ANN/THE JAKARTA POST – Social media platforms have shown an interest to venture into e-commerce in Indonesia, despite recent government constraints on social commerce are poised to encounter various regulatory hurdles, as outlined by business analysts.
Following the enforcement of Trade Ministry Regulation number 31/2023 to foster equitable and ethical competition, social media companies have not yet introduced any alterations to their platforms to facilitate an expansion into the realm of social commerce.
However, media and research reports have sparked speculation about TikTok looking to relaunch its TikTok Shop in the country after the forced shutdown of the e-commerce service on October 4.
The platform has made no announcement of such a move. The Financial Times (FT) described the situation surrounding the Chinese firm’s business plans in Indonesia as fluid in an article published.
Beijing-based ByteDance, owner of the popular TikTok video-sharing app, has put together product and technology teams in Singapore to discuss ideas after Jakarta imposed the ban, according to the FT report. A source told the paper that the social media firm was not actively working on a separate app at the moment but was exploring all available options. Meanwhile Alphabet, the parent company of Google and YouTube, was seeking an e-commerce licence in Indonesia, it was reported, without specifying any details of the licence sought.
However, Asia-Pacific YouTube Regional Director Ajay Vidyasagar denied the report, saying the company had no plans to apply for an e-commerce licence, as reported by Katadata.
The Trade Ministry’s Director General of Domestic Trade Isy Karim, said TikTok and YouTube had not approached authorities for any such licence.
Meanwhile, Facebook owner Meta had applied for a licence through the Investment Coordinating Board (BKPM) online single submission (OSS) system, according to the Trade Ministry’s director for trade through electronic systems and trade in services Rifan Ardianto as reported by Bisnis.
He noted that there were no further developments so far.
The reports suggest that social media companies have not given up on e-commerce activities in Indonesia.
Analysts said social media platforms holding operating permits in Indonesia have the option to apply for both social commerce and e-commerce licences. “Yes, this is indeed possible, but it depends on each social media platform’s internal policies, considering which option is advantageous in terms of overall cost-benefit and risk appetite,” Center for Indonesian Policy Studies researcher Muhammad Nidhal told The Jakarta Post.
“If they choose to open social commerce services, YouTube and Meta could proceed with the licensing process by complying with the prevailing regulations. However, establishing a new e-commerce business would involve more complex licensing requirements,” he added.
For e-commerce, companies not only needed an electronic trading system licence, but also had to at least obtain a licence as a private electronic systems organiser, based on Communications and Information Ministry Regulation number 5/2021, and secure a ticket from the OSS management agency, he elaborated.
Christina Desy from Indonesian legal advisory platform Hukumonline told the Post that, while companies were allowed to obtain multiple business licences for various activities, the new regulations specifically excluded social media businesses from acquiring a payment app business licence.