Hawaii’s Commitment to
Business: The Evidence is Clear
Hawaii’s commitment to attracting and supporting
business is more than just talk, and the recent record
speaks for itself. Last year the state:
- committed $30,000 to the multi-sourced financing of
the University of Hawaii’s Pacific Business Center
Program. Small businesses and entrepreneurs can tap
in to the valuable resources of professors and researchers.
- granted an additional $100,000 for the Industry and
Product Promotion Program and $500,000 for the Hawaii
Capital Loan Program. Both these programs support small
business, and both have been proven to return more tax
revenues to the state than the programs cost.
- modified the laws governing the Land Use Commission
so that body will no longer hear petitions on zoning
changes of parcels of 15 acres or smaller. Over the
past 20 years, petitions for these parcels have accounted
for almost one-half the actions before the Commission.
The action is expected to reduce the number of petitions
by one-third to one-half; in short, fewer petitions
mean faster permits.
The state has also devised a one-stop permit application
center in Honolulu to accommodate the needs of the film
industry, burgeoning thanks to the climate. the talent
pool, and of course, the mystique of Hawaii.
|Hawaii: A Mini-Melting Pot
Hawaii’s people are famed for the warm generosity
of the “aloha spirit.” Many of the cultural
influences come from Asia. Everybody belongs to a minority,
sometimes two or three. That this mighty mixture works,
on both personal and community levels, is a source of
pride. “I’m 7/16th Hawaiian and seven other
things,” says Luanna Burke, a recent graduate of
the University of Hawaii. With a grin she recites her
heritage: “Portuguese, British, Scottish, Austrian,
Czechoslovakian, French and Spanish.” She looks
up, worried. “Did I get Austrian? I don’t
want to leave anyone out.” With such a diverse heritage,
it’s no wonder that people here work well together
and come to the workplace with the industrious outlook
that is traditional in many Asian countries.
The Three Most Important Facts
About Hawaii: Location, Location, Location
Honolulu is located equidistant from most of the major
market centers in North American, Asia and Oceania.
With the ninth busiest airport in the world, Honolulu
is a hub for Pacific air routes, a gateway to the region
with non-stop links to 17 cities in Asia and Oceania.
This is 11 more than Los Angeles, 12 more than San Francisco,
and 16 more than New York City. Even among Asian cities,
Honolulu compares well, ranking third after Hong Kong
and Singapore in terms of air access – and ahead
Consequently, Hawaii affords a key advantage to the
busy executive or entrepreneur who can leave aboard
a night flight, sleep to Hong Kong or Tokyo, conduct
a full day’s work, board another night flight
and return to Honolulu without losing a business day.
Hawaii’s location also provides a time zone advantage
that permits communication with cities in North American,
Asia and Oceania during the working day. During a 7
a.m. to 6 p.m. business day in Honolulu, there is a
six-hour overlap with New York, a seven-hour window
of availability for Chicago, nine hours for the West
Coast, seven hours for Melbourne, six for Hong Kong
and Manila, and five hours for calling Bangkok or Singapore.
“Location gives you a market niche, and that’s
very important,’’ says Andrea L. Simpson,
a vice president of Honolulu-based Pacific Resources,
Inc. For PRI, an independent energy company, the niche
translates to just under $2 billion in a market that
ranges from the West Coast to Southeast Asia and throughout
the Pacific Basin. “From Hawaii, we can talk to
New York the same day we talk to Tokyo. We use this
to great advantage, whether it is making arrangements
for procuring products, refining crude oil, or for shipping.
|Living Costs: The Bottom Line
Living costs in Hawaii can be high but before assuming
the worst, check these figures: One a base of 100, Honolulu
is 94 to 97 in Los Angeles and 101 in San Francisco. That
looks very good indeed when compared to 105 in Hong Kong
and 135 in Tokyo. The cost-per-square-foot of prime office
space echoes this, with Honolulu at $20-$30, and Hong
Kong topping the list at $50-$70. And Hawaii has a tax
base that compares favorably with other key Pacific Rim
Education in Hawaii: Good Grades
Remarkably, Hawaii is the only state in the union with
a single, unified public school system. In 1984, 163,298
students enrolled in 231 schools in grades kindergarten
to 12. Private schools, with tuition ranging from $250
to $8,520 annually, provide an alternative of internationally
recognized quality. The state university system includes
nine campuses, with a powerhouse reputation in fields
as diverse as electrical engineering and astronomy.
Most of the students, more than 21,000, are enrolled
at the University of Hawaii’s Manoa campus, an
area of Honolulu renowned for the number and intensity
of its rainbows. There are four private four-year colleges.
