Some novels used what-if as its speculative root. Philip K. Dick’s The Man in the High Castle tries to imagine a victorious Axis and the reality of living in a Nazi and Japan-occupied America. And more relevant to the subject of this post, Faisal Tehrani’s 1515 explores the question, what if Malacca had defeated the Portuguese invasion in 1511.

The novel 1515 (first published in 2003) can be a little bit confusing because there are multiple storylines of the same characters that run parallel to each other. It is almost like employing a parallel universe trick as a device, but it is not. If I could attempt to describe the novel succinctly (and if I understood it properly), 1515 is a story of two what-ifs on top of actual history arising from the main character’s bouts of amnesia.

One case of what-if has Malacca fantastically ending up conquering Portugal. That brings my mind to a game where that is possible: Europa Universalis IV. But that possibility requires an expert with deep knowledge of the game’s mechanics as defeating Portugal as Malacca is not easy. I suspect only playing a Native America tribe or any southern African nation is harder than playing a Southeast Asia civilization in that game.

It is a game but Europa Universalis IV tries to simulate history as closely as possible within its own rational logic. In contrast, 1515 requires a heavy dose of magical realism to enable Malacca win the 1511 battles and then to invade Portugal successfully on the other side of the planet. In Faisal Tehrani’s novel, Malacca wins because its military leaders could fly with krises in hand and with Koranic verses incanted as shield against Portuguese bullets.

That reminds me of the feeling I had while reading Salman Rushdie’s Victory City. But maybe that comparison is inappropriate because Rushdie’s magic has a more comprehensively big role in its world: a great city gets made instantly out of the ground with deities interacting with humans directly. That kind of magic. This is unlike 1515 where its magic is more down to earth and less all-encompassing.

Maybe, in terms of the casualness of magic, the magic in 1515 is more akin to Ang Lee’s Crouching Tiger, Hidden Dragon. It is the flying kung fu type of superhuman feats, with a tiny dose of One Hundred Years of Solitude.

I use the term magic here but maybe I mean something else altogether. But magic is never really the point of the novel and that is something other people have written about earlier.

But anarchy is always a transient state. By the mid-2010s, it is clear many had placed too much hope on what is a tool that could either improve or hurt society. And that tool increasingly has been used to drag society towards worse equilibria.

For some time now, the internet is a shitty place to be in. We cannot live without it but we are miserable with it. More than anything, the internet collectively has inverted its promise. The cyberspace is now a surveillance tool masquerading as a crack designed to advertize and sell everything.

Enshittification by Cory Doctorow is a 2025 book that attempts to explain how we got here. The term enshittification as Doctorow defines it is a process of internet platform decay from the perspective of its users.

The concept itself could be used to describe other services off the internet although these days the internet has proliferated everywhere that it is not helpful to make the online/offline distinction anymore, as much as it is unhelpful to call any company a tech company. If Grab a tech company, or just a transport company? Is Stashaway a tech company, or just a financial service provider company? Is Amazon an internet and tech company, or just a retail platform?

The enshittification process

Enshittification is a 3-stage process.

It starts with platform operators (Twitter/X, Facebook, Amazon or Google etc), being good to everybody and that means generating massive consumer surplus to individual users. This is stage 1 (the so-called be good to users stage).

Once the number of users hits critical mass, stage 2 (the abuse users for businesses stage) begins with the platform treating individual users badly in order to attract business users. The bad treatment generally include targeted and intrusive advertisements utilizing personal and private data tracked by within the platform and elsewhere too. Here, the platform operators are draining consumer surplus and redirecting it to sellers. As a result, businesses flock to the platforms. Individual users feel and understand the abuse but most of them could not leave the platform because their social network is already entrenched on the platform. Only the determined would exit and seek social interactions via other means.

Stage 3 (the stage of abuse businesses for the platform) is when there is enough business users around with the platform becoming the essential marketplace where all the businesses’ customers are. To exit the platform is to lose a chuck of customers and revenue. Platform operators then proceed to treat businesses badly by draining producer surplus towards themselves. This is done via various platform fees and advertisement requirement (pay to be seen or we place your product on page 999 instead of page 1). At times, the platform itself competes with its business client by cloning the business and placing its products above the clients (similar to the cheatings that happened in various stock exchanges as told in Michael Lewis’s The Flash Boys). There are various details in the book showing that much of the advertisement is fraudulent (paying for ads that do not really exist or ads with no noticeable effects on earnings) but businesses could find no way to hold the platform accountable. And the fees are pure rentseeking and structured in a way that prevent businesses from selling elsewhere (and if businesses do sell outside, they are forced make it more expensive).

The end result is that everybody except the platform operators gets stuck in a shitty environment where most producer and consumer surpluses get channeled to the platforms.

For all the technological advancement we have seen in the past 2 or 3 decades, in the end, the whole internet gets boiled down to an age-old phenomenon: the middle men abusing their (dominant) position.

