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# Ventures in Paradise: Hawaii Trade Report (CaliforniaCEO, December 2002)
- URL: https://www.hibiotech.com/press-2002-12-calceo/
- Published: 2002-12-01T12:00:00.000Z
- Updated: 2026-10-24T18:57:00.000Z
- Description: From the Hawaii Biotech archive: California CEO : December 2002 : Trade Report : Hawaii December 2002 TRADE REPORT Hawaii: Ventures in Paradise Think Hawaii is just a beautiful vacation spot? Think again. The Aloha State is welcoming businesses with a new attitud
- Author: The Hi, Biotech Newsroom
- Tags: Press Archive, Press Coverage

Hi, Biotech is an independent publication with no affiliation with Hawaii Biotech, Inc. This page preserves a historical record from the company's original press archive, republished for research and archival purposes. Copyright in the original material remains with its original owner.

California CEO : December 2002 : Trade Report : Hawaii December 2002 TRADE REPORT Hawaii: Ventures in Paradise Think Hawaii is just a beautiful vacation spot? Think again. The Aloha State is welcoming businesses with a new attitude and strong incentives. Hawaii is Open for Business Hawaiian government is taking steps to become more business-friendly. By Governor-elect Linda Lingle On Election Day, November 5, 2002, the people of Hawaii made some very clear choices about their future and one of those clear choices is about business. By choosing a strongly pro-business candidate for governor, the people of our state have said, "Hawaii is open for business." What does it mean to be open for business? It means that state government will change its attitude and relationship toward the business community. Instead of "policing" business with excessive regulations and heavy-handed oversight, state government will work in partnership with business to create quality jobs, improve public education, support entrepreneurship, and welcome investment in Hawaii. We'll start by leveling the playing field so that these business leaders no longer have to know someone on the inside to conduct business with our state government. We understand that people do not want to invest capital where they don't understand the rules or where the rules are different for different people. Everyone who wants to do business in Hawaii will be treated equally, fairly, and with respect by state government. Being open for business means that we will restore trust and integrity in government and restore honor in public service. We believe that government workers want to do their best for the people they serve, but without leadership and direction they sometimes forget that time is money to a business. We will work to make government more responsive to business. State government will be a facilitator rather than an impediment to doing business in Hawaii. We will streamline government processes and systems to reduce money-wasting redundancies. And we'll work with our four county governments to identify and eliminate unnecessary overlaps in regulations and http://www.californiaceo.com/current\_issue/tradeReport.html (1 of 25) \[1/21/2003 10:23:08 AM\] California CEO : December 2002 : Trade Report : Hawaii permitting. Being open for business means that we will create a public education system that does an outstanding job of serving the people of Hawaii and is, therefore, an asset to companies seeking to keep or attract employees. Our public education system will work with business to prepare students for the workplace so they can secure quality jobs when they complete their education and training. From a government perspective, "profit" will no longer be a dirty word in Hawaii. We understand that business and capital investment have no reason to go where there is no potential for profit. We understand that profitable companies create more jobs, provide training and professional development for employees, contribute to retirement plans, invest capital in their own growth, and give back to the community through charitable contributions of time and money. We want businesses that invest in Hawaii to be profitable. State government in Hawaii will no longer compete with business for opportunities and accolades. It is time for state government to understand and excel at its own role in the lives of the people it serves. Government does not exist to create jobs and revenue. More accurately, government exists to ensure the health, safety, and education of its citizens. It is the role of the private sector to create jobs and revenue. State government will facilitate this wherever possible and get out of the way whenever it's not needed. As part of our state's new attitude and relationship with business, we will do our part to inform those wanting to do business in Hawaii about our precious multi-ethnic, multi-cultural heritage. We will