Two other Honolulu education institutions can benefit
business. At the public, non-profit East-West Center,
scholars have been exploring the issues pertinent to
nations on or in the Pacific Ocean. Found by the United
States Congress in 1960, the Center receives support
from more than 20 Asian and Pacific governments, as
well as private agencies and corporations. At the Japan-America
Institute of Management Science, managers from Japanese
and American firms have been learning each other’s
languages and business practices since 1972, when Fujitsu
Ltd., of Japan founded this private, non-profit facility.
Hawaii and Culture: Beyond the
The Hawaiian lifestyle? The catch-phrase is “casually
elegant.” If that seems a bit vague, here are
some guidelines. Every Friday is “Aloha Day,”
when everybody sports traditional Hawaiian shirts or
muumuus. Don’t let those bright flowery prints
fool you. People work hard and afterwards they play
hard. Short of ice-fishing, just a bout anything anyone
has every considered doing in, on, or near the ocean
is done here. Fitness reaches manic levels in the hours
just before and after the work day. The local joke describes
a child from out-of-state visiting her grandmother in
Honolulu. After watching running pound out their laps
of Kapiolani Park, the tiny tourist asks, “Is
there a law that makes people run here?”
There is life beyond triathlons and water sports, though,
as a glance at the entertainment columns of the newspaper
will attest. Opera? Sure. Will it be Chinese or Italian?
A night on the town? Choose: a sweaty rave-up at The
Wave in Waikiki, dancing to local faves, or a quieter
time with one of the many club acts that play the big
hotels throughout the islands. Ballet. Hula. The Symphony.
The Prince Kuhio Rodeo. The International Film Festival
draws an array of folks to mix in the local audience.
Tickets are free. Just about any cultural activity you
could imagine is here. The problem is selecting the
activity and the culture. To help you make an education
choice, the Bishop Museum in Honolulu offers special
shows, permanent exhibits, and demonstrations of traditional
crafts of Hawaii, and other Pacific Island cultures.
“People here, in the main, support the arts,”
said Elaine Zinn, the executive director of the non-profit
Arts Council of Hawaii. This was the first state to
set aside public money for the purchase of art. Hawaii
ranks fifth in the nation in the amount of money it
spend per resident for art and cultural activities.
There are 144 cultural organizations throughout the
islands, bringing in some $16 million. “The arts
industries are among Hawaii’s top 21 earners,”
Zinn says. “That’s $7 million above papayas.”
A World of New Opportunity
A Time Special Advertising Section
The steep descent into Honolulu International Airport lurches
you awake. Somewhere between the movie and the second meal you fell
asleep. No wonder. A trip for the record - books, bouncing about
looking for possible locations for a new Pacific Rim office. “Thank
goodness we scheduled the trip home with R&R in Hawaii,”
you think to yourself as you stretch a body numbed by accumulated
jetlag and the strange beds of the past two weeks. As Diamond Head
comes into view behind the steel-and-glass towers of downtown Honolulu,
you jot down a summations of your trip. “Taxes! Cost! Politics!
Through customs, you emerge to the sunshine and breath deeply.
Plumeria and ginger scent the soft trade-winds sweeping away the
fumes of a busy airport. Looking around, you notice lots of business-types.
It hits you. They know something you just figured out.
Hawaii is changing the way it does business. That change is for
the better. Sure, there was bad press about excessive local regulations
delaying projects that wriggled free of the state’s red tape.
But rather than discouraging folks here, the negative comments got
them all fired up to do more than just yammer about the problems.
The attitude is “No more studies. Let’s get this show
on the road.” While it’s tough to roll up the sleeves
on an aloha shirt, that’s what’s happening. Public sector,
private sector, academia, the community at large, they’re
in this together.
No matter what you’ve heard about the easygoing pace of
life in paradise, in just two years the state has taken some impressive
action. In part, the motivation comes from a slowdown in the local
economy, one that reflected national and international trends during
the 1980-84 period. During that time, however, Hawaii’s official
unemployment rate was among the lowest in the United States. Hawaii,
unlike 40 other states, balanced the budget in those years without
“The really big thing we have to offer is the fiscal condition
of our state,” says Governor George R. Ariyoshi. “Our
nation has gone through a very rough period. Many states have been
in a chaotic condition. But in Hawaii, we manage our resources very
carefully. We’ve avoided these ups and downs. We’re
encouraging business. We have many new programs to provide support
to normal businesses as well as agriculture,” he says.
The radical improvements—everything from a streamlined permit
process to an increased utilization of the resources offered by
the University of Hawaii—are receiving good notices.
