We recently shared the news with you that Indonesian government has taken a hard stance on the social media platforms that are also doing e-commerce in the country with a law that states that they can’t operate their e-commerce stores on the same platform where they are also doing social media which meant that the apps like TikTok Shop and Facebook Marketplace had to be killed overnight in the country in order to comply with the regulations. It was also worth noting that TikTok Shop was huge before this regulation change in Indonesia and this was a huge blow to the company.
However, we expected that the company would find a workaround to this and they have. In a new report from today, China’s TikTok has announced that it will invest $1.5 Million in GoTo Gojek Tokopedia and become a controlling shareholder in the company. Once everything is complete, this will mean that TikTok will be able to re-open its TikTok Shop operations in the country. Quite surprisingly, “Shares in GoTo, whose business includes ride-hailing, delivery and financial services, tumbled 8.3% after the announcement, as some investors took profit from the stock’s recent rally on expectations of a deal with TikTok”. Also, it is reported that “Under the deal, TikTok will buy 75.01% of GoTo’s Tokopedia, Indonesia’s biggest e-commerce platform, for $840 million and inject TikTok Shop’s Indonesia business into the enlarged Tokopedia entity”.
Two firms said in a joint statement that “The strategic partnership will commence with a pilot period carried out in close consultation with and supervision by the relevant regulators”. They added that “The transaction will be concluded by the first quarter of 2024 and Tokopedia will receive a $1 billion promissory note from TikTok that can be used to fund working capital needs”. It was also added that “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”. Google reported that “Indonesia’s e-commerce industry is set to expand to about $160 billion by 2030 from $62 billion this year” and TikTok also sees a huge potential in the Indonesian e-commerce market to make such a move.
