Then why FL295? Because they were possibly transiting an area where the Quadrangal rule is in effect and they wanted to be sure that they didn't hit anything coming the other way, because this is in effect up to FL290 (see the Malaysian AIP). So why not fly at FL355? Possible because other planes flying at FL340 - 360 could see them pass relatively close under them and advise ATC of a "near miss"?
What is the source of FL295 as the altitude? If it is from primary radar, keep in mind that the altitude will be quite approximate, and that it will be in geometric altitude (like you would measure with a tape measure). Aircraft cruise altitudes are barometric altitudes, based on measuring air pressure and converting to altitude, assuming that the air pressure vs altitude is the same as the Standard Atmosphere. But, in the real world, with variations of air temperature and local atmospheric pressure, the relationship between barometric altitude and geometric altitude can easily vary by 1000 or 2000 ft at high altitude.
So, a report of FL295 from primary radar could easily be an aircraft cruising at FL280, FL290, FL300 or FL310 based on its barometric altimeter.