One Voice, Government Regulates "Social Commerce"
After reportedly having different views, the government finally came out with a regulation governing "social commerce".
This article has been translated using AI. See Original .
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The following article was translated using both Microsoft Azure Open AI and Google Translation AI. The original article can be found in Satu Suara, Pemerintah Regulasikan ”Social Commerce”
Minister of Cooperatives and Small and Medium Enterprises Teten Masduki visited the daily Kompas to discuss Tiktok Live Shopping regulations, Wednesday (27/9/2023).
JAKARTA, KOMPAS — The government finally has one voice in responding to social commerce. This short-term response is outlined in Minister of Trade Regulation Number 31 of 2023 which regulates social commerce.
"There is (one vote)," said the Minister of Cooperatives and Small and Medium Enterprises Teten Masduki in response to Kompas journalists when visiting the Kompas Tower in Jakarta, Wednesday (27 /9/2023).
Minister of Trade Regulation (Permendag) Number 31 of 2023 regarding Business Licensing, Advertising, Development, and Supervision of Business Actors in Electronic Commerce was published on Tuesday (26/9/2023). The revised regulation of Permendag Number 50 of 2020 was agreed upon in a limited meeting chaired by President Joko Widodo at the State Palace in Jakarta on Monday (25/9/2023).
Also read: Digital Services Market Rules Need to Be Clarified
In the last few days there has been a polemic about social commerce. Social commerce is a social media organizer that provides certain features, menus and/or facilities that enable traders (merchants) to place offers for goods and/or services.
Pro and contra voices have emerged in various public discussions. Several ministries are reported to have different views on this matter. Some are in favor, while others are against it.
Minister of Cooperatives and Small and Medium Enterprises Teten Masduki visited the daily Kompas to discuss Tiktok Live Shopping regulations, Wednesday (27/9/2023).
”The regulation of digital platforms in e-commerce is currently still very weak, including the regulation of the flow of incoming goods is also still weak, so that our market today is dominated by products from "China is selling very cheaply and then hitting domestic products, MSMEs and industry, in both offline and online markets," said Teten.
The negative impact occurred, Teten continued, because the platform tends to dominate the market. Therefore, the government through the latest trade ministerial regulation regulates the platform in several aspects.
E-commerce should not be combined with social media on one platform.
These rules include platform restrictions. E-commerce should not be combined with social media on one platform. Second, platforms may not sell their own products, but products belonging to MSMEs.
"In the past, foreign retail products could go directly to consumers, now there must be permits and standardization to protect consumers. Fourth, there will no longer be predatory pricing to protect MSME products. "We regulate that imported goods sold online cannot be less than 100 US dollars per unit," said Teten.
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Minister of Cooperatives and Small Medium Enterprises Teten Masduki (center) accompanied by Minister of Trade Zulkifli Hasan (right) and Minister of Communication and Information Technology Budi Arie during a press conference at the Presidential Palace Complex, Jakarta, on Monday (25/9/2023).
The regulation from the Ministry of Trade, as explained by Teten, needs to be translated into technical rules in the related sector. Concerning investment matters, the Investment Ministry will follow up on it. Regarding trading matters, the Trade Ministry will be the one to follow it up.
Regarding the matter of Indonesia's Standard Classification of Business Fields (KBLI), it falls under the authority of the Ministry of Communication and Informatics. As for the matter of goods flow, it is under the Ministry of Finance, specifically the Directorate General of Customs and Excise. "So, there are many derivatives that need to be regulated more strictly," he said.
The Minister of Trade's regulations regarding Social Commerce are of a short-term responsive nature. As for the medium-to-long-term response, Teten added that it takes the form of a digital transformation strategy.
The most important thing is to have clear authoritative policies and direction. However, if it is like autopilot now, then there is a problem.
"Yesterday's discussion (in a closed meeting) was about forming a Digital Transformation Task Force. My suggestion is to create a Digital Transformation Steering Committee for the President," said Teten.
This will still be discussed in the next opportunity. "However, the most important thing is to have a clear authoritative policy direction. Well, if it's like autopilot right now. As a result, what is developing is private sector initiatives in the downstream sector. Meanwhile, the production sector is still weak, so our products cannot compete," said Teten.
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Cooperatives and Small and Medium Enterprises Minister, Teten Masduki, made a surprise inspection at Tanah Abang's Blok A Market in Central Jakarta on Tuesday (19/8/2023). He approached a clothing store whose traders also sold their wares online through an e-commerce platform.
This new regulation is important due to several factors contributing to the decline of digitalization in the industry, especially in the micro, small, and medium enterprises (MSMEs) sector. Out of the 64 million MSMEs, only 22 million units have utilized the digital ecosystem. According to Teten, they have only transformed at the downstream level. They are losing out to the entry of illegal imported goods that are sold at cheaper prices.
This phenomenon is accelerated by the presence of social media platforms which also function as e-commerce, such as Chinese platform Tiktok. According to a Cube Asia survey in Indonesia, Thailand, and the Philippines, product sales on Tiktok resulted in 85 percent of people reducing their frequency of shopping on other e-commerce platforms.
The influx of illegally imported goods dominates the e-commerce platform, with an estimated 98 percent of marketed products falling under this category.
Some data collected by the Ministry of Cooperatives and Small and Medium Enterprises shows that the flow of illegally imported goods dominates e-commerce platforms, with an estimated 98 percent of marketed products falling into this category. Over 40 percent of imported products are preferred by the market due to their cheap prices, particularly finished goods imported from China.
"E-commerce regulations are weak and import inflows are high so that our market is dominated by very cheap Chinese goods and this is hitting domestic products, both from the online industry. or offline. We see this as a result of there being platforms that tend to dominate the market. "Therefore, the platform must be regulated so that it does not dominate the market," said Teten.
In the long run, the government's efforts to enhance the digital industry involve the establishment of a digital transformation task force. This transformation will regulate several digitalization strategies, such as fostering industrial digitalization, government service digitalization, data digitalization, and digital talent.
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Translator's note: The article doesn't contain any of the forbidden words. Researcher at the Center of Law and Economic Studies (Celios), Yeta Purnama, believes that online sellers usually exist on more than one platform. As an example, sellers who sell on Tiktok Shop are also typically on Shopee, Tokopedia, and Lazada.
"When the government finally decides that technology companies with social media business models cannot accommodate transaction processes, sellers will not immediately lose all their revenue. Perhaps, the seller in question may experience a decrease in revenue and that is a common thing in the beginning," she said.
Meanwhile, in terms of marketing practices and branding of goods/services, Country Head of MoEngage Indonesia (marketing technology solutions company) Roy Simangunsong is of the opinion that Minister of Trade Regulation No. 31/2023 will have a significant impact on branding (< i>brand) interacts with consumers. Brands ultimately need to explore new creative ways so they can stay in line with consumer preferences, behavior and interests.
”Marketers must also seek insight to understand the impact of this regulation on online and offline markets in Indonesia. "Protecting customer data must also be a brand priority, not only as a legal obligation, but also as an action to show concern for consumers," said Roy.
