Indonesia’s e-commerce woes aren’t going away. After calls from lawmakers and even local SMEs to regulate social commerce, Indonesia has finally made its move. 

They have officially banned e-commerce transactions over social media because of alleged predatory pricing by online sellers.

• The move was aims to level the playing field between online sellers and offline SMEs.

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💔 Time to DTR

One of the goals of the new trade regulations was to define social commerce and regulate how transactions work on social media. 

Here, social commerce is defined as the provision of features by social media platforms that enable merchants to offer goods and services.

• Yay. So, you can still market and promote your foods and services online… 

• Nay. But social media sites won’t be allowed to facilitate direct transactions and direct payments. That means no in-app checkouts on places like Instagram and TikTok. 

Did you know? TikTok Shop offers huge discounts (as much as 99% off) to new customers to incentivize them to shop on the platform. 

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🥙 Some more detail

The revised policies also included the following rules:

• Business actors have to stick to local requirements on licenses, quality standards, tax regulations, get halal-certified, and obtain permits from the Food and Drug Monitoring Agency.
• E-commerce platforms also have to set a $100 price cap on products directly purchased abroad.
• The bill also restricts e-commerce marketplaces and social commerce operators from producing their own goods.

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⏰ Tic-toc, TikTok

Though no businesses were cited as a reason for the new regulations, lawmakers in Indonesia have been raising concerns over TikTok Shop. 

With the announcement, TikTok has a week to decide whether it will be a standalone social media app or an e-commerce platform. If it doesn't decide? Closure awaits.

• Earlier this year, Indonesia also curbed TikTok’s Project S, which would allow them to sell their own branded goods. 
• Plus, TikTok's CEO Shou Zi Chew promised in August that he would funnel $10B in Indonesia.

But if this rule pushes through, it may not be a win for anybody. Online sellers (TikTok has 6M sellers online) may be forced out of their livelihoods and local e-commerce players may also be affected. 

Though, we still have to see how it’ll all play out.