Japanese capped
isle prosperity; exit of
yen brought on
hard times

Japanese tourists and investors
induced the '80s spending spree

By Richard Borreca
Star-Bulletin

If statehood turned Hawaii's economy golden, it was the Japanese-induced spending boom of the 1980s that put the diamonds in isle real estate.

And when Japan's bubble economy burst at the end of that decade, Hawaii's tourist-dependent market also fizzled.

The exit of Japanese yen was a double blow. First, tourists stopped coming and the high-priced Waikiki and neighbor islands stores, hotels and boutiques were left empty.

At the same time, the Japanese investment market dried up. No longer were Tokyo millionaires cruising neighborhoods for speculative housing purchases. Instead, Japanese investment was dragging the economy down, as foreign-owned hotels, golf courses, restaurants and stores were sold at distress prices.

"I think it was the first time we have seen it in a way that's affected our community so broadly," David Ramsour, a local economic consultant, said during the collapse.

From 1990 to 1996, statewide bankruptcy filings soared from fewer than 1,000, to more than 3,000 a year.

The timing could not have been worse. Hawaii's sugar plantations had already dwindled to four by 1996, victims of cheaper competition overseas. In 1930, when sugar dominated the economy and the entire islands' life, 30 percent of Hawaii jobs were in sugar. In 1996, it was less than half of 1 percent.

Further, as more than 10 plantations shut in the '90s, part-time tourism jobs could not keep up with the number of laid-off sugar workers.

Although conditions for a continuing recession still surround the state, the closing months of this decade saw the state Council on Revenues predict that Hawaii's economy could be on the verge of a turnaround.

Hawaii's businesses are more confident today than any time since 1991, Paul Brewbaker, Bank of Hawaii economist, reported to his fellow Council members.

About this Series The Honolulu Star-Bulletin is counting down to year 2000 with this special series. Each installment will chronicle important eras in Hawaii's history, featuring a timeline of that particular period. Next installment: November 8. Series Archive Project Editor: Lucy Young-Oda Chief Photographer:Dean Sensui