Tag: ASEAN

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ASEAN Economics

[3025] Malaysia inches closer to high income status (but it is not the 2025 star…)

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.

 

Categories
Conflict & disaster

[2997] The broken city walls of Mandalay

All countries are beautiful in their own way and Myanmar is a beautiful country indeed.

When the country just emerged out of its isolationist cocoon and optimism was sweeping through its population in the early 2010s, I had the opportunity to witness the liberalization of Myanmar firsthand by travelling approximately 2,000km for about 3 weeks from Yangon to Mandalay by buses, trains, cars, motorbikes and boats. What surprised me at first back then was that Yangon did not strike me as a particularly poor city. It seemed the democratic dividend was paying off.

But as with most countries, the reality in the capital does not always reflect that of the whole country. Kuala Lumpur feels and looks like an advanced ultramodern economy when taken out of context of the whole of Malaysia.

There is beauty in urbanity but it was the slow progress of modernity in the 2010s that made the country beautiful. Beyond the limits of Yangon within its glittering Shwedagon Pagoda and a confusing mix of brand new right-hand and left-hand drive vehicles on the road all at once, life was slower. The old ways still held fort. When I reached the famed romanticized city of Mandalay after a long train ride sitting next to a Buddhist monk, I felt I was entering a different country.

Myanmar has since slided back. The Rohingya crisis has made the country less popular in the region. Democratic progress has been rolled back. Civil war has taken hold. When I found myself travelling in northern Thailand recently, driving along the Myanmar border, Thai troops maintained high alert, stopping everybody with no exception to ensure that the situation remained safe on this side of the world. On the back of the range that divides Thailand from Myanmar, I could spy deep into the Shan state. Things were quiet and they gave no clue of the raging civil war happening far across the mountains.

Somewhere in Sagaing across the Irrawaddy river from Mandalay (I cannot recall the location exactly now but I think it was in Sagaing), there was a large cuboid temple standing 40 to 50 meters tall. The temple had a large crack running from the top to the bottom caused by an earthquake during pre-colonial times. Back then as I stood in wonder of the crack, that earthquake was an academic curiosity.

A strong earthquake has struck Mandalay this week and pictures of devastation are coming out online. Bridges have collapsed. Pagodas cracked and crumbled. Houses gone. Parts of the old city walls now suffer from gashes. I have been to some of those places and it breaks my heart to see them in such devastation.

I hope we Malaysians will help Myanmar even in our current state of politics where racism, xenophobia and general meanness is on the rise. Malaysia is the chair of Asean this year and Asean has failed the people of Myanmar in so many ways. This is a chance to redeem ourselves from all those failures, even if the window is only for partial redemption.

Categories
Photography Politics & government

[2843] Comrade Takashimaya

I love this kind of contrast.

Within Southeast Asia, it is at its starkest in Vietnam.

I have been to Laos with its own nominally communist government. The hammer and the sickle would adorn lamp posts and facades in Vientianne and Luang Prabang, reminding tourists and locals alike the insecurity of those in power. But deep in the Mekong heartland, commercialization is still at its infancy, rugged and all. There are contrasts, but not like how it is in Vietnam, where consumerism is embraced wholeheartedly decades after American troops were chased out, sparking Malaysia’s first refugee crisis.

Malaysia received those Vietnamese refugees about 30-40 years ago, unwillingly. They are grateful to us, it seems, regardless of our intention.

Not much has changed today as Malaysia experiences its third refugee crisis, the second, I think, being the one caused by the civil war in southern Philippines. This time around, the new refugees from Myanmar are just a political football game to be played by the corrupt.

Categories
Economics Politics & government

[2563] Why I do not want to see a Eurozone break-up

I understand the case for the breaking up of the Eurozone. I do appreciate the virtue behind a flexible exchange rate, especially for cases like Greece. There is a need for rebalancing that a monetary union cannot provide. Yet, I am uneasy at the suggestion of a break-up, of Grexit, because deep inside of me, I am more or less an internationalist.

The internationalist sentiment is derived from my libertarian belief. It is about freedom of movement. Free flow of labor. Free flow of capital. All around the world.

I dream of a world where I would not have to present identification whenever I land in some foreign airports. I dream that I would be free to be anyway I choose without the need to ask permission from the state.

Unleash the ideal world and what I call the crazy me would come out as an anarchist. Specifically, an anarcho-capitalist. Freedom unbounded.

But I am not an anarchist because I understand anarchism is inherently unstable. I settle for the second best option available and that is free-market libertarianism.

Just as anarchism is the ideal but unattainable and thus the second-best solution is libertarianism, internationalism is the ideal but the second best approach is regionalism, for now.

This fuels my sympathy for the Eurozone. I want the Eurozone to be intact because of my bias. It has nothing to do about being western or Europe-centric.

I want it intact so that in the future, the Asean version can emerge. An Eurozone failure will likely inform decision on a more integrated Asean. Already the Indonesian President warned Asean of repeating the European mistake. The warning is appropriate but as I have argued, there are appropriate lessons to learn from the European crisis without jettisoning a closer Asean idea.

And I do think Europe will succeed, if recent history is of value.

The end of World War II saw closer cooperation between European countries: observe the Marshall Plan. Not all and definitely it was easy to cooperation when your opponent is dead, but the cooperation happened and that is the point.

The Cold War saw closer integration: observe the European Coal and Steel Community and the European Economic Community.

Post-Cold War saw even more: observe the European Union and its expansion.

The European Exchange Rate Mechanism crisis brought closer cooperation: observe the introduction of the Eurozone.

Now, the latest Eurozone crisis may bring in closer cooperation: observe the fiscal union proposal.

So, do not ring the bell yet. The regionalist game is not over yet and the outcome of death is not certain.

As a libertarian, the issue is the creation of a stronger state but I think, this can be a largely enlightened state, with a federal structure is can be a counterforce to the central government.

Categories
Economics

[2553] The lesson of Europe for Southeast Asia

Indonesian President Susilo Bambang Yudhoyono warned of the danger of a common currency in an interview with the Wall Street Journal. It is a reminder that needs not a resounding. The horror of Europe is enough to make one thinks twice of a currency union. The talks of Greek exit can potential become the end of the European dream.

The European crisis is a challenge to me partly because I am supportive of a currency union for Southeast Asia. Sometimes in the past, I contended to be associated with the term Aseanist.

More importantly, I am supportive of a currency union because of my free trade tendency: a union boosts trade because it reduces trade barrier significantly.

To be fair to myself, I support a union across similar economies and not wholly across the diverse Southeast Asia economies from the financially sophisticated Singapore to the tiny backwater East Timor.

Really, the lesson of Europe is not that monetary union does not work. The lesson is that monetary union works best for similar economies: the economic cycles mostly coincide, the structures are about the same, the culture of societies in it are not so different, etc.

I think I have made the case for a currency union for Malaysia, Singapore and Brunei for a start. In fact, Singapore and Brunei are already on a currency board, which effectively means de facto currency union. Malaysia is the natural extension of the Brunei-Singapore union because of its proximity and the massive interlinking between the three economies.

Then, there is perhaps historical hangover on my part, given how the original Malaysian proposal was a 15-state federation, with both Brunei and Singapore in it. Indeed, prior to 1973, all three currencies were interchangeable freely. Even before that between 1953 and 1967, all three countries used the same currency.

One issue with the Malaysia-Singapore-Brunei currency union is that the Singaporean economy tends to be more volatile than Malaysia. Nevertheless, I think in many ways, the direction of both economies are more or less the same. In that sense, the challenge of a monetary authority is to be more flexible and responsive to a more dynamic economy.