Indonesia to ban e-commerce transactions on social media

Sept. 27 (UPI) -- Indonesia said on Tuesday that it will not allow e-commerce transactions on social media platforms in an effort to regulate the industry and protect local small businesses.

Trade Minister Zulkifli Hasan said that the nation would implement a regulation allowing social media to be used only to "facilitate promotion, not for transactions."

He added the government would also prevent social media companies from acting as e-commerce platforms to "prevent misuse of public data" and that it would regulate the sale of overseas goods.

"The connection [between social media and e-commerce] must be separated so that the algorithm is not all controlled," Hasan said during a news conference Monday.

President Joko Widodo said the move was needed to shield its businesses from predatory industries overseas. He said that local micro, small and medium-scale enterprises have seen sales decline because of the influx of foreign goods made available through social media.

The new rule prevents TikTok, Facebook and other social media outlets from being used to buy and sell products and services.

Indonesia represented TikTok's second largest market with 113 million users, just behind the United States with 116.5 million.

"Social commerce was born to solve a real world problem for local traditional small sellers, by matching them with local creators who can help drive traffic to their online shops," a TikTok spokesperson said following the announcement. "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."