a significant change as previous laws did not cover direct transactions through platforms like TikTok, Facebook, or Instagram. The regulation is seen as a setback for TikTok, which has faced scrutiny over data security and alleged ties to Beijing. Indonesia, as one of the world’s biggest markets for TikTok Shop, becomes the first country in Southeast Asia to take action against the platform’s growing popularity in the social commerce space.
It is important to note that the ministerial-level regulation, an amendment to a trade regulation issued in 2020, did not require approval from lawmakers. This demonstrates the government’s determination to address the concerns surrounding social media platforms and their impact on small businesses.