Chinese entertainment platform Tik Tok will invest $1.5 billion in Indonesia’s largest digital ecosystem PT GoTo Gojek Tokopedia Tbk (GoTo Group).

GoTo said in a statement on Monday that the duo have undertaken a beneficial strategic partnership to drive long term growth for Indonesia’s micro, small and medium enterprises (MSME) sector and the country’s digital economy as a whole.

As part of the agreement, Tokopedia and TikTok Shop Indonesia’s businesses will be combined under the existing PT Tokopedia entity in which TikTok will take a controlling stake.

The shopping features within the TikTok app in Indonesia will be operated and maintained by the enlarged entity.

According to the statement, TikTok has committed to invest over $1.5 billion in the enlarged entity over time, to provide future funding required by the business, without additional dilution to GoTo.

The arrangement will allow both TikTok and GoTo to each serve Indonesian consumers and MSMEs more comprehensively.

GoTo will benefit from the growth of the enlarged entity and will remain an ecosystem partner to Tokopedia, through its digital financial services via GoTo Financial and on-demand services via Gojek.

GoTo will also receive an ongoing revenue stream from Tokopedia commensurate with its scale and growth.

The strategic partnership will commence with a pilot period carried out in close consultation with and supervision by the relevant regulators.

The first campaign will be the Beli Lokal initiative which will launch on Dec 12, coinciding with Indonesia’s National Online Shopping Day (Harbolnas) – a government program designed to grow Indonesia’s digital economy by supporting local MSMEs.

The campaign, which will be available on TikTok as well as Tokopedia, will promote a broad range of merchants, with a strong focus on Indonesian products.

The Beli Lokal offering on TikTok will enable its community to engage and shop with the local merchants they know and love.

Going forward, TikTok, Tokopedia and GoTo will transform Indonesia’s e-commerce sector, creating millions of new job opportunities over the next five years.

More than 90 percent of the combined business’s merchants are MSMEs and the companies will undertake a series of joint initiatives to support them, including the promotion of Indonesian products on Tokopedia and TikTok’s platforms.

Besides, the duo will be building the capacity of Indonesia’s MSMEs through a holistic program focusing on skills development and providing resources relating to upstream production and selling; supporting merchants to sell products online by providing support in areas such as marketing, branding, and sustainable business practices; helping local brands to promote their products in international markets.

They will also be establishing technology centers across Indonesia to develop local tech talent and ensuring a marketplace that fosters fair competition.

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.

To ensure the PT Tokopedia business continues to operate in the best interests of Indonesia’s digital economy, a committee under the enlarged entity will be established to facilitate transition and integration, chaired by GoTo Group Chief Executive Officer Patrick Walujo, with support from members of both businesses.

GoTo is a firm aims to offer technology infrastructure and solutions that help everyone to access and thrive in the digital economy.

The GoTo ecosystem consists of on-demand services (mobility, food delivery, and logistics), e-commerce (third party marketplaces + official stores, instant commerce, interactive commerce, and rural commerce), financial technology (payments, financial services, and technology solutions for merchants) and logistics (fulfillment and delivery) through the Gojek, Tokopedia, GoTo Financial and GoTo Logistics platforms.

TikTok is the leading destination for short-form mobile video. Its mission is to inspire creativity and bring joy.

TikTok’s global headquarters are in Los Angeles and Singapore, and its offices include New York, London, Dublin, Paris, Berlin, Dubai, Jakarta, Seoul, and Tokyo.

TikTok mulls investing in Indonesia’s GoTo to revive online shop – report