TikTok to invest US$1.5bil in Indonesia shop pact with GoTo Group

Another route: The entrance of Bank Indonesia headquarters in Jakarta. The agreement with GoTo is designed to address regulatory hurdles and let TikTok revive its online shopping service in South-East Asia’s largest retail arena. — Bloomberg

JAKARTA: ByteDance Ltd’s TikTok agrees to invest US$1.5bil in a joint venture with Indonesia’s GoTo Group, part of a pact that lets the Chinese company restart its shopping app in its biggest online retail market.

The social media giant will combine its Indonesian TikTok Shop business with GoTo’s eCommerce unit Tokopedia, the companies said in a statement yesterday.

TikTok will get a controlling 75% stake in that combination, which will run the shopping features of TikTok’s social media app in Indonesia.

The deal is designed to address regulatory hurdles and let TikTok revive its online shopping service in South-East Asia’s largest retail arena.

Indonesia in September announced sweeping regulations that forced TikTok to split payments from shopping in the country, a separation that prompted TikTok to halt its online retail service just as it was gaining traction against Sea Ltd and GoTo.

The Indonesian government, which has sought to protect local contenders including tens of millions of its smaller enterprises, has signalled that it’s approving TikTok and GoTo’s new pact.

TikTok Shop is the fastest-growing feature for Beijing-based, closely held ByteDance, which is seeking new revenue sources beyond its popular social media service.

It has targeted the online shopping market of Indonesia, a country of 278 million, as a template for a global expansion from the United States to Europe.

TikTok started the shopping feature in Indonesia in 2021 and its instant success encouraged it to expand into online retailing in other markets, including the United States.

Earlier this year, TikTok said it will invest billions of dollars in Indonesia and the broader South-East Asian region.

For GoTo, Indonesia’s largest Internet company, a deal with TikTok could be risky as it would help a major online retail rival to keep operating in the country.

But it also gives GoTo a strong global social-media partner in an arrangement that could boost shopping and payment volumes for both companies.

Chief executive officer Patrick Walujo, who took over in June, is trying to bring GoTo to profitability on an adjusted basis by the end of the year to show the ride-hailing and eCommerce company has long-term earnings potential.

The managing partner of shareholder Northstar Group is continuing his predecessors’ campaign to reduce losses by slashing jobs, cutting promotions and tightening expense controls.

Indonesia is among the first countries in South-East Asia to push back against TikTok.

Following the Indonesia restrictions, Malaysia said it is studying the possibility of regulating TikTok and its eCommerce operations.

The social media giant is already facing possible bans and scrutiny in the likes of the United States, Europe and India on national security concerns. — Bloomberg

Follow us on our official WhatsApp channel for breaking news alerts and key updates!

Indonesia , Tik Tok , GoTo , e-commerce


Next In Business News

PepsiCo's first-quarter results beat as international demand drives growth
Spotify profits up, but lower marketing hits user growth
Rafizi: Economy continues to strengthen along with Bursa Malaysia
MAHB's 1Q24 traffic hits more than 90% recovery rate against 1Q19
IRDA's RM636bil investment goal to help propel Malaysia into top 30 global economies
DXN Holdings net profit for FY24 rises to RM310.99mil
Ringgit closes slightly lower against US dollar
Inta Bina bags RM170mil construction job
PETRONAS Gas commits to sustainability, announces total dividend of 72 sen per share
Crest Builder bags RM486mil condo job

Others Also Read