Indonesia e-commerce regulation on sales via social media to affect TikTok shop

Indonesia's government has put a halt to direct transactions on social media platforms as directed by trade minister Zulkifli Hasan who revised the Minister of Trade Regulation No. 50 of 2020. As a result, TikTok shop operations in Indonesia are highly affected.

• Regulation Parameters: The Minister of Trade Regulation No. 50 of 2020 calls for a distinct separation between e-commerce and social media. It will also monitor any e-commerce platforms getting too cozy with social media services.

• Regulation Goals: President Joko Widodo has been hinting at this for some time to protect offline markets and local SMEs from the onslaught of digital commerce.

• TikTok's Response: Reacting to the regulation, a TikTok spokesperson has stressed the platform's role in aiding MSMEs and local creators to expand their online presence. Despite upcoming changes, TikTok Shop is committed to adhering to Indonesian rules, hoping the government also considers the 6 million sellers and nearly 7 million creators who depend on TikTok Shop.

• Possible Ban: Teten Masduki, Indonesia's minister for SMEs, hinted at wanting to ban TikTok Shop, accusing it of potentially monopolizing and disrupting local MSMEs.

• Status: Indonesia is TikTok's second-largest market globally (after the US), and has an impressive 119 million users as of 2022. Despite TikTok's financial losses, TikTok seller is among the top 10 shopping apps in Indonesia.

In 2022, the company boosted its revenues by an astonishing 172%, reaching $5.39B. The fastest-growing segment? E-commerce! Its revenues soared about 95 times from $1.88M in 2021 to nearly $180M in 2022.