TikTok and Tokopedia Forge Strategic Partnership to Boost E-commerce Sector in Indonesia

TikTok and GoTo have officially announced a collaboration in Indonesia to bolster the e-commerce sector. This partnership confirms recent rumors suggesting the return of TikTok Shop to Indonesia by teaming up with local players.

According to the official statement received by CNBC Indonesia on Monday (11/12/2023), as part of this strategic partnership, Tokopedia's and TikTok Shop Indonesia's businesses will be combined under PT Tokopedia, with TikTok assuming control over PT Tokopedia's operations. The in-app shopping feature on TikTok in Indonesia will be operated and managed by PT Tokopedia.

As a form of collaboration, TikTok has invested over US$1.5 billion as a long-term commitment to support Tokopedia's operations. However, it is emphasized that this investment will not result in further dilution of GoTo's ownership in Tokopedia.

Through this agreement, TikTok and GoTo aim to expand benefits for users and MSMEs (Micro, Small, and Medium Enterprises) in Indonesia. The growth of Tokopedia's business combined with TikTok Shop Indonesia will be advantageous for GoTo, which will continue to be an ecosystem partner for Tokopedia, including reaching a broader market with digital financial services through GoTo Financial and on-demand services from Gojek. GoTo will also receive revenue streams from Tokopedia in line with the company's scale and growth.

This strategic partnership will commence with a trial period conducted with consultation and supervision from relevant ministries and institutions. The program to be launched during this trial period is the "Beli Lokal" (Buy Local) campaign starting on December 12, 2023, coinciding with National Online Shopping Day (Harbolnas).

Available on both the Tokopedia and TikTok apps, the Beli Lokal campaign will promote various merchants, with a primary focus on Indonesian products. The Beli Lokal program on the TikTok app will enable TikTok users to shop and interact with their favorite local products.

In the future, TikTok, Tokopedia, and the GoTo Group aim to provide broader benefits for MSMEs in Indonesia by leveraging e-commerce platforms and driving the creation of millions of new jobs over the next five years.

Through the merger of both businesses, more than 90% of merchants are MSMEs. These MSMEs will receive support through various programs from TikTok, Tokopedia, and the GoTo Group, including:

Promotion of Indonesian products on Tokopedia and TikTok platforms;

MSME digitization - encouraging capacity and competency enhancement of Indonesian MSMEs through comprehensive programs that promote skill development and resource access from upstream (production phase) to downstream (sales phase);

Marketing, branding, and sustainable business practices support for traders;

Support for local entrepreneurs to promote their products in international markets;

Establishment of digital talent development centers in various locations in Indonesia; and

Ensuring fair competition in local markets.

The transaction is expected to be completed in the first quarter of 2024. This agreement aligns with the GoTo Group's efforts to strengthen its financial position and the company's strategy to expand market coverage (total addressable market).

To ensure the sustainability of PT Tokopedia's initiatives in driving national digital economic development, a committee will be formed to facilitate the transition and integration, chaired by Patrick Walujo, with support from representatives of PT Tokopedia and TikTok.

Goldman Sachs acted as the financial advisor for the GoTo Group in this transaction.

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