TikTok seeks reentry into Indonesia via Tokopedia stake

Short-video app TikTok, owned by Chinese tech company ByteDance, announced on Monday it will take a controlling stake in Tokopedia, an e-commerce unit of Indonesia's biggest internet and tech firm PT GoTo Gojek Tokopedia.

If approved, the partnership would see TikTok invest $1.5 billion over the long term.

The move came after Indonesia banned TikTok Shop, the online shopping business of the short-video app operator, in October, citing concerns over data of local small merchants.

Tokopedia is Indonesia's biggest e-commerce platform. TikTok plans to integrate its TikTok Shop business in Indonesia into the enlarged Tokopedia entity.

The strategic partnership will commence with a pilot period carried out in close consultation with and supervision by the regulators concerned, TikTok said in a statement on its website.

"TikTok has committed to invest over $1.5 billion in the enlarged entity over time, to provide future funding required by the business, without additional dilution to GoTo," the company said.

In addition, the arrangement will allow both TikTok and GoTo to serve Indonesian consumers and micro, small and medium-sized enterprises more comprehensively, TikTok said in the statement.

GoTo will benefit from the growth of the enlarged entity and will remain an ecosystem partner to Tokopedia, through its digital financial services via GoTo Financial and on-demand services via Gojek.

The transaction, which is expected to close in the first quarter of 2024, is in line with GoTo's strategy to strengthen its financial and strategic position by growing its total addressable market, TikTok said in the statement.

In 2021, TikTok began rolling out its e-commerce service in Indonesia, followed by forays into the United Kingdom, Malaysia, Thailand and Vietnam. It launched TikTok Shop in the United States in September.

Zhang Zhouping, a senior analyst covering business-to-business and cross-border activities at the Internet Economy Institute, a domestic consultancy, said as a short-video platform, TikTok has huge data flows, which lays a solid foundation for the platform to get involved in cross-border e-commerce. However, it needs to strengthen the construction of supply chains.