ask that business respect Hawaii's pristine physical environment and work with us to preserve and enhance it. Hawaii's well-deserved nickname has always been "paradise" because there is no place on earth where physical beauty, human diversity, and generosity of spirit combine in a more perfect way than they do in our state. The people of Hawaii have proven again and again that they are as strong, smart, capable, and resilient as anyone, anywhere. Therefore, it is time for us to use these tremendous assets to take our place in the larger business community. We will begin to do this immediately because that is what the people of Hawaii asked for on November 5, 2002\. Linda Lingle is the newly elected Hawaiian governor. Lingle is the first female governor in the state and the first Republican voted into office in 40 years. Island Excitement A new era has begun in Hawaii and the business community is benefiting. By Mike Fitzgerald A new economic and political era has begun in Honolulu and in the State of Hawaii. It's been under way and slowly gaining momentum since the demise of the sugar and pineapple plantation economy. The election of Linda Lingle as the state's first woman Governor -- and first Republican in 40 years -signaled a call for change. With her election, Hawaii can anticipate an accelerated move in a positive direction. In 1991, the Gulf War caused a slowing of tourism statewide. The decline of Japanese tourists to Waikiki http://www.californiaceo.com/current\_issue/tradeReport.html (2 of 25) \[1/21/2003 10:23:08 AM\] California CEO : December 2002 : Trade Report : Hawaii was an economic shock and evidence of a new era dawning. Since the early 1990s Hawaii's economy has been in a state of transition, slower than the economic transition and restructuring that happened on the mainland in the 1980s and 1990s. Hawaii did not experience the big economic "runs" and bubbles of the 1990s and the Hawaiian economy did not have the deep declines, mass unemployment, bankruptcies, and credit card defaults, experienced throughout much of the mainland. The economic transition has created significant and very positive changes that aren't well understood in Hawaii, much less on the mainland. Over the past decade, agriculture, thought to be a dead industry with the end of the plantations, has been the fastest growing sector with over 20 diversified and specialty crops for local markets and export. Tourism has been diversifying for two decades on Maui, Kauai, and the Big Island into eco and adventure tourism, as well as cultural, sports, and wellness tourism. While Oahu previously was focused on the sun-surf-leisure-shopping tourism, hotels, resorts, and tour operators are making multi-million dollar investments, increasing expenditures for marketing and promotions and targeting the well educated, affluent tourists who are interested in spiritual renewal through learning and adventure, as well as leisure vacations. The military in Hawaii comprises 20 percent of the economy and is the 4th largest of any state. Because of Hawaii's strategic Pacific location, it is a key base for the Army, Navy, Air Force, Marines, and the Coast Guard. The national response to terrorism likely will increase Federal Government activities and the military presence in Hawaii. Hawaii's cultural and ethnic diversity as well as its plant and ocean bio-diversity provide a unique and natural laboratory for University of Hawaii programs. Many UH programs are national and world leaders in astronomy, ocean, earth, and marine sciences; tropical agriculture and forestry; and tropical medicine. UH's Cancer Research Center is one of 60 National Cancer Institute designated cancer centers. In addition, ground has been broken and recruitment of private companies is underway for the new, visionary $150 million campus for the John A. Burns School of Medicine and Bio-Medical-Science Research Park. Most exciting, however, is the beginning of an entrepreneurial culture in Honolulu and statewide. The technology industry is being nurtured and growing to leverage our strategic mid-Pacific location, a diversified hub of trans-Pacific fiber-optic cables, satellite links, and cellular and wireless networks. In the past five years, with the influence and support from Silicon Valley VCs and entrepreneurs, the UH School of Business now offers a special program, the Pacific Asian Center for Entrepreneurship and E-Business, as well as Annual Business Plan Competition which draws venture capitalists from Asia and the western United States. This entrepreneurial spirit has spread thru the community colleges and high schools sponsoring their entrepreneurial curriculum and business plan competitions. A Silicon Valley 200 member "Friends of Hawaii" network has been mobilized to consider investment in Hawaii startups. This is partly