Studying Abroad More Expensive for Indonesians as Rupiah Weakens
Indonesia's heavily depreciated rupiah makes it more difficult for Indonesians to study abroad or to send their children to universities abroad without having the financial aid in the form of a scholarship. For those that are thinking of making such a decision, they need to take into account the performance of the Indonesian rupiah as well as the inflation outlook in the country of destination. So far in 2015, the Indonesian rupiah has depreciated 18 percent against the US dollar, 9 percent against the euro, 14 percent against China's yuan, and 2.4 percent against the Australian dollar.
Like basically all other world currencies, Indonesia's rupiah has been depreciating against the US dollar ahead of looming further monetary tightening in the world's largest economy (higher US interest rates). However, the rupiah has also weakened against most other currencies as Indonesia is regarded particularly vulnerable to capital outflows in times of global shocks (such as further monetary tightening in the USA or China's hard landing and subsequent yuan depreciation) due to several internal factors such as the wide current account deficit, slow government spending and expected further slowing economic growth this year.
The rupiah is expected to be plagued by depreciating pressures until the Federal Reserve hikes its key Fed Fund Rate. Considering that the latest US employment data were weak, this hike may be postponed until after March 2016. However, on a positive note, Indonesia's economic growth is expected to rebound in 2016 from the six-year low this year.
To see the performance of the rupiah against a selection of other currencies, visit our Exchange Rates page
For Indonesians, the most popular places to pursue higher education are the United States, Australia, Singapore, the Netherlands, England, China, Japan, and Germany.
A basic rule-of-thumb that can be used to calculate the increase in tuition fees in those countries is by taking the average annual inflation rate (over the past five years) in the country of destination and multiply this by two. This rule-of-thumb would mean that tuition costs in the USA and the Netherlands will increase by nearly 4 percent in the foreseeable future. In Japan, which is still combating deflation, inflated tuition fees are lowest at about 1.9 percent. In Singapore and China the increase in tuition costs are estimated to be highest at over 6 percent.
Another factor that can be taken into account is weather-related. If you study in a country that has a winter then living costs will most likely become higher compared to the tropics as spending on electricity, gas and a new wardrobe increases.
Obviously, the length of the program is crucial to calculate all costs related to studying abroad. Whereas in the Netherlands or Australia it takes at least three years to (successfully) complete a bachelor's degree, in the USA it would take at least four years.
Inflation in Popular Study Destinations of Indonesians:
| 2010 | 2011 | 2012 | 2013 | 2014 | Average | |
| USA | 1.6% | 3.0% | 1.7% | 1.5% | 1.6% | 1.7% |
| China | 3.3% | 5.4% | 2.6% | 2.6% | 2.1% | 3.2% |
| Australia | 2.9% | 3.3% | 1.7% | 2.5% | 2.5% | 2.6% |
| Netherlands | 1.3% | 2.3% | 2.5% | 2.5% | 1.0% | 1.9% |
| England | 3.3% | 4.5% | 2.8% | 2.6% | 1.5% | 2.9% |
| Germany | 1.1% | 2.1% | 2.0% | 1.5% | 0.9% | 1.5% |
| Singapore | 2.8% | 5.2% | 4.6% | 2.4% | 1.0% | 3.2% |
| Japan | -0.7% | -0.3% | -0.03% | 0.4% | 2.7% | 0.9% |
Source: Kontan