Jakarta, Indonesia

Indonesian trade minister said on Wednesday (Oct 4) that the nation has banned e-commerce transactions on social media platforms, which came as a blow to TikTok, owned by China's ByteDance. 

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The announcement would damage TikTok's plan to double down on Southeast Asia's biggest economy to boost its e-commerce business. 

The government said that the decision, which takes effect immediately, is intended to protect offline retailers and marketplaces. 

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The government also said that predatory pricing on social media platforms is affecting small and medium-sized businesses. 

The final decision comes after the Ministry of Trade set a one-week deadline for TikTok to become a standalone app with no e-commerce features or risk being shut down. 

In a statement, TikTok said on Tuesday: "Our priority is to remain compliant with local laws and regulations. As such, we will no longer facilitate e-commerce transactions in TikTok Shop Indonesia by 17:00 GMT+7, October 4, and will continue to cooperate with the relevant authorities on the path forward." 

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Recently, President Joko Widodo called for social media regulations and also noted that the market has been flooded with foreign imports, and the influx of such platforms has contributed to a sales fall for domestic enterprises. 

Last week, the Indonesian government outlawed e-commerce transactions on social media platforms like TikTok and Facebook. 

In Indonesia, TikTok has 125 million active monthly users. 

A TikTok Indonesia spokesperson said it would pursue a constructive path forward and was "deeply concerned" with the announcement, "particularly how it would impact the livelihoods of the 6 million" local sellers active on TikTok Shop. 

Indonesia Trade Minister Zulkifli Hasan on Wednesday told reporters that the regulation is intended to ensure "fair and just" business competition, adding that it was also intended to ensure data protection of users.

(With inputs from agencies)

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