Chinese short-video platform TikTok on December 11 announced an investment of 1.5 billion USD in GoTo technology firm of Indonesia following an agreement to restart its shopping app in the Southeast Asian country.

TikTok to invest 1.5 billion USD in Indonesia's GoTo group, illustration photo/ Source: freepik.com

Under the deal, the social media giant will combine its Indonesian TikTok Shop business with GoTo’s e-commerce unit Tokopedia. TikTok gets a 75 per cent stake in the combination, which will run the shopping features of TikTok’s social media app in Indonesia.

A statement of GoTo said that TikTok has committed to invest over 1.5 billion USD in the enlarged entity over time, to provide future funding required by the business, without additional dilution to GoTo. Going forward, TikTok, Tokopedia and GoTo will transform Indonesia’s e-commerce sector, creating millions of new job opportunities over the next five years.

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, it said.

In October, TikTok was forced to shut down its e-commerce service in Indonesia when authorities banned online shopping on social media platforms, a move intended to protect small merchants.

Online commerce platforms such as Tokopedia, Shopee and Lazada dominate the Indonesian e-commerce market. However, TikTok Shop has gained significant market share since its presence in Indonesia in 2021. With 125 million users, Indonesia is TikTok's second-largest market in the world after the US.