Generalizing an old competition problem

In many ways, enshittification appears to be the new term to describe an old problem reappearing in the digital world. It is an old-known problem in competition or anti-trust where the dominant player abuses his or her position to extract surpluses from consumers. It is what a monopolist/oligopolist does.

First, you dump into the market to kill off all competitors and once monopoly power is established, you engage in predatory pricing. In Malaysia, we have witnessed this with Grab that now charges exorbitant fares after all its effective competitors have been driven off the road due to aggressive discounts in the early days of the service.

When Doctorow offers a way out, the solutions he gives are more competition in the market along with more rigorous anti-trust actions by the state and greater labor power through unionization.

These are the typical suggestions against monopolistic power but of course, the difference between textbook solutions and the problems outlined by Doctorow is that the technological, political and regulatory challenges in the real world are many times more complex than what discussed in a competition university classes. Internet monopolists are more technologically competent than the regulators, which makes running anti-trust policy more difficult to execute when compared to more traditional sectors like aviation or steelmaking. Many times too, regulators do get captured by the monopolists.

An old condition in a new world: technofeudalism

All those platform fees are simply rent with another name.

The rise of rentseeking as a major source of revenue from internet giants causes Doctorow to digress and borrow Yanis Varoufakis’s concept of technofeudalism, explained in his 2023 book Technofeudalism.

It is a neologism describing a condition where an increasing portion of revenue gets derived from rent (revenue arising from just controlling some assets/resources) instead of profits (revenue arising from productive activities minus the cost of running those activites). Varoufakis insists this represents a new kind of economic condition more akin to feudalism where long ago, landlords exacted rents from the working peasants who largely had no other choice but to work as farmers on someone’s else land. The peasants had to pay rent in various form to the landlords, regardless of profitability/harvest. Varoufakis further insists that this is a post-capitalism age, as capitalism is less about rent and more about profits.

A major component of enshittification of the internet fits Varoufakis’s framework well. Varoufakis is of course famous for this:

He is also the former finance minister of Greece during the European debt crisis, the former economist for Valve, the owner of the gaming platform Steam and all around leftwing economist.

Gamers should recognize these technofeudal trends quickly, where instead of buying and owning the games, they have to pay for subscription to play. There are also microtransactions (the worst of it, pay-to-win), which I would take as a subset of this trend.

But internet platforms are not the only guilty parties. Subscription-based model is proliferating in other sectors. In Malaysia, Perodua is selling its electric vehicles but with the battery must be rented from the manufacturers. Battery-as-a-service, as it is called. And then there is the more established term: software-as-a-service. SaaS is the ultimate example of technofeudalism; SaaS is a fancy term for rent-based businesses.

Electronic locks and anti-circumvention law

Central to much of the rentier tech economy (tech is a very loose term here) is the cover provided by a defective but mainstream intellectual property law.

Instead of copyrighting a new way of doing things productively, companies are copyrighting electronic locks to various machines (computers, printers, cars, etc) that should be open in the first place. Since the lock is copyrighted, hacking or breaking the them amounts to a crime while using the machines itself in whatever way mostly is not.

For example, a printer should be able to use third-party ink cartridges but the printer manufacturing prevents so by introducing an electronic lock. The lock allows only the use of the manufacturer’s own cartridges. Without the electronic lock, any ink with the right configuration would work with the printer. In fact, the use of any ink for the printer you own is not illegal. But the lock itself is copyrighted and breaking the lock is a crime. The protection for the electronic locks is the anti-circumvention law.

Because of this, the manufacturer, upon selling a printer, gets to enjoy repeat business through future ink purchases. And this is a rent and the law protects rents while stifling innovation instead of protecting intellectual property in order to encourage innovation.

Printers and cartridges are simple and maybe petty examples. But if you start to think about your smartphones and the restrictions its manufacturers impose on the users (famously, this is Apple), then the whole thing starts to become a more serious matter.

And one of the solution Doctorow proposes to fight technofeudalism, and rentiers in general, is to reform intellectual property law so that it returns to its original purpose: encouraging innovation.

No longer a curiosity: first degree price discrimination

Finally, I want to visit a section of the book that discusses the ability to track customers through all the private and personal data collected and sold by internet platforms through apps and in general, cookies everywhere, along with the ability to change prices dynamically/instantaneously based on those data due to the availability of electronic price display connected to the clouds.

Imagine two persons visiting an aisle just minutes apart. The first person would see a set of price different from the second person, because the retailers now have the technology to know a specific person’s preference (the tracking is so precise that you would think the apps are listening to you) and change prices based on that preference. By the way, this is already happening online where changing any price is a technological a trivial thing.

This is first degree price discrimination, where the seller is able to discriminate individual customers so effectively and completely that all consumer surplus gets extracted.

The concept itself is not at all new but 20 years ago when I was an economics undergraduate, such a thing was taken a did-you-know theory but with impossible application in the real world. It was a curiosity much like how the demand curve could slope upward. Today, it is not just a possibility. First degree price discrimination is becoming common and in all likelihood, the standard way of pricing if no regulation is forthcoming.

