Signing Revised Permendag 50/2020, Indonesia’s government has officially banned social commerce from executing direct transactions on social media platforms.
Heaptalk, Jakarta — Indonesia’s President Joko ‘Jokowi’ Widodo conducted a limited meeting with Ministers to discuss electronic trading regulations, specifically related to the trading activity on TikTok and other social commerce platforms.
In the agenda, the Indonesian government has officially banned social commerce, such as TikTok, from executing direct transactions on social media platforms as stated in the Revised Minister of Trade Regulation (Permendag) Number 50 of 2020, signed on Monday. (09/25)
“We have decided today to sign the Revised Minister of Trade Regulation 50/2020. Social Commerce may only facilitate the promotion of goods or services and is prohibited from conducting direct transactions,” Minister of Trade Zulkifli Hasan affirmed.
Previously, Jokowi also explained his reasons for banning social media for selling, which is expected to protect MSMEs from the significant impact of a decline in sales. According to his perspective, technological developments must create new economic potential and contribute to the economic growth of other business players. For this reason, the government will design more integrated regulations to facilitate Indonesia’s MSMEs to trade their products.
Furthermore, the revised policy will ban social media from doubling its role as an e-commerce platform, expecting to protect society’s data. Regarding the sale of goods from abroad, this regulation will also regulate the list of products licensed to be marketed. The trade process of these goods will also receive the equivalent treatment as domestic offline trade.
Concurrently, the revised Permendag also regulates penalty mechanisms for e-commerce platforms still integrated with social media services. Violators will receive fines in stages through warnings and closing social media platforms. The determination is claimed that this decision will emphasize the position of social media platforms as a socialization platform.
From now on, social commerce is also not allowed to perform as a product manufacturer. To maintain the prices in the local market, this regulation also emphasizes that the permitted prices of the imported product to be traded in the archipelago are worth a minimum of US$100.
“If the perpetrator commits a violation for one week, they will receive a warning letter from the Ministry of Tech. After receiving a warning letter, they had to close their business on the platform if they still violated the existing policy.” Zulkifli Hasan said.
As is known, Revised Minister of Trade Regulation (Permendag) Number 50/2020 concerning Provisions for Business Licensing, Advertising, Guidance and Supervision of Business Actors in Trading Through Electronic Systems is also part of efforts to anticipate the impact of Project S TikTok, which is claimed to reduce the growth of MSME businesses on digital platforms. The consideration for revising this regulation is related to cross-border trading practices through online markets and social media.