fueled by Act 221, the new tech investment incentive passed in 1999, which provides 100 percent tax credit over five years. Along with four tech incubators and HiBEAM, a local entrepreneurial accelerator founded by Silicon Valley veterans, there is a new birthing of the entrepreneurial spirit, new startups, and investment by U.S. mainland and Asian investors, launching a new exciting era in Hawaii. Mike Fitzgerald is CEO of Enterprise Hawaii. For detailed information about investment opportunities call Enterprise Honolulu at 877-423-6332, or visit www.enterprisehonolulu.com. http://www.californiaceo.com/current\_issue/tradeReport.html (3 of 25) \[1/21/2003 10:23:08 AM\] California CEO : December 2002 : Trade Report : Hawaii Saying Aloha to Business Think Hawaii is just a terrific vacation spot? Think again. By Kenneth Joyce Photo courtesy of Outrigger Enterprises With its year-round sunshine, temperate climate, and miles of sandy beaches, Hawaii has a well-earned reputation as a great place to visit and an even better place to live. Although it's one of the smallest populated of the 50 states, with 1.2 million residents, Hawaii is a prime destination for planeloads from mainland America and Asia -- more than seven million plus visitors flock to the islands each year. What is less known about Hawaii though, is that its wonderful natural climate is exceeded by its open and inviting business climate. Established companies and new startups are forging a dynamic and vigorous economy on the islands. Here is an all-encompassing overview of what makes the Aloha State so unique. Telecom Hawaii makes the best of its geographical location, floating midway in the international time zones between Asia and the United States. Companies may conduct business with the American East Coast and Pacific Rim on the same workday. Hawaii facilitates international communications with a multi-faceted hub of trans- Pacific fiber optic cables, cellular and wireless networks (100 percent of local phone lines are digital), and more than 30 satellites. The High Technology Development Corporation is implementing the Hawaii Telecommunications and Information Resource Network that is enabling the creation of information products and services in the fields of telemedicine, distance learning, and earth sciences. The Resource Network links the major Hawaiian Islands to each other, as well as with the other continents of the world. "As the new center of Pacific telecommunications and new business growth between the United States and Pacific Rim countries, Hawaii offers an ideal location for international companies such as AT&T," says Ken Sandefur, area vice president of AT&T. "It is the logical link between East and West, bridging different time zones and allowing global companies to expand their markets." http://www.californiaceo.com/current\_issue/tradeReport.html (4 of 25) \[1/21/2003 10:23:08 AM\] California CEO : December 2002 : Trade Report : Hawaii With this kind of communications infrastructure, Hawaii is capable of fulfilling just about any kind of high technology business requirement and the state is taking affirmative action to encourage this all-important industry. Act 221 In 2002 Hawaii became the only state in the nation offering 100 percent tax credit on an equity investment in a qualified high-tech business (QHTB). Act 221 is landmark legislation that greatly enhances Hawaii's high technology climate. The recent boom and bust of the dot-coms have made investors ever more cautious when it comes to putting money in a particular venture, especially anything having to do with high tech. Act 221 gives investors a competitive edge if the company happens to be in Hawaii. It provides for an excellent high technology investment credit, structured as a 100 percent return on cash investments in a QHTB, on a front-loaded basis over five years (35 percent credit in the year of investment, 25 percent the next year, 20 percent the next and 10 percent each in the third and fourth years). Intended to provide a full 100 percent return for investments up to $2 million per year per QHTB, Act 221 provides that if the QHTB fails to qualify or if the investment is sold or withdrawn, there will be a recapture of 10 percent of the total tax credit in the preceding two taxable years. Biotech Hawaii is proving to be a fertile field for the specialized sector of biotechnology. The biotech industry has produced more than 45 companies and nearly 2000 white-collar jobs. Across the state, bio-business generates about $350 million in revenue. While countless startup companies flamed out during the Internet bubble, biotech continued to grow. This research-intensive industry is at home in Hawaii, thanks in large part to the state's fairly stable temperate climate. Hawaii is an ideal environment for growing new plant