Indonesia will restrict the sale of goods on social media through the revision of Minister of Trade Regulation 50 of 2020, which regulates the rules of e-commerce in Indonesia. 

The regulation, which was signed on Monday, September 25, 2023, aims to fend off challenges to offline markets and local small and medium enterprises (SMEs) posed by giant tech firms. 

Indonesia’s president, Joko Widodo, gave a speech at a live-streamed video address on Monday, advocating the need to protect local micro, small, and medium-sized enterprises from the potential negative effects of unregulated e-commerce. 

"What the people are expecting is that the advancement of technology can create new economic potential, not kill existing economies," President Widodo said. 

The new regulation, according to trade minister Zulkifli Hasan, will limit the use of social media platforms to advertising for goods and services only. 

Therefore, just like television, social media and other digital media platforms cannot be used to conduct transactions. 

"Social (media platforms) can only facilitate the promotion of goods or services and cannot facilitate direct transactions and direct payments," Mr. Hasan said following a brief meeting presided over by the president at the Presidential Palace Complex on Monday. 

Furthermore, in the newly agreed regulation, the government has firmly divided “social media" and "social commerce" platforms to avert the use of personal data for business purposes. 

Consequently, some social media and e-commerce platforms, such as TikTok, will be required to distinguish their e-commerce businesses from their social media platforms. 

Although the government made no specific mention of any particular social media platform, regulators have recently become more intrigued by TikTok Shop, the e-commerce division of social media giant ByteDance's TikTok. 

Indonesia is TikTok's second-largest market worldwide after the US, with 119 million users in 2022. In April 2021, Indonesia became the first nation in Southeast Asia where TikTok Shop expanded its operation. 

In early September, Teten Masduki, Indonesia's Minister of Cooperatives and SMEs, said TikTok Shop should be banned because it posed a threat to local SMEs. 

"India was brave enough to ban TikTok; why aren’t we? The US also banned TikTok, allowing the company to do sales but not to merge with its social media," Mr. Masduki said, as quoted by Deal Street Asia.