TikTok owner ByteDance is set to resume business in Indonesia by taking a majority 75.01% stake in Tokopedia with a promised $1.5bn investment.
Indonesian tech company GoTo will maintain a 24.99% minority stake in Tokopedia, reports Reuters. This comes after the social media giant was banned from operating its e-commerce platform in Indonesia in October due to new regulations.
TikTok will initially pay out $840 million to acquire its stake and has promised further investment in Tokopedia – one of Indonesia’s most visited e-commerce platforms – amounting to $1.5 billion over a longer period. TikTok’s e-commerce arm, TikTok Shop Indonesia, will be absorbed into Tokopedia, allowing it to resume operations in the country. The deal is due to close in early 2024.
TikTok’s ambitions in Indonesia
According to reports, Indonesia is Southeast Asia’s largest e-commerce market, valued at over $50 billion, so it stands to reason that TikTok is keen to resume business there, keeping regulators on board. In a joint statement, ByteDance and GoTo said, “The strategic partnership will commence with a pilot period carried out in close consultation with and supervision by the relevant regulators.”
“We are creating an Indonesian e-commerce champion, combining Tokopedia’s strong local presence with TikTok’s mass market reach and technological prowess,” GoTo CEO Patrick Walujo said in a statement to Reuters.
“GoTo now sits on a much stronger foundation and we expect this partnership to bring many benefits not just for e-commerce, but for our on-demand services and fintech businesses as well,” he said.
TikTok Shop is currently only available in a handful of countries, including the UK and USA, so to have regulators stop it as it found a base in Indonesia will have been a blow for TikTok, especially as foreign security concerns rise.
This growth is vital for TikTok after reports earlier this year that its use is on a “steep decline” with young people. It is a tumultuous time for TikTok as it offers a share buy-back scheme despite news that it has closed down its gaming brand Nuverse. It has also confirmed that it works on a large AI platform allowing users to create AI Chatbots.
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