What is the likelihood of Malaysia ending up like Argentina? The similarities are more than you think.

After WWII, Argentina grew rapidly with the ruling party keeping itself in power with pro-growth industrialisation policies. When growth started to slow down, it borrowed and spent heavily and because it was the only way for the ruling party to stay in power.

Similarly, the current bailouts and fiscal spending of Malaysian government — while not to the same degree — is similar. Barisan Nasional cannot hold on to power unless it keeps spending.

The currency peg that Malaysia adopted in 1997 is eerily similar to what happened a decade ago in Argentina. It led to stabilisation and continued growth which kept the incumbent in power.

However, underlying it was a budget deficit and creeping inflation that ignored market forces. Malaysia today is undertaking the same policies. Civil servant salaries are being increased despite the recession. Inflation is creeping in despite our falling competitiveness.

The government is preoccupied with maintaining its political agenda rather than running a real government. From computer laboratories that do not get built to the Bakun project, the government is pandering to political interest at a huge cost and in insular conditions.

To be fair, there are differences between Malaysia and Argentina. Malaysia is definitely in better financial conditions but 30 years ago Argentina had even better financial position than Malaysia today.

It took only several years for Argentina to destroy what took a generation to build. Indonesia is now viewed as similar to Latin America. What took decades to build was destroyed in several years in the late 1990s.

The fact of the matter is that given the political structure of Malaysia, BN/Umno cannot be removed unless we have a Argentina-like crisis. The fact is, if we end up like Argentina, Malaysia could be in worst position because it would be even more prolonged and difficult to solve because of our racial and ethnic politics.

The parallels should scare all voters and opposition need to articulate this more clearly because the danger is there unless BN (or should I say, Umno) change its philosophy fundamentally. Malaysia is lucky in that there are still avenues that we can express ourselves, unlike the Peronist government of Argentina, but the fact is Prime Minister Mahathir Mohamad's recent announcement that he is likely to continue after the next general election should alarm us over the parallel.