News, AntaraNews.net – The Chinese company TikTok has signed a deal to invest $840 million on the acquisition of Indonesian technology conglomerate GoTo’s (GOTO.JK) e-commerce division – which will allow the company to revive its online-based shopping company in the Southeast Asia’s most populous economy.
It further stated that it plans to increase its investment in the company, Tokopedia, which is the largest e-commerce site in Indonesia with a cost in the amount of $1.5 billion.
TikTok was required to stop its innovative e-commerce product, TikTok Shop, in Indonesia because the country had banned the online purchase through social media in September. It was based on the necessity of protecting smaller businesses and their customers information.
TikTok Shop will return to Indonesia with a Tokopedia investment worth $1.5 billion
The partnership is set to begin with a trial period that will be that will be conducted in close collaboration with the appropriate regulators, the two companies announced in a joint statement.
“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 announcement.
“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,” said the CEO. added.
GoTo’s services include ride-hailing as well as delivery, and financial services.
As part of the deal TikTok that is controlled by China’s ByteDance It will purchase 75.01 percent of Tokopedia and incorporate TikTok Shop’s Indonesia company into the larger Tokopedia company.
The trade ministry of Indonesia have not responded to requests for clarification.
A large portion of Indonesia’s 300 million users are engaged on social media and TikTok is looking to convert the 125 million users to a substantial income stream from e-commerce.
TikTok Shop is currently available in a handful of nations, which include Singapore, the United States, Britain and Singapore as per its site.
The agreement will be finalized in the beginning of 2024’s first quarter and Tokopedia will be granted a $1 billion promissory note issued by TikTok which can be used for financing work capital requirements according to the two companies.
Tokopedia competes with Shopee owned by Singapore-headquartered Sea (SE.N) and Lazada owned by Chinese e-commerce giant Alibaba (9988.HK).
The company saw its half-year revenues increase by 14% to 4.5 trillion rupees ($288 million) during August. Meanwhile, its loss per annum slowed to 752 billion rupiah, down from 3.7 trillion rupiah just a year earlier.
Shares of GoTo but, they plummeted 13% Monday, the biggest drop in percentage over the past six months as investors recouped their losses after GoTo’s stock climbed in anticipation of a possible deal in conjunction with TikTok.
The e-commerce market in Indonesia is expected to increase to approximately $160 billion by 2030, up from just $62 billion in 2016 in a study from Google, Singapore state investor Temasek Holdings and consultancy Bain & Co.