TikTok invests $1.5billion into, GoTo, the largest digital ecosystem in Indonesia and the largest ecommerce market in South East Asia. TikTok’s strategic decision to partner with the company aims to drive long term growth for Indonesia’s MSME sector and the country’s digital economy as a whole.
As a part of the agreement, Tokopedia and TikTok Shop Indonesia’s businesses will merge under the existing PT Tokopedia entity in which TikTok will take the majority share amounting to 75.01%.
Investment in Segments
According to the investor note, the investment of $1.5billion will be made in intervals, over a period of time to provide future funding required by the business, without additional dilution to GoTo.
The arrangement will “allow both TikTok and GoTo to serve Indonesian consumers and MSMEs more comprehensively”, according to a recent statement. GoTo will acquire 24.99% in the JV and will receive an ongoing revenue stream from Tokopedia to commensurate with its scale and growth.
Growing Indonesia’s Digital Economy
The first initiative, sinse the start of the partnership will launch on 12 December, the Beli Lokal – coinciding with Indonesia’s National Online Shopping Day (Harbolnas) – a government program designed to grow Indonesia’s digital economy by supporting local MSMEs.
E-Commerce Initiatives for Locals
The objective of the campaign is to promote a broad range of merchants, with a strong focus on Indonesian products. The Beli Lokal offering on TikTok will enable its community to engage and shop with the local merchants they know and love.
TikTok’s mergence with TikTok, Tokopedia and GoTo will transform Indonesia’s e-commerce sector, creating millions of new job opportunities over the next five years. 90% of the combined businesses merchants are MSMEs and the companies plan to undertake a series of joint intiatives to support them.
Five Year Growth Plan
Going forward, TikTok, Tokopedia and GoTo will transform Indonesia’s e-commerce sector, creating millions of new job opportunities over the next five years.
More than 90 percent of the combined business’s merchants are MSMEs and the companies will undertake a series of joint initiatives to support them that includes establishing technology centers across Indonesia to develop local tech talent and supporting merchants to sell products online, among other ventures.
TikTok Regulator Scrutiny
Just recently, TikTok was under fire by regulators for its wholly owned venture, TikTok Shop Indonesia, which provided online shopping via TikTok’s popular flagship social media app.
Another setback, which may have prompted the investment was the incident on 4 October where Jakarta banned direct payments for online purchases on social media platforms to protect smaller local merchants and users’ data.
Nevertheless, the move will propel GoTo towards becoming a leading e-commerce business in South East Asia and help thousands of MSMEs across Indonesia make the transition into the digital ecosystem.
