I guess the reason for us not being able to upgrade flights operated by MH is not in KLM`s hands.Asian airlines are known to protect their premium classes more than european airlines, maybe capacity is also a factor or maybe they would charge KLM too much for an upgrade...
I am pretty sure that they want to protect their premium class, if you want to fly C or F, simply pay for it, otherwise better shut up...

BTW, is it possible to upgrade to C or F on MH, if you are a member of their FF product, would be interesting to know.

What I know for sure is the fact that upgrades to Asia and Australia are quite popular ( big surprise considering the flight durations ), but unfortunately KLM cannot offer anything in that regard, actually they cannot offer any substantial premium service in Asia...
Lounge access is still a big question on MH away from KUL, no upgrades, no select seating....

I know that Australia is a way overrated market from Europe, yield wise , but KLM should not underestimate that we have a choice and that most of us will very likely not choose KLM or MH to Australia, both * and OW offer much more choices and secured FF benefits...