JAKARTA: Indonesia has banned goods transactions on social media platforms in a new regulation, its trade minister said on Wednesday, as Jakarta aims to rein in direct sales on major platforms it says are harming millions of small businesses.

Calls have 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,” Trade Minister Zulkifli Hasan told a news conference in the capital, Jakarta, 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 seen by AFP.

“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 would be warned first and would finally have their license to do business in Indonesia revoked, he said.

Laws in the archipelago nation did not cover direct transactions through social media platforms such as TikTok, Facebook or Instagram before the new regulation.

The new regulation is yet another setback for TikTok, which has faced intense scrutiny in the United States and other nations in recent months over users’ data security and the company’s alleged ties to Beijing.

Published in Dawn, September 28th, 2023