I had one unconventional history tutorial as an undergraduate long ago. Sitting in a chair in a depressing basement classroom during wintertime, the tutor, instead of engaging on material discussed during lectures, was asking what-if questions. What if, instead of what happened in the history books, things took a different turn. What if Germany had won the Second World War? What if the Mongols did not sack Baghdad? What if Imperial China had not attacked Burma?
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.
The internet was supposed to be a wonderfully liberating medium. A force for good that equalized power by circumventing gatekeepers of all kinds: information wanted to be free. Almost all internet-based companies was a social crusader out to right some wrong when it all started back in the day. Google’s motto was ‘Don’t be evil’. That was the promise of the late 1990s and the early 2000s when the internet was still new in its anarchic stage where almost everybody competed to do good. Nobody online had market power.
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.
It is natural to make a list of countries one has visited before. Sometimes, that list comes in the form of emoji of flags. Sometimes, it comes in the form of map with the countries visited highlighted.
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.
Yesterday, the World Bank updated its database to include the new 2025 datapoints. The updates also redefined the institution’s income classifications.
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.
Malaysia has dreamed of joining a class of rich industrialized economies since the 1990s. Initially, it was an aspirational goal with nebulous metrics in the form of Wawasan 2020 but by the late 2000s and early 2010s, the World Bank’s definition of high-income economy was adopted as something concrete. During the 2010-2014 period, it felt like Malaysia was on the cusp of being reclassified as such. By 2014, Malaysia’s income was 85% of the high-income threshold and some in the government believed it was reasonable to expect Malaysia to become a high-income economy by the end of the decade.
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).
