Turning Demographic Transition into a National Advantage

In modern economic terms, what Indonesia needs is not simply a larger population, but more productive, healthy, creative, and technologically adaptive human capital. The latest results from the 2025 Inter-Census Population Survey (SUPAS) conducted by BPS show that Indonesia’s Total Fertility Rate (TFR) has fallen to 2.13 children per woman. This figure signals a major social, economic, and cultural shift underway in Indonesia. The rate of 2.13 means that, on average, an Indonesian woman will give birth to around two children during her reproductive years. While the difference from the 2.18 recorded in the 2020 Long Form Census appears small, in demographic science, such decimal changes can signal the future direction of a nation. More significantly, this figure brings Indonesia closer to the replacement level fertility—the birth rate required for a generation to replace itself without causing the population to naturally increase or decrease. In many countries, this level is around 2.1 children per woman. Indonesia is thus entering a new chapter in its population journey.

For decades, Indonesia’s population issue was synonymous with fears of a population explosion. The Family Planning programme, initiated in the 1970s, became one of the most successful public policies in the nation’s development history. Data shows Indonesia’s TFR fell from around 5.6 children per woman in the early 1970s to 2.41 in the 2010 Population Census, then to 2.18 in the 2020 Long Form Census, and now to 2.13 based on SUPAS 2025. This decline indicates that Indonesia is undergoing what demographers call a fertility transition, a shift from high to low birth patterns. This phenomenon commonly occurs as education levels rise, urbanisation expands, female workforce participation increases, and the cost of raising children grows. Nobel laureate in Economics Gary Becker explained that modern families tend to make a quality-quantity trade-off. As income and education rise, families focus less on the number of children and more on the quality of investment per child through education, health, and skills development. This phenomenon is increasingly evident in Indonesia today. In many large cities, having two children, or even one, is becoming a rational choice—not because society dislikes large families, but because the costs of education, housing, health, and other necessities continue to rise. Parents want to ensure each child gets the best opportunity to thrive.

Approaching the replacement level can be viewed as good news. More controlled population growth provides the government with room to improve the quality of public services, expand access to education, and enhance public health. Nobel laureate economist Amartya Sen emphasised that development is essentially the expansion of human capabilities. In this context, development success is not measured by how many children are born, but by how much opportunity each child has to live healthily, attend school, and reach their full potential. From this perspective, declining fertility can be a golden opportunity. When families have fewer children to care for, household resources can be more concentrated on improving human resource quality. This was one of the foundations that enabled East Asian countries like South Korea, Singapore, and Taiwan to achieve developmental leaps decades ago. However, the story does not end there.

Indonesia is currently still in a demographic bonus phase, a condition where the proportion of the productive-age population is larger than the non-productive-age population. The demographic bonus is often called a window of opportunity because it can drive higher economic growth. But this window will not remain open forever. Research by renowned Harvard demographer David Bloom shows that the benefits of the demographic bonus can only be realised if a country provides quality education, productive employment, and adequate health systems. Without these, the demographic bonus can turn into a social and economic burden. The decline in TFR towards the replacement level is a reminder that Indonesia must optimally utilise the demographic bonus momentum before the population structure begins to age. Countries that are late in preparing for the demographic transition often face serious challenges, including labour shortages, increased social security burdens, and slowing economic growth. Japan is the most frequently cited example, with a TFR of around 1.2 and a continuously shrinking population. South Korea even recorded a TFR below 1.0, one of the lowest in the world. Indonesia is still quite far from that situation, but international experience shows that fertility decline often occurs faster than anticipated.

Approaching the replacement level means Indonesia must start considering an issue that has received little attention: population ageing. As birth rates fall and life expectancy rises, the proportion of elderly citizens will continue to grow. The consequences involve not only health services but also social protection.