And so, two of the country’s largest tech startup companies Gojek and Tokopedia on Monday, May 17, 2021 announced their long-awaited merger to become a new entity called GoTo Group.
The announcement ended rumors and speculations that have circulated for months. Almost all sides hailed the merger, which makes the new business entity valued at around US$18 billion, becoming one of the big ones in Southeast Asia.
There is expectation that the merger of the two tech companies would, in a way, help develop digital economic ecosystem in the country. Some also expected the merger would help ease the adoption of digital technology by small and medium enterprises (SMEs) and eventually help the SMEs upgraded to higher level in term of quality and capability.
Nevertheless, doubts and questions rose after the merger. What does the merger mean for economic development in Indonesia? Will it help nurture small businesses’ growth? Or is it just another corporate action that will simply benefit the investors?
While the merger itself is good for Indonesian economy in general, as it would drive more economic activities in the long run, whether or not it would effectively help grow small and medium enterprises remains to be seen.
Can the merger help nurture small business players to grow? Can it help Indonesia realize Industry 4.0 target? Will it really accelerate Indonesia’s digital economic ecosystem?
We hope decision makers at GoTo Group will give answers to those questions.
Gojek was first known as a ride-hailing platform, the Indonesian version of Uber, before it later developed into a super app offering various features, including delivery, lifestyle and payment services. It earned unicorn status in 2017 around seven years after its establishment.
Tokopedia, meanwhile, was the country’s largest digital marketplace which earned unicorn status almost the same time with Gojek.
The merger of Gojek and Tokopedia means the new entity will have a total combined number of business partners of at least 11 million merchants and around 2 million partner drivers, according to data per December 2020.
In a statement after the merger, GoTo Group president Patrick Cao stated the merger would make the new entity have a varied, stable and sustainable business model. “In the near future, GoTo Group will contribute more than 2 percent to Indonesia’s GDP and will create more jobs and income opportunities along with our business growth and national economic recovery,” he said.
With its network of merchants and partner drivers, GoTo will create the largest digital platform for consumers in Indonesia, serving almost all household needs, from e-commerce, good delivery, food delivery, transportation to payment.
Patrick said GoTo will combine transactions in Gojek platform that has high volume and frequency with Tokopedia that has medium frequency but high-value transactions.
GoTo will work on high growth potential of the Indonesian economy, which is the largest in Southeast Asia and has fast-growing middle class with tech-savvy young population.
“We are very enthusiastic to start a new chapter of our business plan and we will keep doing innovation to drive a more inclusive growth in all sectors connected to our technology,” he said.
Separately, Gojek CEO and co-founder Kevin Aluwi emphasized the new entity has a list of powerful investors that are strong enough to support its performance in the future. The investors in the list, among others, are Alibaba Group, Astra International, BlackRock, Capital Group, DST, Facebook, Google, JD.com, KKR, Northstar, Pacific Century Group, PayPal, Provident, Sequoia Capital, SoftBank Vision Fund 1, Telkomsel, Temasek, Tencent, Visa dan Warburg Pincus.
Meanwhile, Tokopedia co-founder and CEO, William Tanuwijaya, said he hopes the new entity could bring large-scale social impacts, including providing equal opportunity for local SMEs to develop their business and at the same time giving users equal access to goods and services.
Top GoTo leaders have made statement shortly after the merger and it may help answer public curiosity about the future of digital business ecosystem in the country.
Given the enormous financial backing, wide variety of services as well as huge number of business partners, the new entity GoTo will very likely grow bigger and involve larger number of business players and consumers.
Positive growth means profit for investors.
But, whether or not it would nurture SMEs to grow and expand or, instead, choke the small businesses to death will remain to be seen.
As we all have known one predominant problem relating to e-commerce in Indonesia is the fact that most of items sold on the digital marketplace platform are imported goods. The huge number of imported goods sold online is worrying as they could paralyze local producers particularly the small-scaled ones.
President Joko Widodo has repeatedly expressed his concern over the massive import of foreign products and calling for people to love “Made in Indonesia” products.
Thus, the public will assess whether the merger of Gojek and Tokopedia will be able to really benefit local producers and drive local economy or, instead, will boost imports of foreign products simply for the benefit of the investors.
It takes time to know the answer.
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