Pacific Island nations
feel Japan’s pain

Economist Wali Osman
is studying the impact of
Japan's economic crisis

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By Tim Ruel
truel@starbulletin.com

Hawaii should pay close attention to the impact of Japan's economic weakness on other tourism-dependent isles in the Pacific, said Wali Osman, vice president and international economist with Bank of Hawaii.

CRAIG T. KOJIMA / CKOJIMA@STARBULLETIN.COM Wali Osman, vice president and international economist with Bank of Hawaii, talks about Japan's influence on Pacific Island economies.

It was expected that Japan travel to the Pacific would rebound after post-Sept. 11 security concerns eased, but that hasn't happened, Osman said. Guam, which gets 70 percent to 80 percent of its tourists from Japan, has been experiencing deflation, weak bank-loan activity and is getting less revenue from business and income taxes, he said.

Osman, who visited Guam, Saipan and Palau in October to survey their economies, said if Japan remains in economic stagnation for another decade, the toll on Western Pacific nations will be huge. Osman spoke yesterday at a seminar at the East-West Center.

Visitor arrivals to Hawaii from Japan are down 11.8 percent from last year through October.

While it's difficult to tell exactly how much of the reduction in Japanese tourists is attributable to Japan's economy, and how much should be blamed on security concerns, it's clear that both play a role, Osman said. He plans to issue reports on the matter early next year.

His guess is that Sept. 11 caused the downturn, but the situation worsened because of the country's economy. Drops in visitor spending on Guam have been consistent with drops in per-capita income in Japan, he said.

To avoid the same trouble, he recommends that Hawaii tap the more affluent Japanese tourist market, "people who actually hold the wealth in Japan," Osman said.

Osman, who came to Hawaii in 1976 from Afghanistan on an East-West Center scholarship, is now a Bank of Hawaii senior fellow at the center.

Yesterday, he recalled his college days at Kabul University in the early 1970s, when, in contrast to the repressive Taliban rule of the late 1990s, students were liberated. Men and women went to class together, and courses were taught in English. There were Islamic fundamentalists around, but they were seen as harmless. "They were beginning to become vocal on campus," he said.

After coming to Hawaii, Osman said he didn't even pay attention to the Taliban until the terrorist bomb attack on the destroyer USS Cole in Yemen in October 2000.

In light of all the upheaval, Osman said, he can't imagine going back to Afghanistan.