varieties -- it's the most biologically diverse place on the planet. In many respects, Hawaii's island locale is a test tube, with the multicultural population creating opportunities for using genome-sequencing data to customize the treatment of different diseases to different ethnic groups. For example, Hawaii Pacific Health and Quintiles Transnational Corporation, a contract pharmaceutical company based in North Carolina, have combined forces to conduct clinical trials of FDA-approved drugs for use in Japan. "The opening of Japan's pharmaceutical market has created a greater demand for clinical trials acceptable for drug registration in Japan," says Pam Kirby, CEO of Quintiles. "Access to Hawaii's large population of ethnic Japanese offers a solution to this challenge." The island climate is an R&D asset exploited by the likes of Monsanto, Cargill, Syngenta Seeds, Pioneer Hi- Bred International, and the Garst Seed Company. Contributing to the seed industry's 20 percent annual growth, these multinationals are growing seed crops enhanced by biotechnology, contributing to Hawaii's reputation as a center for plant genetics. Developing a new strain of seed on the Mainland can take up to 12 years. Hawaii's island climate permits up to three crops in a single year, reducing that 12-year cycle to four years -- an enormous savings in both time and money. Another positive for the biotech industry is that Hawaii has the resources and the willingness to make things happen. Researchers at the Department of Tropical Medicine and Medical Microbiology at the John A. Burns School of Medicine, under the direction of Dr. Sandra Chang, are developing a major breakthrough in the fight against malaria, a disease responsible for more than one million deaths per year. The University of Hawaii's Free Electron Laser Laboratory has developed a process utilizing a high-energy light source for xray crystallography and x-ray microscopy, giving researchers a 3-D perspective and in-depth understanding http://www.californiaceo.com/current\_issue/tradeReport.html (5 of 25) \[1/21/2003 10:23:08 AM\] California CEO : December 2002 : Trade Report : Hawaii of molecules, critical in the study of proteins. The Natural Energy Laboratory of Hawaii (NELH) provides resources and facilities for energy and ocean-related research, educational and commercial activities. NELH makes it possible for companies in aquaculture and marine biotechnology to conduct underwater operations in near pristine conditions. Cyanotech Corporation is one of the world's leading producers of Spirulina, a high value nutritional supplement for the health food industry. Kona Cold Lobster Ltd. Is the largest holding facility for Maine lobsters west of New England, and Royal Hawaiian Sea Farms produces over two tons of sea vegetables per week. Each of these firms and many others like them are seizing the new day that has dawned in Hawaii. "The state has taken huge strides and is now establishing itself as one of the optimum locations for high technology enterprise," says Tareq Hogue, chair of the Hawaii Technology Trade Association. And Mike Fitzgerald, CEO of Enterprise Honolulu, had this to add about the state's biotech success: "Hawaii has created a climate that lays the groundwork for the long-term development of this industry. All the pieces are in place, including safeguards for overseeing responsible development." Besides the passage of Act 221, Hawaii makes ongoing efforts toward the development of the all-important high tech sector. "The State's determination to develop the technology sector is neither a pipe dream, political rhetoric, nor simply following a fad," says Seiji F. Naya, director of Hawaii's Department of Business, Economic Development & Tourism (DBEDT). "With comprehensive legislative enactment, authority now exists to pursue a growth strategy to move Hawaii's economy briskly forward in the new Millennium. However, although technology development is an area in which government must exercise leadership to ensure optimal progress, the effort must be in cooperative partnership with the private sector . . . the common thread that unites the partners is the knowledge that the future of our children and their children in these islands may depend upon how well our partnership succeeds." Financial services Within DBEDT is the Hawaii Strategic Development Corporation, which promotes the state's economic diversification through venture capital investment partnerships. Hawaii's private sector furthermore has a stable and vigorous banking system able to satisfy any number of financial needs the business community might have. The Bank of Hawaii, First Hawaiian Bank, American Savings Bank, Central Pacific Bank, City Bank, Finance Factors Ltd., Territorial Savings & Loan Association, Hawaii National Bank, Oahu Finance Co., and