Perhaps this is the point of overly long book review: rapid technological advancement in the past 10 or 20 years is forcing a rethink of what we know of the world.

But is the list truly accurate? Have you really been to Russia if all you have visited was Moscow? The United States but just New York? India but just New Delhi? Japan but just Tokyo? Indonesia but just Jakarta? Malaysia but just the Twin Towers? Singapore but just… (okay maybe not all countries).

Indonesia is a massive country and I can say I have been to more than just Jakarta. Yet most places I have been are on the island of Java. There are Batam, Bintan, Bali and others but these places could not tell you about Indonesia in totality. To truly understand a place, one has to read its literature, history, newspapers and maybe, travelogues.

It is in that spirit that I picked up Elizabeth Pisani’s Indonesia Etc. Having worked in the country and travelled extensively still all over the places, she reveals just how diverse the Indonesia is. So much so that one of several threads running through the 400-odd pages is the idea how Jakarta or Java could feel like a foreign country to many living outside of the Javanese sphere, especially in the outer islands such as the Lesser Sunda Islands or places like Maluku.

I suppose any capital of a sufficiently-sized country can feel like a foreign country to those who do not live in the city. It is true even for Kuala Lumpur with its modern cosmopolitan outlook that contrasts sharply with life on the peninsular East Coast or the interior of Sabah. But Indonesia is truly big that the definition of foreignness gets on to another level.

Just as Jakarta is foreign to the outer islands, so too the outer islands to Jakarta and more so to foreigners like me. Here is where place-description pulls me into the book. Indonesia is just such a place where place-writing can go on and on and you would never get bored out of it.

But the breadth of the travels comes at cost: the book can feel disjointed and sometimes, superficial. As I progressed farther along the book, I had the feeling that it was written for white tourists, or maybe for white expatriates. As a person with deep roots in the region, by the time I finished reading the book, I found myself dissatisfied. I found myself wanting more details on localized history, politics and society.

To explore this argument further, the depth is uneven as the author attempts to cover as many places as possible. But when there is depth, it is great. I love the details of Sumba’s gifting culture and Pisani’s own thoughts on how it is a form of social insurance and how it has evolved into more of a debt system than gifting. Or how the way people enjoy wayang kulit has changed as the puppet masters shifted from flickering candlelight or flame to much brighter electric bulbs.

The unevenness of the depth is no fault of the author however. Indonesia is a big country and to write with all the breadth and depth, it would probably take a lifetime or at the very least, thicker than the tomb that is David Van Reybrouck’s Revolusi (which is an excellent read). 

Revolusi inspects Indonesia’s turbulent independence period of the 1940s. Pasani’s meanwhile is a travelogue, a window to a specific period of history: a post-reformasi era during rapid decentralization and perhaps, a more optimistic country 10 or 15 years ago.

The data shows what is expected: Malaysia has indeed made further progress towards attaining high income status. In fact, Malaysia is now the closest it has been to being reclassified upward. In 2025, Malaysia’s GNI per capita (Atlas method) was recorded at 86.1% of high income threshold, which represents 2.5-percentage point improvement from 2024 (83.6%). The last peak was in 2019 when the ratio was 85.8%.

Judging by events this year so far, despite challenges, I am willing to bet that the upward momentum will continue in 2026. Still, there is some ways to go and the more interesting question is, when would Malaysia graduate up?

The easiest—but not the most realistic—way to estimate that is to assume a straight line trajectory: at 2.5-percentage point ratio increase per year means Malaysia would need about 6 years to get there, i.e. 2031.

Yet, that straight line assumption unlikely to hold. Recent strong growth rates, wide inflation differentials between Malaysia and the world as well as an ever strengthening ringgit would not be easy to replicate over that period.

So, it would likely take longer than 6 years. If I were to give a target, the earliest is by the middle of the next decade. The latest, 2040.

Racing against others

Malaysia is not the only one moving up in the world. Several economies have overtaken Malaysia over the past decade or so and this could be understood by looking at Malaysia’s ranking. In 2025, Malaysia was the 88th richest economy based on GNI per capita (Atlas) calculation. In 2010, Malaysia was the 80th richest (out of 200+ economies). Eight economies have shot past Malaysia within that timeframe.

None of these economies is more impressive than China. If Malaysia is on the cusp of reclassification into high income category, then China’s fate feels inevitable with its ratio at 99% in 2025. China surpassed Malaysia’s GNI per capita in 2020 during the the heights of Covid-19 pandemic and the Malaysian political crisis. Malaysia has been playing catch-up ever since and has recently got its act together.

More progress in the neighborhood

But in the latest data release, Malaysia and China are not the stars of the year.

The stars are the Philippines and Vietnam. In 2025, both for the first time have been reclassified upward from lower-middle income to upper-middle income.