Inc. magazine rated Hawaii 20th, up from 35th, as a place
for small business to succeed in America. State figures show some
21,000 small firms operate here and provide about 90 percent of
the gross state product. Half of those businesses employ four or
fewer people: 98 percent have 100 employers or fewer. A national
rating placed Honolulu 5th among 74 cities as a good place to do
business. So much for the image of businessmen drowning in red tape
on the regulatory reefs.
What brought about the change? Partly it is the result of a shift
in the structure of the state economy. “We are now a small
business state,” said Kent Keith, director of planning and
economic development. “Our laws and regulations were enacted
years ago when the economy was dominated by a few big companies.
Workers’ compensation, unemployment insurance, permits and
taxes affect small companies differently than big companies. More
small businesses and their lobbying organizations are speaking up
and raising these concerns as business climate issues. This is appropriate.”
Change also came with the realization that “any economy,
no matter where, cannot survive on one industry. Tourism is an industry,
and like the auto industry, the shoe industry and the textile industry,
it cannot support an economy very long. Our aim is not to discredit
the visitor industry. But the problem we see is that the other industries
are declining. It could spell disaster if anything happened to tourism,’’
said Fred Sexton, director of the Economic Development Corporation
of Honolulu. Rather than pick up the pieces, the state is encouraging
diversification of the local economy, a move that is leading Hawaii
into such future-focused areas as aqua-farming and astronomy.
One of the changes Hawaii businessmen made was to work for a restructuring
of Hawaii’s unique land laws. They realized that many outsiders
believed, incorrectly, that it was impossible to purchase land here.
True, the original system saw a home or business owner leasing the
land under his building from one of the big land companies. That’s
changing. Another factor in the change has been that old bugaboo,
democracy in action. With their new attitude towards business, state
and local politicians are responding to a recent public opinion
survey conducted as part of a revision for the state plan. Hawaii’s
residents want more economic diversity. People know the problems
business encountered here, but they are also aware of what the state
can offer business. “There are opportunities here and they’re
not to hard to identify. People are forcing government to look forward,”
This year, the state legislature will be considering action to
eliminate the general excise tax on a variety of goods, as well
as the consolidation of all land use permits under one county department
to guarantee processing within 90 days from receipts of the application.
The legislators will also be asked to create a venture capital fund
and an “innovation center’’ at the Manoa Campus
of the University of Hawaii.
Action in these areas would build on the state’s recent
pro-business record. It has already created a network of small business
services and obtained a total of $850,000 for small business loans,
product promotion and informational services, according to Keith.
In 1983, the State Department of Planning and Economic Development
provided $80,000 as its share of a 50-50 matching grant program
with the Chamber of Commerce of Hawaii for the Chamber’s Small
Business Information Service. Since then, the service has been able
to operate entirely on Chamber monies.
In 1984, DPED established its Small Business Information Service,
with three staffers who do nothing but work with small businesses.
The project began with a $45,000 state grant and recently scored
a $95,000 federal grant to continue operation. “I sense a
lot of attention to business and the difficulties businesses have
here,” said Angela Williams, director of the Pacific Business
Center Program at the Mania campus of the University of Hawaii.
“I don’t think you can blame the state too much because
in the past, business people haven’t lobbied the legislature
diligently. People who were anti-business were there.”
Williams described her program as “brokers of university
expertise. I think you’re going to see more and more universities
across the country moving in this direction. All the professors’
research is published in journals. The Japanese are reading them
selling our own technology back to us. We’ve got to turn this
research into actual products.”
Local businesses and local folks thinking of setting businesses
come to the center for assistance in everything from marketing strategy
to package design. Williams directs the inquiries to the appropriate
professors and graduate students. The center also works on the reverse
route. “We help the University commercialize the results of
research project and evaluate their commercial value. Too often,
scientists don’t have a good grasp of how much something is
worth, or how to market it,” she said.
Three hi-tech parks are on the way with one, in Mililani, “that
should be up and running by summer 1987,” said Ray Tsuchiyama
of Oceanic Properties. “A lot of people stereotype Hawaii
as a place where you cannot buy land. Well, there it is, at the
hi-tech park. Fully improved land for sale. We had a very, very
smooth approval process with the state. We’re following the
state’s lead in this. The prices are competitive with Silicon
Valley, at $11 a square foot, fully improved,” Tsuchiyama
said. (He might want to add that wages here are 18 percent below
those paid in California.)