GECC Financial Corp. have the wherewithal and the willingness to promote Hawaiian business enterprises. "Our efforts toward diversifying the economy away from tourism have been very successful," says Constance Lau, senior vice president of American Savings Bank. "We have found many opportunities in high technology and our small business portfolio has grown from $15 million in 1997 to $220 million today." http://www.californiaceo.com/current\_issue/tradeReport.html (6 of 25) \[1/21/2003 10:23:08 AM\] California CEO : December 2002 : Trade Report : Hawaii Higher education University of Hawaii students are learning essential international business skills. Photo: University of Hawaii College of Business Administration The University of Hawaii College of Business Administration has curricula spanning the gap between East and West. The Pacific Asian Management Institute, a Japan- and Chinafocused MBA program, and the Pacific Asian Center for Entrepreneurship & E-Business are first-class crosscultural resources that allow students from the Pacific Rim, Hawaiian Islands, or from the mainland to experience the essence of international business with an Asian perspective. With increasing economic globalization, students learn valuable skills, making them better competitors on the world stage. Through a partnership between the College of Business Administration, University of Hawaii, and the Japan- America Institute of Management Science, MBA programs are more than academic exercises or classroom drills. The 15-month programs include three-month corporate internships in China, Japan, or the United States and the coursework has an intense emphasis on language and cultural training. The Hawaii location is the ultimate multi-cultural setting to network international relationships on the way to business success in Asia. "Under guidance of professional instructors in this program, we experienced business administration styles of America and Japan, cross-cultural exchanges, and worthwhile internships at the Japanese company of our choice," says Robin C.C. Lin, from Taiwan, vice president of the International Commercial Bank of China in New York. "JEMBA promoted a tight-knit learning environment for students from all over the world. In addition to gaining specialized knowledge, we also had the opportunity to socialize and expand our cultural views and personal interaction skills. These aspects of the JEMBA program make it stand out among business programs at other institutions." The University of Hawaii College of Business Administration is highly proactive, working with the business community within Hawaii, as well as with companies across the Pacific Rim. Since 1999, they have had a Business Plan Competition giving students an opportunity to learn the fundamentals of entrepreneurship. Another program, in conjunction with the Hawaii Technology Trade Association, "Start-Up: the Hawaii Entrepreneurs Boot Camp", is a thorough immersion in the finer points of entrepreneurship, including good business concepts, writing a good business plan, which business models make sense, and what it takes to succeed in business by yourself. "Our newly established Pacific Asian Center for Entrepreneurship and E-Business has already become a focal point for students, entrepreneurs and venture capitalists, where ideas for exciting new businesses are becoming a reality," says David McClain, dean of the College of Business Administration. "Our Business Plan Competition, with $50,000 in prize money, drew 46 student teams and the interest of investors." The high esteem in which the school is held is seen in the who's who of companies who have hosted the JEMBA/CHEMBA interns. Apple Japan, ASICS, Burson-Marsteller, Dentsu, Dun & Bradstreet, Fuji Electric, Lucent, McCann-Erickson, Mitsubishi, Nissan, Toyota and Seiko Instruments, are just a handful of the plethora of firms expressing confidence in the University of Hawaii's College of Business Administration's Asian-specific programs. http://www.californiaceo.com/current\_issue/tradeReport.html (7 of 25) \[1/21/2003 10:23:08 AM\] California CEO : December 2002 : Trade Report : Hawaii The University of Hawaii is just one of the higher education resources ensuring that the business community has a well-trained workforce. Community colleges in Kauai, Kapiolani, Honolulu, Hilo, Maui, and Kaneohe, along with the American University of Hawaii, Chaminade University, Hawaii Pacific University, the Hawaii Preparatory Academy, Pickering University, and the Heald College of Business & Technology are each offering coursework and degrees to keep the growing workforce current with the demands of Hawaii's economy. Defense and dual-use The United States military has been a significant presence in Hawaii for more than a century and, after tourism, federal spending has the