Thursday, 10 December 2009

What’s been good about 2009

John Mangun
Outside the Box
Business Mirror

IT is too early to start looking back on 2009. Yet it is the Christmas season and we should have a positive attitude at least just a little. I know it is extremely difficult to be positive about things with all the negatives that have happened over the last three months: killer storms, gasoline pushing higher, flat economic numbers, the Maguindanao massacre and the beginning of the election season; perhaps, especially the beginning of the campaigns. Who knows what else might happen in the next three weeks. But you can find all the bad news you want on the front page and maybe it would be good to try to find some reasons to count some blessings for the year 2009. 

No one is holding it up as the big story for 2009, but the banner headline to describe 2009 probably should be the performance of the Philippine Stock Exchange. Here we have a stock market that began 2009 near 1,800 and will end the year near 3,000. The last time the local market performed so well, up more than 60 percent, was in the very early 1990s, and that seems like a lifetime ago.

Maybe the reason no one is really looking at the stock market for some optimism is that the global equity markets did very well in 2009, so the Philippines does not stand out as particularly special. But if you look at individual stock prices, this was a exceptional year for trading on our exchange. Several of the big-cap stocks like Ayala Corporation are higher by 50 percent. Many issues doubled and more in price.

I will presume that, given the current trading and the quiet holiday time just ahead, our market will remain poised for a dramatic jump in the first quarter of 2010. When you consider that this increase in prices happened against the most possible negative backdrop of dying economies in the West and all the pessimistic comments about the Philippines, buyers of local shares certainly were optimistic about something through 2009. Of course, stock prices are supposed to climb a “wall of fear.” Maybe that is truer than we realize as there was more than enough economic fear to go around during 2009.

Another story that you might have a hard time hearing about is the absolute boom that has taken place in the Philippine outsourcing/call-center business. With all the new call-center sites that opened or every new hiring binge these companies started, it is a shame that none of the local media put them all together in one article to give you the bigger picture and how amazing the growth was this year.

Considering that most businesses that our call centers serve have had major financial and profit problems these last 12 months, it certainly did not stop them from growing jobs in the Philippines. I know that you probably think of the call centers in terms perhaps of the neighbor’s kid who decided to stay home with the nursing degree instead of going abroad. And of course, call centers are all located in Makati, Eastwood City and Cebu, with maybe one or two in a couple of other provincial cities. The fact is that there are over 700 call centers operating in the Philippines located in more than 20 cites from Baguio to Davao. The revenue growth of the call centers in the Philippines was the largest since this industry became a force in the economy.

This year has seen growth from Western clients that have created a second-wave boom in the industry. Companies that rejected even the thought of outsourcing a year ago cannot wait to enter into local contracts. These companies cannot afford not to do business here as a method to beat the recession in the West by significantly cutting the costs for their customer service and backroom operations. 

Something else that should be making us a little merry for Christmas is how well the Philippine economy responded to the drop in oil prices in 2009. When prices collapsed in 2008, bottoming out in early 2009, local prices responded accordingly, driving inflation to almost nothing. Even as oil prices rebounded quite a bit this year due to the weak dollar, inflation has remained well within acceptable levels. This tells us that the economy, which is really thousands and thousands of individual businesses, responded to the buying patterns of their consumers. This economy worked well as a free-market economy in that prices operated well within the boundaries of supply and demand. As oil prices, a large component of all consumer prices, fell, so, too, did consumer prices. As oil prices moved up, consumer prices did not race ahead of the oil price increase. Therefore, we saw inflation quiet and virtually a non-factor in the economy.

In the face of all the turmoil of 2009, perhaps the most positive event that happened in 2009 was the nationwide response to the massive flooding of Ondoy. Perhaps it is not apparent, but Filipinos rose to the problem with unselfish assistance even as the rain was still coming down, in a manner that should be a source of great pride for this country.

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