The social media app TikTok has reached a joint venture agreement with the Indonesian tech giant GoTo to revive its online shopping business in the country.
The company, owned by China’s Bytedance, plans to invest over $1.5 billion (£1.2 billion) in the long term in Indonesia’s largest e-commerce platform, Tokopedia.
In October, the TikTok Shop was closed in Indonesia to comply with new regulations in Southeast Asia’s largest economy.
TikTok has approximately 125 million users in Indonesia.
Under the agreement, TikTok will acquire just over 75% of Tokopedia and integrate TikTok Shop’s business in Indonesia with it.
“The strategic partnership will begin with a trial period conducted in close consultation with and supervision by the relevant regulators,” said the two companies in a joint statement.
GoTo and TikTok also stated that they will promote Indonesian products on their platforms and assist small and medium-sized businesses in the country in developing their production and sales strategies.
This deal comes after the Indonesian government banned online shopping on social media platforms to protect smaller merchants and user data.
Many of Indonesia’s over 270 million people are active social media users, forming TikTok’s largest online retail market before the ban took effect in October.
The announcement of the ban came after Indonesian President Joko Widodo said in September: “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.”
Online retailing in Indonesia has surged in recent years. The value of e-commerce sales is expected to increase more than sixfold between 2018 and next year, reaching 689 trillion Indonesian rupiahs ($44 billion; £35 billion), according to the country’s central bank.
TikTok Shop had been increasing its market share since its launch two years ago into Indonesia’s online shopping market, dominated by platforms such as Tokopedia, Shopee, and Lazada.
Regulations in Indonesia were another setback for TikTok, which has faced scrutiny in the US, European Union, and the UK, where Parliament has banned the app from its network over security concerns.
