TikTok on Monday committed to invest $1.5 billion in Indonesian firm GoTo’s e-commerce unit Tokopedia to drive long-term growth for the 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 75.01 percent stake.

The shopping features within the TikTok app in Indonesia will be operated and maintained by the enlarged entity. The arrangement will allow both TikTok and GoTo to serve Indonesian consumers and MSMEs more comprehensively, the companies said in a statement.

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.

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“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,” said the Indonesian firm.

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 December 12, coinciding with Indonesia’s National Online Shopping Day (Harbolnas).

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

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“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,” they said.