With the graduation of the two, that means there are only Cambodia, East Timor, Laos and Myanmar left in the lower-middle income group. Of these four, Cambodia is the next candidate for graduation. Myanmar, of course, is at war with itself.

That said, Indonesia could lose its status as an upper-middle income economy if the trouble there persists. The steep fall of the rupiah is something to watch out. Even so, the country’s 2025 ratio increased, which shows a kind of resilience the financial markets tend to ignore.

The crazy actually rich Asians

On the other side, Singapore and Brunei are obviously up there.

But Brunei is another economy to look out for. For some years now, the economy has been struggling. In my mind, its excessive reliance on petroleum production (which is declining), limited progress on economic diversification and the pegging of the Brunei dollar to the Singaporean dollar are the primary sources of their economic pain.

But it as turned out, attaining that label is not that easy. Growth in the real world is never so linear. After making rapid progress for much of history, since 2014, the ratio of Malaysia’s gross national income (Atlas method) to the World Bank’s upper-income definition has stagnated within the 80%-85% range as shown in the chart below.

The weakness of the ringgit against the dollar was the reason the stable ratio (forex rate is a proxy to other troubles in the real economy, domestic or otherwise, which I will not touch here). So much so that some would think Malaysia was suffering from the middle-income trap, a phenomenon that describes an economy that appears to have lost steam after successfully joining the middle-income ranks.

Now a decade later, the same optimistic conversation has returned  as Malaysia’s prospects of graduating is brightening up yet again. Economic growth has been going strong (Malaysia is a clear winner in the ongoing trade war between China and the US), inflation is low relative to other places (subsidies and price controls) and the currency is doing rather well in 2025 and 2026 (thanks to Trump’s chaotic administration). These three are exactly the things that determine whether Malaysia passes as a high-income economy, as far as the Atlas method is concerned.

We cannot see progress of 2025 yet because the data is not ready but optimism and progress could be seen through a slightly different lens. When Malaysia’s GNI per capita is compared to OECD’s median (OECD is mostly a class of rich economies where the 2024 GNI per capita median was roughly $41,000 versus the World Bank’s high-income lower limit of approximately $14,000), we can observe the improvement since 2022. For 2025, the ratio would likely be higher than 2024.

Whether Malaysia makes it soon or not (…the ringgit may yet weaken), I have always taken the position that crossing the line is an act of arbitrariness while the usefulness of the Atlas method itself can be quite narrow. It is unclear what changes materially when a country crosses the line (the classification itself is used by the Bank for inform its lending policy but for awhile now, the whole exercise has taken a life of its own). There is really no medal to be won, except a pat on the back, some glowing praising articles in the global press (and investment banks’ notes) and talking points for some roadshows abroad. Crossing the line arises from an act so marginal that if you ask the typical persons walking the Malaysian streets, it would be hard to convince them that they are collectively rich this year, but was just a middle-classer the previous year.

Additionally, as far as the World Bank classification is concerned, Malaysia sits at the margin, snugging between upper middle-income and high-income classifications. This can make the discussion whether Malaysia is high-income economy more the difficult than it should. There are convincing arguments to be made for and against.

Reversed boiling frog syndrome

When we are too close to the ground and our reference point is too close to the present, any improvement from the day before would feel marginal. We would not feel it unless there is a drastic change and drastic change usually comes in the form of crisis. Rarely would it involve improvement: it is much easier to destroy than to build.

I was thinking of the reversed boiling frog syndrome lately because I have been observing a trend where foreigners on social media rave about Malaysia. In the Indonesian side of the cyberspace, there appears to be a kind of Malaysia-envy where many seem to be convinced that Malaysia is a developed economy after experiencing Kuala Lumpur or even George Town. I have seen Filipinos expressing the same sentiment.

For them, perhaps, Malaysia could feel and look like an advanced economy. Again, Malaysia is snugged between upper middle-income and high-income classes. This makes Malaysia quite different from most other upper middle-income economies. For citizens of those countries, Malaysia could feel like a high-income economy after all, despite sharing Malaysia’s income category.

Yet, there are other foreigners that seem to think so too. When Trump was in Kuala Lumpur for the Asean Summit last year, more than a few Americans who were amazed at infrastructure Malaysia has and these facilities that Malaysians take for granted and would more often than not dismiss them as a marker of progress.

Convergence, in a way

Those feelings expressed by foreigners who live farther away from the ground with time reference more distant from the present do suggest some useful dimension in thinking whether Malaysia is a developed economy.

All measurements are imperfect but all of them do say something in their own way. When we shift away from GNI Atlas method and turn to GDP PPP that attempt to control differences in living costs, there is a convergence happening. In the chart below, it compares Malaysia’s GDP per capita against OECD’s median and from it, there is a stronger case of convergence, which is to say Malaysia is getting there.

But of course, as somebody once told me, you cannot eat your PPP (you cannot eat Atlas method too but it is more edible: a Malaysian that travels abroad would likely be concerned with the foreign exchange than PPP calculation).

