By Ananda Teresia
JAKARTA (Reuters) – China’s TikTok and Indonesia’s tech group GoTo will carry out a trial e-commerce partnership for several months as regulators assess its impact on small merchants in the Southeast Asian country, Indonesia’s trade minister said on Tuesday.
TikTok said on Monday it agreed to spend $840 million to buy most of GoTo’s e-commerce unit Tokopedia after Indonesia banned online shopping on social media platforms in September, citing the need to protect small businesses and users’ data.
The two firms said their partnership will commence on Tuesday with a pilot period carried out in close consultation with and supervision by relevant regulators.
“We will give a three to four months period for trial because technology is not an easy thing. Maybe efforts to perfect it would be needed,” Indonesia’s Trade Minister Zulkifli Hasan told an event kicking off the partnership at a national online shopping festival called Beli Local Initiative.
“The main purpose (of the trial) is to help sellers… so they… can run their business again (after suspension of TikTok Shop),” he said.
Zulkifli said the ministry will audit and assess the partnership after the trial period, adding the regulation is aimed at protecting small businesses which employ 90% of the country’s workforce.
TikTok has been looking to translate its 125 million user base in Indonesia into a significant source of e-commerce revenue, as the country’s e-commerce gross merchandise value is forecast to more than double to $160 billion by 2030.
Analysts said the deal with Tokopedia, Indonesia’s biggest e-commerce platform with around 67 million users, would help TikTok become a stronger rival to established competitors such as Shopee owned by Singapore-headquartered Sea and Lazada owned by Chinese e-commerce giant Alibaba.
Jefferies analysts said in a note that the pilot programme was expected to have the same user experience as before with TikTok Shop, noting its fast growth pace in Indonesia.
They said TikTok Shop’s total online transaction value tripled to $6 billion this year before the ban, a milestone that took 10 years for Tokopedia to reach.
(Reporting by Ananda Teresia; Writing by Miyoung Kim; Editing by Michael Perry)