All this is solid evidence that Hawaii wants to work well with
the businesses already here and those who will move here. Sure,
Hawaii isn’t the perfect place for every business. Find one
that is. A feed lot on 42nd Street? No. Heavy manufacturing in Hawaii
would have the same chance of success. Here, the key is lightweight
products with high values, good management and a reason to locate
near the Pacific Rim markets of Asia and Oceania.
Hawaii has the people and the location. Honolulu, with a population
of over 865,000, is home to about 80% of Hawaii’s people.
It is the eighth fastest growing major metropolitan area in the
United States. The cultures of East and West have been meeting,
mingling and getting along just-fine-thank-you here for some 150
years. Business is done with Western firms in the Western manner
and with Asian firms in the Asian manner, based on personal relationships
such as those Governor Ariyoshi and other local leaders have built
over the years. An example of this came last November when Honolulu’s
mayor, Frank Faso and other community leaders ventured to Australia
and Japan to attract business. He said “Come to me directly.
We’ll help you find a place to get settled on Oahu. I assure
you we’ll cut the red tape.” “That made quite
an impression,” said Galen Fox, the mayor’s executive
“When we talked about doing business here, they were surprised
to find we have attributes that are business-related,” said
Sexton, director of the Economic Development Corporation of Honolulu.
“Half the battle is telling them there’s something beyond
Andrea Simpson of Pacific Resources cites other advantages for
locating in Hawaii. “We tend to be able to understand how
to do business with the each better. We have the cultural diversity,
so we’re used to this. We also have a language advantage here.
We have resources at our fingertips for interpretation and assistance,
for printing in different languages.”
The lack of an international banking system is a problem, Simpson
pointed out, but “that’s changing. And there definitely
are delays and red tape. But to tell you the truth, we haven’t
had many of the problems other companies have had. We’re a
success story that would attest to the helpfulness here.”
There’s another perk to being a Hawaii-based company, one
that Simpson reveals with a smile. “In the past, our management
has said ‘we kind of wish we could travel on a Hawaii passport.’
Because of Hawaii’s mystique, it’s easier to get a foot
in the door. People love to stop in Hawaii on their way to and fro.
The hospitality here is just marvelous. The Asian cultures do know
how to entertain properly, and in business, that is absolutely essential.”
While there will always be a place for sugar and pineapple in
the state’s agricultural plan, state farmers and leaders are
betting on the blossoming of such diversified options as papayas,
macadamia nuts, coffee, flowers, foliage plants and guava. This
means Hans-Peter Hager, owner chef at Edelweiss in Waimea, on Hawaii,
can fulfill a diner’s request for a meal featuring local products
with an appetizer of oyster mushrooms grown in Hilo, a main course
of local papayas stuffed with locally raised veal prepared in a
stroganoff, and of course, world renowned Kona coffee.
According to State Department of Agriculture statistics, in 1983,
the receipts from all crops totaled $83.7 million, 13 percent above
the 1982 receipts of $740.5 million. The $837 million includes the
processed value of sugar and pineapple and $6.8 million in government
funding for various programs. Molasses and sugar amounted to $410.2
million and sales of pineapple to $219 million. That’s 75
percent of the total when the crops’ receipts are combined.
About $199 million came from diversified agriculture, including
$86.4 million form livestock.
Another major factor in Hawaii’s economy is the military.
In the past, the state has relied on its strategic location to attract
military contracts. Now, leaders realize they can bid for additional
military contract and they go after them aggressively. The military
accounts for more than 20,000 civilian jobs – about 5% of
all non-agricultural jobs in the state. As of July 1, 1984, 60,000
members of the armed forces and 67,100 dependents called Hawaii
Tourism ranks as the state’s number one industry and will
continue in the position for the foreseeable future. However, patterns
of the visitor industry are changing: m ore repeat visitors; more
tourism on the islands other than Oahu, which enhances the economy
of the state and each island.
The aloha tradition of hospitality contributed to the popularity
of Hawaii as a vacation spot. Now, with the decline of the monolithic
sugar and pineapple industries, the visitor industry is the state’s
largest moneymaker. After several sluggish years, developers are
building resorts again, changing their focus to create spectacular
hideaways off Oahu.
Business and tourism work together to promote the islands. “Hawaii
still conjures up visions of that dream vacation,” said Gordon
Kai, of Mauna Lani Bay and the other two Emerald Hotels. “No
matter what we do, there’s always that in the back of their
minds. Yet we’ve found when professional groups meet in Hawaii,
participants are more motivated to start early and work efficiently
throughout the day so they can have a little time off in the afternoon.”
Just over ten years ago, the state created the Natural Energy
Laboratory of Hawaii on 322 acres at Ke-ahole Point on the Kona
coast of the Big Island, as locals call the island of Hawaii. Off
the point, the ocean floor drops deeply and steeply.