A distracted ruling class with a damaged reputation is working in a lame duck period

There are several reasons why I am so. The factor that I would like to highlight today is that we are entering a lame duck period as those in power and everybody else are already having an eye on the next election. With the Johor assembly dissolved recently and with several state elections to follow in the matter of months if not weeks, it is only natural for the political class to worry what comes next and shift to electioneering mode instead of the tasks of governing. That means the crisis is not getting the full attention it deserves. The crisis mostly is an FYI instead of an FYA as apparent from policymaking and the behavior of the general public.

More than that, those in power are quickly losing influence over everybody else that includes the business community, foreign governments, individual Malaysians and even members of the civil service. Even members of the ruling side with its complex multi-coalitional equation might take the government’s words and actions with a pinch of salt. Why should they not? They question and second-guess what would come next. Would this initiative be taken up by the next government? Do we still need to engage the current government or wait? Would he still be the Prime Minister after the election? Who would head this or that ministry? Would I want to associate with the ruling side now? More often than not, the safest course of action for most is to wait until the dust gets settled

The distraction and loss of influence are compounded by the government’s fear of voters’ backlash. As I have opined earlier, there is a lack of political capital to address the crisis as that capital has been used for various unhelpful episodes damaging the PH brand. Addressing the supply crisis would involve some economic pain (specifically higher prices and general living costs, and possibly some rationing too). We need to lengthen the availability of supply as long as possible that that means saving some resources instead of enjoying it all now. Nobody likes pain, but that pain is necessary in order to avoid greater complications that would definitely come if Malaysia is to take on business-as-usual path (which is what happening at the moment). Addressing the crisis comprehensively would intensify the backlash, even if compensating policy like greater cash transfers is put in place. With all these things in mind, the ruling coalitions are frozen to death about what this would mean at the ballot box. So, instead doing the right thing, the government has instead decided to coddle the voters policy-wise from what is to come.

Policymaking and execution are in stasis at a time when we need courage with all hands on deck.

There is not one, but two imminent economic crises

But what are the crises?

The first is well-known by now even as most Malaysians act as nothing is happening due to the very mild supply policy we have at the moment. It is the energy supply crisis centered around the Persian Gulf that is directly caused by the Israel-US aggression against Iran. The disrupted petroleum supply is sending ripple effects to various sectors in Malaysia (and around the world), as can be observed through the input-output model. The government has been communicating this very well to the public. Sadly, that communication runs at odds with actual policy, especially when it comes to petrol and diesel subsidies (and also… tourism).

The second is the very possible return of a strong El Nino that would hurt, among others, water supply, which in turn affecting agricultural and food production adversely. Already, fertilizer supply is a concern. El Nino would exacerbate the problem and raise market prices.

The first crisis is not being handled properly despite warning from the government’s own economists. The second crisis is largely going under the radar and would exacerbate the effects of the first crisis.

Renewed mandate is the way to go

It seems to me that in order to address the two crises effectively, the democratic mandate must be refreshed. Here, the general election is the way to shorten the lame duck and do-nothing policy period. Having the election as soon as possible could return us to the state of serious policymaking as quickly as possible democratically. There are other ways to do this, but democratically is the operating word here.

We have seen how prolonged policy inaction affected our lives before. The late February 2020 Sheraton Move caused Malaysia to lose weeks if not months’ worth of reaction policy time during the Covid-19 pandemic. That led to unnecessary deaths, overly deep economic downturn and the deepest of pain for everybody. We should heed the lesson of recent history. We need to move quickly and proactively.

No doubt, there is a risk that the election would also lead to a do-nothing period due to the need for power sharing negotiation immediately after election. The outcome of the next election would likely require multiple coalitions to work together yet again. The uncertainty involves the way the puzzle would fit together. Yet on the balance, even that government (whether PH would be in it or not) would have greater political capital than the current one, due to renewed mandate.

We must put the country first, party second.

Electoral messaging: the truth will set you free

To reiterate, Pakatan Harapan is so petrified of elections that in response to the ruling Johor Umno and Barisan Nasional dissolving the state assembly, PH-friendly social media accounts and some PH personalities have only one coherent argument: it is irresponsible to have an election during a crisis. But that argument would only work if the ruling side has the political capital to handle the crisis, which it does not. It is even more irresponsible to sit on it in fear.

Pakatan Harapan should take a different tack instead. Take the bull by the horns. They (or any coalition with national ambition) should be truthful of what lies ahead to the public going into the general election. Say it up front: the current government setup is untenable and fraying and that is preventing more effective solutions from being taken. They will be pain but it we will do the necessary to mitigate it. Tell the voters that Malaysia needs to come out of the crisis stronger and based on that, request a new mandate to take the necessary actions for the greater good.

That would be the manifesto: how would we deal with the crisis and how would we mitigate the pain. This would immediately avoid the kitchen sink manifesto that had caused Pakatan Harapan trouble in the past.

