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ByteDance-owned social media platform TikTok is to invest some $1.5 billion (£1.2bn) in Indonesian e-commerce platform Tokopedia in a move to restart its online sales business in the country following a ban imposed by the country’s government in September.
TikTok suspended operations of its e-commerce platform TikTok Shop in Indonesia in early October to comply with the new rules in South East Asia’s largest economy.
The firm is to acquire a controlling 75.01 percent share in Tokopedia, a unit of GoTo, the Jakarta-listed technology group told investors on Monday.
TikTok promised to invest $1.5bn in Tokopedia in the long term as part of the deal.
The transaction will see Tokopedia acquire TikTok Shop’s Indonesia business for $340m in an expansion of its e-commerce platform.
“The strategic partnership will commence with a pilot period carried out in close consultation with and supervision by the relevant regulators,” TikTok and GoTo said in a statement.
Shares in GoTo fell more than 12 percent on Monday following the news.
Indonesia banned social media-based e-commerce in September, dealing a serious blow to TikTok’s ambitions in one of its largest and most promising markets, where it has about 125 million users.
Malaysia and Vietnam have considered imposing similar bans.
The September regulations require companies to separate e-ecommerce transactions from social media content.
Indonesian trade minister Zulkifli Hasan said in September the rules were aimed at ensuring “fair and just” competition and protecting user data and small and medium-sized bricks-and-mortar vendors.
Analysts said TikTok’s controlling share in Tokopedia should allow it to lead the business without interference from GoTo.
TikTok and GoTo said they would promote Indonesian goods on the platform and help smaller businesses develop production and sales strategies.
Tokopedia competes with other quickly expanding e-commerce platforms including Shopee and Lazada.
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