Henry Mulyana, who ran the Soldatenkaffee in the West Java provincial capital of Bandung, met with local authorities today, and tourism chief Herry M. Djauhari suggested that Mulyana change the name and theme of the cafe.
City officials had earlier expressed concerns about the cafe's motives and worried it might incite hate and racism in the town, which is a tourist destination.
Mulyana said he is considering his options, but will not reopen the Soldatenkaffee cafe.
Mulyana insisted that he was not pro-Nazi but that he was instead using the decorations to attract customers. It is the second time this month that Nazi images have provoked controversy in Southeast Asia.
Last week, Thailand's premier university apologised for displaying a billboard that showed Adolf Hitler alongside Superman and other superheroes, saying it was painted by ignorant students who didn't realise Hitler's image would offend anyone.
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