Harley Davidson closes down in Indonesia

Collapsed:  PT Mabua Harley-Davidson, the sole dealer of Harley-Davidson motorcycles in Indonesia, has decided not to renew its agency license following the weakening of the rupiah and soaring import tariffs. (Tempo)

A weakening currency and unsupportive government regulations have forced PT Mabua Harley-Davidson, the sole dealer of Harley-Davidson motorcycles in Indonesia, to let its agency license expire.

The company says that since 2013, it has been burdened by the constant weakening of the rupiah exchange rate, which has dropped by 40 percent, and tax increases imposed on them by the government."We deeply regret to announce that PT Mabua Harley-Davidson and PT Mabua Motor Indonesia will not extend their agency licenses starting from Dec. 31, 2015," PT Mabua Harley-Davidson president director Djonnie Rahmat said in a statement on Friday.

For the time being, he said, the dealer would still provide service support and spare parts for Harley Davidson customers in Indonesia for the next several months.Djonnie said unsupportive tax regulations the government had issued over the last three years had burdened the company.

In 2013, he said, the finance minister’s regulation (Permenkeu) No.175/2013 increased vehicle component import tariffs to 7.5 percent from 2.5 percent. In 2014, government regulation (PP) No.22/2014 increased the luxury goods tax from 75 percent to 125 percent. In 2015, Permenkeu No.90/2015 imposed a 5 percent tax on big bikes with a capacity of over 500 cc while Permenkeu No.132/2015 increased the import tariff on big bikes from 30 percent to 40 percent.

“The total amount of taxes for importing a big bike has increased by up to 300 percent. This has not yet included the costs involved in making license plates and certificates. Those factors have caused the market to lose interest,” said Djonnie.As stated on its official website, PT Mabua Harley-Davidson has nine outlets, comprising five stores in Jakarta and four others in Denpasar, Medan, Semarang and Surabaya.Founded in June 13, 1997, the dealer is a part of PT Mugi Rekso Abadi (MRA Group), a holding company of lifestyle, media, food and beverages, hotel and automotive companies. The group is focused on high class consumer segments, holding licenses for magazines like FHM, Harper's Bazaar and Esquire.

It also owns Hard Rock Cafe, Hard Rock FM, Bulgari Hotel Bali and holds dealer licenses for luxurious products, namely Ferrari and Bang and Olufsen.The company’s founders include Soetikno Soedarjo, Adiguna Sutowo, Hutomo Mandala Putra and Onky Soemarno. Soetikno is the son of the late Soedarjo, the owner of the now defunct newspaper Sinar Harapan. The Soedarjo family also owned PT Jaya Agra Wattie Tbk., a rubber and oil palm company.

Adiguna Sutowo is the son of the first president director of state-owned oil and gas firm Pertamina, Ibnu Sutowo.

The Sutowo family is famous for owning Hotel Sultan. Hutomo Mandala Putra, or Tommy Soeharto, is the youngest son of the late president Soeharto, while Onky Soemarno is the older brother of State-Owned Enterprises Minister Rini Soemarno. (ebf)