Tuesday, March 9, 1999

Asia’s crisis cut isles
a break, expert says

By Susan Kreifels


Hawaii, oddly, can thank the anemia it caught from the Asian flu, says a respected investment expert, because it rid the state of "hot money": the kind with no long-term commitment to the state, like the big Japanese investment that shot real estate through the sky then dried up.

It's also the kind that comes and goes with the flick of a computer button.

Paul Loo, senior vice president-Pacific for Morgan Stanley Dean Witter, says the islands need the committed capital that fueled them after World War II -- domestic investment, particularly from the West Coast.

Loo believes it's headed back.

"Investment in Hawaii is moving to long-term investment," Loo said yesterday at an Organization of Women Leaders lunch. "Silicon Valley is buying. This is fantastic for the islands. I'm more positive about Hawaii than I've been for a long time."

One example: U.S. hotels buying Japanese investments at discount prices. That lowers costs overall, he said.

But Hawaii still breaks some of the rules required of a global economy -- ones that also brought down Asian countries -- like allowing nonbid contracts, a practice that Loo says must stop.

"There are efficient global providers who can build things, but there's no chance because of the political system," Loo said. "They won't come if they can't do more bidding."

And Loo said public employees will have to realize that labor demands must be limited; government can't provide everything.

"We need to get out of the insular syndrome," Loo said. "We need to get into the global economy."

He also advised Waikiki to learn Mandarin. Five million Chinese can already "buy anything they want," Loo said. And that number will grow along with a middle class.

Loo said he was disappointed that the last election didn't bring more changes. But he's hopeful that the Legislature "must be more concerned than any other before."

Loo continues to be bullish about the U.S. economy. Years ago, he predicted a Dow Jones average of 10,000. Now he expects it to surpass 20,000 by the year 2008.

As long as the United States does not "go back to the free-spending days" before corporate downsizing, and it engages China in a productive way, Loo believes the country can continue its prosperity.

"We globalized before anyone else," Loo said. "The United States economy turned from missiles and stealth bombers. It took the talent and turned it into Silicon Valley, technology that's useful today. We unleashed the creative part of our society."

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