BT-REQ-1940 Consumer Holiday Guide 2023 v9 BH - Flipbook - Page 26
No cart left behind: Indonesia’s
social commerce shutdown
Karina Antonio
Mochamad Kasmali
Senior Associate
Jakarta
Partner
Jakarta
Social media platforms have become popular channels for
online shopping in Indonesia since the COVID-19 pandemic. In
2023, the social commerce industry in Indonesia was expected
to grow by 31.0% on annual basis to reach USD$8.2 billion.
Furthermore, Indonesia had the fourth-highest share of social
commerce shoppers (79%) in the Asia-Paci昀椀c region in 2022.
On September 26, 2023, the Indonesian
Government stepped in, issuing a new
regulation that e昀昀ectively banned the
operation of e-commerce on social
media platforms. The Minister of Trade
Regulation Number 31 of 2023 prohibits
social media companies from facilitating
direct payment transactions, which
essentially bars social media platforms
from acting as e-commerce platforms
that sell goods to customers. As a result,
social media platforms have promptly
shut down their e-commerce services.
The ground-breaking regulation has
signi昀椀cant implications for social
commerce platforms such as TikTok,
Facebook, and Instagram, which have
been growing rapidly in the Indonesian
market. In response, TikTok is said to
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Retail and Fashion Holiday Guide 2023
be exploring potential local e-commerce
partnerships while building a separate
app for its e-commerce services. The
Director General of Domestic Trade
of the Ministry of Trade reported that
Facebook and Instagram have applied
for an e-commerce license to promote
goods on their apps without engaging in
direct e-commerce transactions.
The new regulation does not mean the
end of social media e-commerce in
Indonesia, but the beginning of a new
era. Social commerce platforms will
have to adapt their business strategies to
comply with the regulations and avoid
sanctions, which will result in more
features and options that will enhance
the future online shopping experience.
