Amid Economic Difficulties, Indonesian President Urges Citizens to Live Frugally

Jakarta, CNBC Indonesia - President Prabowo Subianto has asked members of the Red and White Cabinet to review austerity policies. From fuel consumption to work from home (WFH), as a precaution if the conflict in the Middle East drags on. This request was made during the Full Cabinet Meeting at the State Palace on Friday (13/3/2026).

This step repeats history that was once carried out by the second President of Indonesia, Soeharto, in 1986. At that time, the national economy faced pressure due to the fall in world oil prices. That pressure was reflected in the 1986/1987 RAPBN which dropped by around 7%. Indonesia, which previously enjoyed a surge in revenue from oil exports, was suddenly hit because global economic growth slowed and commodity prices plummeted.

“Growth slowed, trade and investment fell sharply, debt increased and the government faced major fiscal challenges due to falling oil revenues,” stated historians Jan Luiten van Zanden and Daan Marks in The Indonesian Economy 1800-2010 (2012).

In facing that situation, Soeharto asked all levels of society—civil officials, military, and civilians—to live frugally and simply.

“I have issued several provisions that apply to high-ranking officials, both civil and military. However, those simple living patterns are not only aimed at government officials. The wider community, especially the affluent, also have a moral and ethical obligation to internalise and embody that simple lifestyle,” Soeharto stated, quoted from Merdeka (10 February 1986).

According to Soeharto, living frugally does not mean living in poverty or being made destitute, but living simply in a reasonable manner. A luxurious lifestyle amid economic difficulties has the potential to trigger social jealousy and hinder economic recovery.

In addition to urging the public to live frugally, Soeharto also implemented efficiencies within the government. In a report from Suara Karya (10 January 1986), one example was the simplification of previously convoluted investment procedures, as well as tightening priorities to close leaks and waste.

However, calls for frugal living were not always on target. Philosopher Franz Magnis-Suseno told Sinar Harapan (18 January 1986) that the president’s appeal was not heeded by officials and the wealthy who enjoyed luxurious lifestyles. Seminars and events in luxury hotels were still rampant, contrary to the government’s message.

In the end, the deregulation and economic reforms carried out by Soeharto proved effective in withstanding the economic shock from the fall in oil prices. Indonesia’s economic growth began to stabilise towards the end of the 1980s, averaging 5.5% in the 1986-1988 period, while dependence on oil and gas revenues gradually decreased as exports and investment increased.

Now, President Prabowo is pushing for similar steps, given that the Middle East conflict has the potential to affect energy prices and the global economic situation.