In order to revive its online retail operation in Indonesia, social networking app TikTok has partnered with GoTo, a major player in the country's technology sector.

The company, controlled by China's Bytedance, intends to make a long-term investment of more than $1.5 billion (£1.2 billion) in Tokopedia, the largest e-commerce platform in Indonesia.

(Photo : by NHAC NGUYEN/AFP via Getty Images)
In order to revive its online retail operation in Indonesia, social networking app TikTok has partnered with GoTo, a major player in the country's technology sector.

The largest economy in Southeast Asia, Indonesia, required TikTok Shop to close in October in order to comply with new regulations. In Indonesia, TikTok has 125 million users.

As per the agreement, TikTok would acquire slightly more than 75% of Tokopedia and merge its Indonesian operations with TikTok Shop.

GoTo and TikTok's Collaborative Initiative to Empower SMEs in Indonesia Amidst Regulatory Challenges

Additionally, GoTo and TikTok declared that they will help small and medium-sized enterprises in Indonesia create manufacturing and sales plans, as well as promote Indonesian products on their platforms.

In order to safeguard smaller retailers and user information, the Indonesian government outlawed online purchasing on social networking sites. This led to the current agreement.

Before the ban went into effect in October, TikTok's largest online retail market consisted of the more than 270 million active social media users who make up Indonesia.

Following his remarks in September, Indonesian President Joko Widodo announced the ban: "We need to be careful with e-commerce. It can be very good if there are regulations but can turn bad if there aren't any regulations."

In Indonesia, e-commerce has grown dramatically in the last several years. According to the central bank of Indonesia, e-commerce sales would have grown by more than six times between 2018 and 2019 to reach 689 trillion Indonesian rupiah ($44 billion; £35 billion).

Since its debut two years ago, TikTok Shop has increased its market share in Indonesia's online retail business, which is dominated by sites like Tokopedia, Shopee, and Lazada.

TikTok has been under investigation in the US, EU, and UK because of security concerns, and the UK Parliament has banned the app from its network. The laws in Indonesia were just another blow to the service.

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TikTok's Ambitious Investment Plans and E-Commerce Expansion in Southeast Asia

In June, TikTok's CEO, Shou Zi Chew, announced that the company intends to make billion-dollar investments in Southeast Asia in the following years.

During an Indonesian event, Chew stated that TikTok's content is getting more varied as the platform gains more users and ventures into e-commerce. ByteDance is based in China and owns TikTok.

In terms of total users, TikTok's largest market is Southeast Asia. However, the platform has not yet been able to turn its massive user base into a significant source of e-commerce income due to intense rivalry from larger rivals like Sea's Shopee, Alibaba's Lazada, and GoTo's Tokopedia.

Through links on the app, users may purchase products through TikTok's e-commerce platform while livestreaming.

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