Through a 6,000 foot-long-line, pumps, operating at the rate of
1,000 gallons a minute, such up the cold, germ-free water that is
rich in nutrients. This kind of water exists only in tropical oceans
where there is a year-round difference in the temperature of the
surface and the deep. To find this kind of water near an inhabited
landmass with an international airport is akin to a wet Sutter’s
The NELH seized the natural advantage to become the only place
on the planet where this water is available for research experiments
and commercial ventures such as the nearby Hawaiian Abalone Farms,
Cyanotech’s cultivation of spirula, a plant source for the
complex of B vitamins and the lobsters.
Last summer, the folks at West Coast Lobster in Oceanside, California
“were ready to throw in the towel,” said president David
Weiner. As one of the state’s largest suppliers of Maine lobsters,
he knew it was becoming increasingly difficult for East Coast fishermen
to trap the diminishing stock of lobsters. After some research and
development activity, the company had the technology to raise lobsters
on a commercial level. Taste tests at San Diego restaurants proved
diners couldn’t discern a difference between wild and domesticated
The company investigated possible lobster-farming sites in Mexico.
“We had problems with just being down there,” said John
Handrus, a company partner who is also a biologist. And after years
of confronting California’s regulatory morass, Weiner and
Handrus were ready for the towel toss.
In mid-August the company wrote the NELH. “In early September,
we went out to Hawaii. We got an approval in concept September 6.
We were financially approved on October 10,” said Weiner.
“We felt kind of silly, wearing suits when everyone else was
wearing Hawaiian shirts, but they were a lot more straightforward,
and there was a lot less red tape,” Handrus said.
“They gave us the guidelines. Hawaii basically held our hand
all the way through the process and that was good,” Weiner
Lobsters, brought from Canada to mature in Ke-ahole Point tanks,
should reach the Hawaiian market by Christmas. Looking ahead, Weiner
sees a ready market for what should be an annual yield of 3.2 million
lobsters in five years. He anticipates few problems finding workers
for the labor-intensive project – “There’s a large
workforce trained in aquaculture already and we plan on drawing
on that,” he said.
Aquaculture fits into the state’s efforts to encourage the
expansion of Hawaii’s existing $200 million hi-tech industry,
which include research facilities that attract astronomers from
all over the world to Mauna Kea for planetary, satellite and lunar
ranging studies at the Institute for Astronomy.
There’s the Research Corporation of the University of Hawaii
(RCUH), a non-profit enterprise created to develop projects directly
or as joint ventures with government agencies, international organizations,
foreign nations or private businesses.
The Physical Electronics Laboratory at the University of Hawaii
supports electronic device education, research and development on
novel electronic sensors targeting industrial needs.
The Pacific Biomedical Research Center (PBRC), the Hawaii Institute
of Geophysics and the Look Laboratory of Oceanographic Engineering
also tie in with the hi-tech industries that have a long history
On the Big Island, the NELH sites is located just a few miles
from some fish ponds once maintained for ancient Hawaiian royalty.
These ponds are preserved on what are now the grounds of the Mauna
Lani Bay Hotel, a luxurious, isolated resort, where weekend activities
for guests include the usual – aerobics, golf, tennis, swimming;
the usual for Hawaii – helicopter tours of live volcanoes,
lei-making, wild boar hunting; and, the truly unusual for just about
anyplace – feeding the fish. Like the awa following the shower
of trout chow around the pools, intrigued hotel guests trails the
hotel’s resident Hawaii historian, Kaniela Akaka, as he feed
the fish and chats about the ancient origins of the royal fish ponds.
Guests, already goose-bumpy from watching eels slither out from
their muddy hideholes, react with shivers to Akaka’s good-natured
revelation that recent haul from the ponds included a 49-pound barracuda.
“That shows you how good life is in our ponds,” Akaka
said. (Big fish are happy fish.) The ponds, with other areas of
the resort, are on the National Register of Historic Places.
Tapping into its natural resources by developing industries such
as aquaculture is what Hawaii does best. At a 1984 state-sponsored
symposium on hi-tech, Dr. David Morrison of the University of Hawaii
said: “Most of the population of the world lives in tropical
climates; most of the population lives in countries that poor in
fossil fuels. Much of the world is adjacent to the ocean, and Hawaii
is the natural window on a large part of the world for the United
States. It is the place where we should test our research activities
and should develop the techniques which we can export to the rest
of the world. We have the capability here of doing things no one
else in the United States can do, but which are of tremendous importance
and have tremendous potential markets in the rest of the world.”