Pakatan Harapan can do this. The current government has a great record navigating global trends. Use this as a testimonial of competence. Tell voters Pakatan Harapan has the necessary plan to address the crisis but insufficient mandate to carry on. We have have the way forward and we would like you to approve the plan.

Further, doing this would allow Pakatan Harapan to regain the initiative instead of forever being reactive to its rivals. To carry on reactive as Pakatan Harapan is now would erode further the reputation of all parties in the coalition.

It is not at all but several weeks later, the government is carrying out a larger spending adjustment exercise by cutting what the Finance Ministry calls non-critical expenditure across all ministries in order to accommodate for the ballooning fuel subsidy cost, which in turn is created by military conflicts in the Middle East.

I still would not call it austerity for the same reasons I rejected the charge levelled at the 2018-2020 Pakatan Harapan government: at that time, total spending and the economy itself actually grew. For 2026, total government spending and the economy would very likely expand too. It is just not the Malaysian mainstream view to expect a recession and an aggregated government spending cuts in the next 12 months. (Still, it does not help that the Anwar Ibrahim-led government itself uses the language of austerity…)

I find the cuts disagreeable though understandable.

Disagreeable because, for instance, to have RM3 billion worth of non-critical spending within the Ministry of Health that suffers from all kinds of manpower and facility shortage sounds incredible. So outrageous that even the Ministry of Health is contesting the cuts. One would think that if there were indeed that size of non-essential spending, it should be redistributed to essential services within the ministry instead of being redirected towards fuel subsidies that are not just unsustainable financially, but wasteful in terms of opportunity cost at a time when economies are competing at the technological level that could redefine future growth in a big way.

Ideally, what should be cut instead is the fuel subsidy spending, which the latest policy has failed its purpose. The regime was designed to save money but the truth is, it was designed to do minimal work during a time of low petroleum prices.

Just imagine the kind of policy we could run based on the amount used and to be used for fuel subsidies this year alone. We could turbocharge electrification throughout Malaysia and address the energy prices more sustainably. Fortify our health and education system to meet ongoing and future challenges. Build larger and stronger public transport network, which also reduces out dependency on petroleum. Provide very large cash transfer programs, which is a superior form of assistance versus subsidies. We could even pay Sabah and Sarawak large petroleum payments and address the cause of that one episode of national divisions.

Nonetheless, the cuts are understandable from various aspects. The war could end soon, somehow. Trump always chickens out. Alternative source of crude oil could be found soon, a betting man could say.

But the most important of them is the national election, which could happen as early as this year. In fact, some state elections are slated for this year, which shows Anwar Ibrahim is running out of options. Inflation negatively affects voters’ satisfaction with the government of the day. And after the electoral disaster for Pakatan Harapan in Sabah along the general discontent faced by the coalition within its own camp (with Umno sharpening some long knives in the passenger seat), anybody in PH seeking reelection would think twice before committing to an energy price hike.

For Anwar Ibrahim, it is doubly so because he and his allies have spent their political capital on self-serving items that include Azam Baki, the Sabah corruption and corporate scandals. These actions easily wash out actual (though limited) reforms done by the government. Not to mention, PH (and PKR especially) have spent an outrageous amount of time fighting its own base instead of its opponents.

As a result, in the PH tank there is no more political capital to be spent on tough policy for the common good at the non-instant gratification horizon. That is a tragedy for a coalition that ran reformasi as a slogan. PH has always needed to use its political capital for tough decisions. Close at the end of the line, it is plain to see that capital has been misspent on political machination that would never inspire confidence among the public, or fire the imagination of the PH base.

^[1] — The government has decided to raise air-conditioning temperatures in all its offices as part of austerity measures and to cut down on energy spending. [Austerity: Govt turns up the heat, raises aircond temps, to relax dress code. Malaysiakini. Zarrah Morden. Zikri Kamarulzaman. April 2 2026]

Solo is one of the great rivers of Southeast Asia and when I think of great Southeast Asian rivers, the Salween, the Irrawaddy and the Chao Phraya would come to mind. Adding to the list is possibly the Kapuas and the Musi. But the greatest without doubt is the Mekong.

The Mekong River flows from the Himalayas, snakes through southern China and defines the contemporary boundaries of Myanmar, Laos and Cambodia before empties out into the South China Sea just south of Saigon.

The Mekong is the great river I am most familiar with. From the air, I have seen the river and its delta in Vietnam. I have been to Phnom Penh twice over the span of 14 years and marveled at the transformation of the city. I have walked the streets of Vientiane during what appeared to be a dry season when the river to the west looked meek with people walking across to either get into Thailand or Laos. Further upriver in Luang Prabang where I spent several weeks, the river was wide and fierce. To cross it as many did at the Laotian capital would be pure madness. I have been through the Chiang Khong border checkpoint, where the Thai-Lao Friendship Bridge crosses a gentler Mekong. And more recently, I have been to Sop Ruak where the Thailand-Myanmar-Laos tripoint is.

