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Government to ban social commerce transactions
The trade minister has said that e-commerce on social media platforms should only be used to promote goods and services, not for actual transactions.
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Shoppers and vendors mill around Tanah Abang wholesale market in Central Jakarta on June 15, 2020 during COVID-19 pandemic. Sellers have reported significant losses amid growing popularity of social commerce, especially TikTok. (JP/Dhoni Setiawan)
The government plans to prohibit social media companies from allowing users to conduct e-commerce transactions on their platforms.
A draft for the amendment of Trade Ministry Regulation No. 50/2020 defines social commerce as the provision of features by social media platforms that enable merchants to offer goods and services.
The draft, a copy of which was obtained by The Jakarta Post, stipulates three key points concerning social commerce, or the provision of e-commerce services by social media platforms.
First, the draft regulation mandates that business actors must adhere to the legal requirements regarding licenses, quality standards, restricted products and tax regulations and obtain halal certification and Food and Drug Monitoring Agency permits.
Second, the draft regulation restricts both e-commerce marketplaces and operators of social commerce business models from functioning as producers, while social commerce providers are also prohibited from facilitating payment transactions through their electronic systems.
Despite these stringent measures, the government did not bar the social commerce from operating but rather focused on curtailing direct transactions conducted through the platforms, as confirmed by Trade Minister Zulkifli Hasan.
“Social commerce should only serve as a facilitator for promoting goods and services, and direct payment transactions should not be permitted,” Zulkifli said in a press conference after a cabinet meeting with the President on Monday, citing promotional advertisements on television as an example.
