Indonesia’s Jokowi bans direct transactions on social media

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President Joko “Jokowi” Widodo has decided to ban direct transactions on social media platforms in Indonesia, dealing a huge blow to the future of TikTok Shop in its largest market in Southeast Asia.

The decision followed a cabinet meeting with several ministers at the State Palace in Jakarta earlier today.

This ban will be included in the revised ecommerce regulations to are expected to be issued by the Ministry of Trade this week. As a result, TikTok will have to separate its ecommerce unit from its social media platform.

Meanwhile, Facebook and Instagram don’t allow direct transactions in Indonesia, giving them much less exposure to regulatory scrutiny.

As Tech in Asia previously reported, regulators in Indonesia have been looking into TikTok over fears that TikTok Shop – a feature integrated into the main app – is monopolizing the market.

Jokowi recently said that social commerce platforms like TikTok Shop have played a role in the downslide of MSMEs and traditional markets.

In a statement to Tech in Asia, a TikTok Indonesia spokesperson said there have been many concerns from sellers seeking greater clarity about the regulations.

“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,” the spokesperson said.

“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,” she added.

The short-video platform has 125 million monthly active users (MAUs) in Indonesia, its second-highest market in the world.

In 2022, TikTok Shop Indonesia recorded a gross merchandise value (GMV) of US$2.5 billion, according to venture builder Momentum Works.

This is a developing story. Tech in Asia will publish updates as we get more details on the matter. 

See also: Uncertain future: TikTok Shop faces first regulatory headwinds in Indonesia