Message from the Publisher
Our Top Ten List

Coming off a year as full of events as 2004 made it difficult for us to pick out our top ten stories which we feel had a significant impact on the economy and will continue to affect us in 2005 and beyond. Every year, we describe the previous twelve months as a roller coaster ride. But nothing quite compares with the ride we took in 2004. We started with a bitter election campaign and closed with a state of denial regarding the crisis.

On the bright side, the year’s highlights included strong macroeconomic growth fueled by consumer spending, overseas remittances, and a rebounding agricultural sector. Agriculture -- that ignored sector -- proved to be the sleeping giant of the economy. Accounting for less than 20% of the economy but close to a third of the workforce, agriculture grew by double its normal rate on the back of strong crop production.

The electric power sector, a target of reform several years ago, finally looked like it was picking up steam as the privatization of power plants began in earnest. Having seen reversals in contracts in the past, we are sure investors will be watching this sector very closely to see whether history will repeat itself.

In a long-awaited decision, the potentials for another strong growth sector opened up with the Supreme Court’s ruling on the mining industry. Long a maligned industry, mining had been left in a state of suspended animation following restraining orders and legal challenges against the constitutionality of mining concessions which Congress allowed under a mining act passed almost a decade ago. The irony is that, of all industries, mines are the most likely to bring development to the most isolated of places where even government presence is limited. Unfortunately, ideological opposition and some self-inflicted environmental disasters by the mines themselves worked against the industry as a whole. Perhaps, it might bounce back now that the Court has decided in its favor.

Finally on the bright side, overseas remittances continued to be a major contributor to the Philippine economy, fueling consumption and keeping body and soul together for many a family. But for all its opportunities, the Overseas Filipino phenomenon also represents a dilemma. For every Filipino going overseas, a family is being torn apart. In exchange for dollars sent home, a worker’s life could be at risk. No one exemplified this more than the case of Angelo de la Cruz, hostaged in Iraq while doing his job, only to be released after the country reconsidered its foreign policy stance, withdrew its troops, and earned the ire of allies.

Unfortunately, the negative outweighed the positive in this year of challenge. A fiscal deficit, rising world oil prices, more corruption scandals, and the continued plague of politics all conspired to sour investor sentiment and public opinion. The net effect was a crisis of a different type of deficit – a governance deficit – and an overall failure to meet rising expectations. The disappointment was reflected not in the economic figures – they were good – but rather in countless conversations and public opinion surveys.

By year-end, people had become a little more cynical and had lost a little more hope. And as if to rub it in and make us pay for our sins, Nature struck – and struck hard. An unusual late-year string of storms which looked like unusually heavy rains began to take on monster proportions as natural calamity quickly turned into man-made disaster. Thanks to unregulated cutting of forests, a torrent of rain quickly turned into a torrent of logs and mud, wiping out communities, killing thousands, and rendering thousands more homeless.

At the end of the day, the public – and we – were only too happy to see 2004 end. Our hope is that we do not forget what happened and heed some lessons from all these events.