Floating Market: Currency Crises and ASEAN Tourism Exports

The objective of this chapter is to explore the relationship between the Asian Financial Crisis of 1997 and ASEAN tourism exports. The currency flotations that began in 1997 led to falling export prices for both goods and services, especially in Malaysia, Indonesia, and Thailand. However increases in merchandise exports, in both volume and value terms, were constrained by financing problems, including not only liquidity difficulties but also foreign exchange shortages that restricted the import of the intermediate goods needed for the production of manufactures. The tourism industries of the affected countries did not face these constraints. On the contrary, the lower exchange rates should give rise to lower prices for hotels, food, entertainment, and shopping, and thus provide an effective stimulus to growth. Consequently a deliberate policy of expanding tourism exports would appear to offer a feasible solution to the economic problems that are the legacy of the crisis.