Friday, April 19, 2024

TikTok resumes operation following closure in October 2023

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Gusty da Costa

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TikTok Shop resume its operation in Indonesia on December 12 ,2023 after Indonesian government closed it on October 2023. This time, Tiktok has a cooperation with Indonesian company Tokopedia.

PT GoTo Gojek Tokopedia Tbk, the largest digital ecosystem in Indonesia, and TikTok, the leading global entertainment platform, announced a mutually beneficial strategic partnership to drive long-term growth for Indonesia’s MSME sector and the country’s digital economy as a whole.

As part of the agreement, Tokopedia and TikTok Shop Indonesia’s businesses will be combined under the existing PT Tokopedia entity in which TikTok will take a controlling stake. The shopping features within the TikTok app in Indonesia will be operated and maintained by the enlarged entity.

TikTok has committed to invest over US$1.5bn in the enlarged entity over time, to provide future funding required by the business, without additional dilution to GoTo. The arrangement will allow both TikTok and GoTo to each serve Indonesian consumers and MSMEs more comprehensively. 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. GoTo will also receive an ongoing revenue stream from Tokopedia commensurate with its scale and growth.

The strategic partnership will commence with a pilot period carried out in close consultation with and supervision by the relevant regulators. The first campaign will be the Beli Lokal initiative which will launch on December 12th, coinciding with Indonesia’s National Online Shopping Day (Harbolnas) – a government program designed to grow Indonesia’s digital economy by supporting local MSMEs. The campaign, which will be available on TikTok as well as Tokopedia, will 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.

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, including:

1.The promotion of Indonesian products on Tokopedia and TikTok’s platforms
2.Building the capacity of Indonesia’s MSMEs through a holistic program focusing on skills development and providing resources relating to upstream production and   selling
3. Supporting merchants to sell products online by providing support in areas such as marketing, branding, and sustainable business practices
4.Helping local brands to promote their products in international markets
5. The establishment of technology centers across Indonesia to develop local tech talent
6. Ensuring a marketplace that fosters fair competition.

The transaction, which is expected to close in the first quarter of 2024, is in line with the GoTo Group’s strategy to strengthen its financial and strategic position by growing its total addressable market. To ensure the PT Tokopedia business continues to operate in the best interests of Indonesia’s digital economy, a committee under the enlarged entity will be established to facilitate transition and integration, chaired by GoTo Group CEO Patrick Walujo, with support from members of both businesses.

Goldman Sachs is acting as the financial advisor to GoTo Group on this transaction.

Gusty da Costa

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Editor

 

Interview

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