While geographically and politically familiar with the river, I had never really thought about the history of its exploration until when I picked up a little gem from Tintabudi bookstore some months back. It is Milton Osborne’s River Road to China. I am familiar with Osborne from a long time ago when I took a class on Southeast Asian history at Michigan. His work was one of the references we used in a class ran by Victor Lieberman.

River Road to China recounts the 1866-1868 French expedition’s attempt to locate the source of the Mekong and determine whether it was navigable. Based on my previous travels and embarrassingly basic geographical knowledge of the river, I would have bet it was navigable all the way up to at least the Myanmar’s section. At each section of the river that I have visited, the Mekong is wide except in Vientiane during what appeared to be a drought.

With a more limited geographical knowledge but with a whole lot more courage (or bravado), that was exactly the suspicion of the French empire, which was expanding its influence across the Indochina in competition with the British. The French were looking for inland access to southern China via the Mekong, while the British were doing so through the Salween in Myanmar. There was race to Yunnan and the supposed riches of southern China.

The French expedition led by Ernest-Marc-Louis de Gonzague Doudart de Lagrée and also later Marie Joseph François Garnier met their first challenge near Sambor, approximately 200km to the northeast of Phnom Penh by river. The Sambor rapids were difficult but it could be negotiated, especially with stronger ships of the mid-19th century. de Lagrée, his men and local guides definitely did with more primitive boats after a struggle that came physically and psychologically.

de Lagrée had been to the Sambor rapids before and he had thought it was impossible to pass. But the expedition did pass the rapids and that raised hope.

That hope was quickly dashed. The Khone Phapheng Falls at the modern Laotian border are the uppermost reach of navigable Mekong. Khone Phapheng Falls are in fact the widest waterfall in the world. I never knew that, thinking Iguazu Falls on the Argentine-Brazilian border being the widest. But no. The Khone Phapheng Falls have a width of nearly 11km, Iguazu is only nearly 3km.

Unlike the Iguazu that rises close to 100 meters, the Khone Phapheng is just 21 meters tall in a series of cascades. In many ways, the Laotian falls are a gentle feature. But that was enough to block any steamship from going upstream. Years later, the French ended up building a rail line to sidestep the problem presented by the Falls.

Now knowing the Mekong was unnavigable, there was still an objective left: find the source of the Mekong. And so, the expenditure pressed on but in a disastrous fashion due to tropical diseases, the limits of French medical knowledge of that time, political realities of the Indochinese interior and simply, European imperial arrogance. de Lagrée in fact spent a second half of the expedition suffering from what seems to be malaria and died unceremoniously in Yunnan away from the Mekong after a failed surgery. de Lagrée shared the fate of another French explorer, Alexander Henri Mouhot, who popularized in Europe the ruins of Angkor but died out of malaria. Mouhot is buried in a tomb in the outskirts of Luang Prabang.

The rest of the team attempted to look for the source but they eventually abandoned the mission due to a civil war in Yunnan between Muslim rebels and the Chinese imperial forces. It was too dangerous to proceed.

While there was strong suspicion about the location of source of the Mekong by the end of the 19th century, it was only truly discovered by the 1990s technology. We today know that the Mekong originates from Lasagongma Spring, deep in the Tibetan Plateau.

Finally, there are two other points I would explore slightly further.

One, the expedition played a role in expanding French influence in Southeast Asia. During the expedition, France controlled the Mekong delta (French Cochinchina) but one surviving member of the expedition, Garnier, briefly captured Hanoi on the delta of the Red River in northern Vietnam on the pretext of securing free river passage in yet another attempt to access Yunnan but this time, via the Red River. While he died in a battle near Hanoi and the city itself was liberated by the Vietnamese soon after, in the longer run, France ended up ruling the whole of Vietnam because Garnier showed it was possible.

Two, I wonder if there were non-Europeans who had traversed the length of the Mekong before the French exploration. It seems quite plain that the locals who worked as porters and navigators for the French knew about the rivers more than their employers. More than that, there were Malay fishmongers all the way from the Malay Peninsula in Phnom Penh when de Lagrée spent days dining with the Cambodian king, Norodom I. He was familiar with the king given that earlier, he played a role in forcing Cambodia to become a French protectorate. More curiously, there were Malay bombmakers as far north as Dali, the northernmost city along the Mekong that the French explorers visited. If there were Malays along the upper reaches of the Mekong, surely it would not be an overreach to expect others like the Thais, Laotians, Cambodians. Vietnamese, Chinese or any other local groups that had explored the river.

Here, I am glad Malaysia has largely steered away from export-restrictive measures. Multiple economies have done so to prolong supply in the domestic economies. After all, shunning the export doors is a quick-and-easy solution. And looking at the domestic use chart below (produced earlier to highlight the crisis at hand), exporting might look unnecessary given the rising stress at home.

