"This regulation has been in force since yesterday," Indonesian Trade Minister Zulkifli Hasan said Wednesday, adding that platforms have one week to comply.

Under this new text, platforms will no longer be able to offer the possibility of making direct transactions but will have to content themselves with promoting products.

The regulation, which is an amendment to a package of trade texts adopted in 2020, did not need parliamentary approval to enter into force.

Indonesian officials had been calling for the separation of social media and e-commerce activities in recent weeks, saying big platforms like TikTok, widely used in Indonesia, were threatening small local businesses.

"Any government would protect its local trade," the minister insisted, indicating that this regulation had been adopted to guarantee "equality in commercial competition".

The passage of the regulations is another setback for the video app TikTok, developed by Chinese tech giant ByteDance, which has come under scrutiny in the U.S. and other countries in recent months due to the security of user data and the company's alleged ties to Beijing.

125 million users

Indonesia represents a major challenge for the Chinese giant, being its second market with 125 million users, according to the company. The archipelago is also one of the largest markets for its TikTok Shop business and was the first to pilot the e-commerce branch of the application.

But Southeast Asia's largest economy is now also the first country to take steps to limit its trade activity.

Asked by AFP on Wednesday, neither ByteDance, the parent company of TikTok nor the Indonesian branch of TikTok reacted immediately.

On Monday, after the announcement of this new regulatory framework by Indonesian President Joko Widodo, a spokeswoman for TikTok Indonesia had estimated that the ban on these transactions would harm no less than 6 million local sellers who sell their products via the platform.

Meta, owner of Facebook and Instagram, also did not respond.

While the modalities of the implementation of the new regulation are not yet clear, it could be that social media platforms must obtain a separate license to operate their e-commerce business, according to experts.

"This could lead to revamping their license," says Tauhid Ahmad, executive director of the Jakarta-based Institute for Economic and Financial Development, for whom these companies should have to choose between several licenses.

At the historic Tanah Abang market, in the heart of Jakarta, the largest textile market in Southeast Asia, the new measures were welcomed.

"The government had to innovate in the face of this situation," said Stevanie Ahua, a 60-year-old jeans saleswoman, who has seen her turnover decline by 60% in a few months due to competition from online sales.

Online sales in Indonesia are dominated by platforms like Tokopedia, Shopee or Lazada but TikTok Shop has taken considerable market share since its launch in 2021.

Last June, on a visit to Jakarta, the CEO of parent company ByteDance, Shou Zi Chew, announced that the group would invest over the next few years "billions of dollars" in Southeast Asia, where TikTok has a total of 325 million users.

© 2023 AFP