China-headquartered ByteDance Ltd’s TikTok has struck an agreement to invest in a unit of Indonesia’s GoTo Group and cooperate on an online shopping service, Bloomberg reported on Tuesday.

Tik Tok is said to have agreed broadly to work with GoTo’s Tokopedia across several areas rather than compete directly with the Indonesian platform, people familiar with the pact said. The pair aim to announce details of that tie-up as soon as next week, the report added.

While the two companies have reached an informal agreement, the final details of that alliance are “getting hammered out and could change before announcement”, the people reportedly said. The pact is also subject to regulatory approval and could still fall through.

An investment in Tokopedia will be a first of its kind for TikTok Shop, Bloomberg said. The rapidly growing arm of ByteDance’s short video service has made inroads into online shopping from the US to Europe.

Its expansion in Indonesia against Sea Ltd. and Tokopedia, however, came to a halt when Jakarta forced TikTok to split payments from shopping in the country.

According to the report, a tieup with a savvy local operator could provide a model for TikTok as it pursues expansion in other markets such as Malaysia, where the government has signalled a willingness to review the influence of overseas players like TikTok.

Bloomberg News reported last month that TikTok and GoTo were discussing a potential investment but another option was a joint venture. That could entail building a new e-commerce platform. Representatives for TikTok and GoTo declined to comment.

Last week, local media Antara reported that TikTok is in the process of obtaining an e-commerce permit in Indonesia.

TikTok is free to collaborate with any e-commerce platforms as long as it abides by applicable regulations and procedures in Indonesia, Deputy Minister of Trade Jerry Sambuaga reportedly said.

Sambuaga noted that the government has frozen the operation of TikTok Shop, an online shopping feature offered by TikTok, as it violated its permit for operating merely as a social media platform.

“Earlier, TikTok did not conform to rules and did not have a permit (as an e-commerce platform). Once it has the permit, it can collaborate with anyone as long as it abides by applicable regulations and procedures,” he was quoted as saying.

Indonesia is the first and largest market for TikTok Shop. It started the service in Indonesia in 2021 and its instant success with younger, video-first shoppers encouraged it to expand into other markets including the US.

TikTok has been attempting to engage government officials and other social media companies to figure out a way to restart its e-commerce operations in the country. Indonesian minister Teten Masduki said TikTok has spoken with five companies including Tokopedia, PT and Blibli about possible partnerships, the report added.

Following the Indonesian restrictions, nearby Malaysia said it is studying the possibility of regulating TikTok and its e-commerce operations.

Tiktok, a popular social media platform, is already facing possible bans and scrutiny in the likes of the US, Europe and India on national security concerns.

TikTok announced in June it would invest billions of dollars in Southeast Asia over the next few years.

TikTok CEO Shou Zi Chew said content on its platform was becoming more diversified as it adds more users and expands beyond advertising into e-commerce, allowing consumers to purchase goods through links on the app during live-streaming.

Chew then said TikTok has 8,000 employees in Southeast Asia, and 2 million small vendors selling their wares on its platform in Indonesia, the region’s biggest economy.

Southeast Asia, a region with a collective population of 630 million — half of them under 30 — is one of TikTok’s biggest markets in terms of user numbers.

ByteDance’s TikTok obtaining Indonesia e-commerce permit- report