It's a matter of context, and of word order.
Dia could be he or she according to the context. Used as a subject pronoun.
Dia could also be used as a possessive pronoun, and means his or her, but the word order would be different.
For instance: Dia suka (pronoun + verb), means He likes or she likes, depending on the context (so both are accepted here on Duo's exercises, as there's no context).
And Kucing dia (noun + pronoun), means his cat, or her cat.
Used as a possessive pronoun, after a noun, and as a subject pronoun, when it's before a verb.
It's ambiguous but the context and the word order indicates us if it's his/her or she/he.