Yet, export ban is beggar-thy-neighbor policy that would make everybody worse off. This is especially so the most manufacturing products are complex involving inputs that could only be obtained through external trade. We could be a net exporter of oil and gas, but we would be a net importer of various chemicals. If we restrict our exports that other needs for their economies, it would be likely others would do the same too. This would result to a whole chain dying off in the short term (while investing takes years) and exacerbating the ongoing energy and chemical-based supply disruption.

Rather than resorting to restrictive trade measures, we should (and appear have) capitalized on our exports in return for guarantee for imported supply. Australia and Singapore have done exactly this recently where Australia promises to continue to supply Singapore with LNG and in return, the latter guarantees diesel supply for the former.^[1] Malaysia appears to have the similar arrangement with Australia.

That is the way forward. Malaysia should use our surpluses in various industries as a bargaining tool to ensure our own supply security whenever possible: our surpluses are both the carrot and the stick we must use. The key is to strengthen our trade ties instead of cutting it.

^[1] — In this context, we reaffirm our commitment to strengthen energy security, to support the flow of essential goods including petroleum oils, such as diesel, and liquefied natural gas between our two countries, and to notify and consult each other on any disruptions with ramifications on the trade of energy. [Joint Statement on Energy Security. Lawrence Wong. Anthony Albanese. March 23 2026.]

Complacency

While neighboring economies have quickly engaged in some kind of mitigating measures, Malaysia appears to be carrying on with business as usual. The latest business-as-usual approach the government has taken is to provide and finance highway toll discounts for the upcoming Eid holidays, which will work to raise petrol and diesel consumption above what it would have been without discount. The subsidy regime has also left unchanged, taking any possible adaptive saving measure out of the equation. Decision on work-from-home arrangement would only be taken after Eid.

It seems the government is complacent. After all, the official communication designed to comfort Malaysians is that Malaysia is a net energy exporter and that the country has two-month’s worth of supply of petroleum products at home. Adding to this is the fact that Malaysia is one of the better prepared economies to weather the supply disruption storm.

Negative effects are unavoidable

Yet, the negative effects are a matter of when, not if.

This is so because many of the industrial (indeed petroleum) products used within Malaysia are exposed to international trade. At the very least, domestic prices are affected by global prices, even if the country is self-sufficient in one specific sector or the other. That is one of the fundamental facts for a small open economy such as Malaysia. Within context of the latest supply disruption, it means domestic prices should go up tracking global prices. This has not taken into account the problem with smuggling, which is really a feature (and not a bug as some would think) of the way Malaysia set prices for its petroleum products.

Qualitatively tracing the disruption ripples with an IO table

To understand the seriousness of the supply disruption, the ripples throughout the domestic economy could be traced through the input-output table. The table links every sector with each other by accounting for all output for all sectors as well as its input from domestic and foreign sources. The latest IO table Malaysia has is from 2021, with the next one due to be published likely this year.

O&G disruption

The clearest channel to trace that disruption is to trace the industrial linkage between oil and gas to chemicals and from there on, to other downstream sectors that use energy and chemical inputs. The chart below is a graphical representation of that linkage within the context of domestic output use (with international trade taken into account).

Here, the output of oil and gas has been traced down by five levels, i.e. from oil and gas, to refined petroleum, to basic chemicals, to special chemicals and then to the next stream user sectors that among others include pharmaceuticals (as listed in the chart).^[1]

While five levels may appear deep, it is possible to drill down deeper and trace all the IO table and hence, the whole economy. For instance, a sector located downstream of pharmaceuticals includes the healthcare sector and healthcare output would be used by other services, like banking or even electricity manufacturing. Or for electricity, it could go down to land transport and then to other activities dependent on land transport.

I do only five because these five levels to me appear to be the among the sectors likely to feel the heat early on, either by the consumers, the producers or the government that may subsidize either consumption or production of certain goods. The numbers even tracing it only 5 levels already suggest a huge portion of of the economy should be affected.

That is not at all comforting.

Fertilizer disruption

O&G and is not the only source of the disruption. Fertilizer manufacturing, which uses natural gas as input, is also a major point of trouble in its own right. The chart below traces fertilizer’s immediate users.

Quantitative tracing

These charts are drawn to scale. For laypersons, that means it is more than possible to trace the expected quantitative effects on all industries using the underlying data. How would one ringgit change in output price of oil and gas affect the change in prices of other downstream sectors? How would one unit of volume change in oil and gas affect change in other sectors?

That will be some further calculations I will do in private.

^[1] — for crude oil & natural gas, coke & refined petroleum, basic chemicals and specialty chemicals, the corresponding rectangles represent total output and imports of the respective sectors. For the rest sitting at the end nodes (to the most right of the chart), they instead represent sum of input from the supplying upstream sectors. For instance, while basic chemicals node represents all of its output and imports, plastic products node only represents the sum of inputs used from basic chemicals and specialty chemicals. For the end node (right most), only sectors using at least 1% of its supplier output are listed. Anything below that is aggregated under the label others. This is done for simplicity’s sake