greatest percentage of gross state product. Defense and dual-use technology programs are an ever-expanding part of the islands' industry mix. Dual-use allows civilian companies to build or build on technologies that may have been originally intended for military purposes. In this way, defense expenditures are a kind of head start for a variety of enterprises. With defense programs as a nucleus, the civilian economy benefits by workforce skills transfer. An improved workforce makes Hawaii more competitive by being able to attract and support new technology industries. NASA, the Departments of Defense, Commerce, and Energy all have fostered programs designed for national security purposes, but which have a convenient application for civilian and commercial use. Throughout Hawaii, the defense & dual-use technology factor is evident. The Center for Excellence in Research in Ocean Science (CEROS) seeks to advance innovative concepts and new approaches to technology, while fully leveraging existing facilities and infrastructure in Hawaii and demonstrating commercial utility for the Department of Defense. Already CEROS has awarded research grants to a host of local Hawaii businesses like Orincon, Makai Ocean Engineering, Pacific Marine, and Oceanit Laboratories. Similarly, the Air Force Space Command has spent more than $230 million to develop, research, and improve atmospheric and space imagery technology atop Haleakala. The Ground-based Electro-Optical Deep Space Surveillance system at the Maui Space Surveillance site is used to track objects in outer space. Besides being facilities of the federal government, civilian firms including Boeing, Textron Systems, TREX Enterprises, and PRC Litton function at the sites. Of the many firms who are flourishing in the defense & dual-use environment, few are more innovative than Science & Technology International. Founded in 1980, the company's original business was providing consulting services to NASA. Throughout the years it started to diversify, developing core technologies in photonics, image processing, and information technologies. In 1993, Nicholas Susner joined STI as company president and a few years later he took over the company. Under his leadership, STI has grown from a dozen employees to more than 100\. Although STI still depends heavily on government contracts, its business is split 55 percent defense and 45 percent commercial. STI develops state-of-the-art systems across a wide array of fields including national security, health systems, and environmental monitoring. STI's cutting-edge expertise perfectly meshes with the special characteristics of Hawaii's tropical location. Hawaii's climate allows for almost continuous air, land, and sea accessibility, which is conducive for testing of STI's remote sensing technology. The coastal waters are the ideal testing environment. The company's sophisticated optical imaging camera systems can see up to 288 colors and their computer software can detect subtle differences in these colors. By mounting the systems underneath a helicopter or aircraft they can be used for detecting submarines, whales, marine debris, coral characterizations, and problems in the environment, such as an oil spill. The airborne systems also can be used during search-and-rescue operations, various ocean emergencies, and natural disasters. With this niche expertise, it's not surprising that STI has a multi-million dollar contract with the Pacific Disaster Center supporting PDC's divisions of Applications Development and Information Systems. Two years ago, the Hawaii Technology Trade Association recognized STI as the state's best Ocean-Earth-Science Technology Company, a clear indicator of the potential of companies operating in the defense and dual-use arena. http://www.californiaceo.com/current\_issue/tradeReport.html (8 of 25) \[1/21/2003 10:23:08 AM\] California CEO : December 2002 : Trade Report : Hawaii "STI's mission is enhancing the quality of life through the innovative application and emerging technologies," Susner says. One of those emerging technologies that Susner talks about is spectral diagnostic imaging that relies on high-resolution imaging and spectroscopy that can distinguish tissue types by their characteristic absorption of light. Further data is gained from fluorescence when the tissue is stimulated with ultraviolet light. This has an advantage over point-monitoring spectral diagnostic devices because STI Medical Systems' instrument provides total area imaging. STI is doing groundbreaking work in the detection of cancer by use of spectral diagnostic imaging. "STI has demonstrated its cervical imaging technology, known as HSDI, on more than 300 women suspected of having pre-cancer or cervical cancer," Susner points out. "It is faster and less painful than biopsy techniques and our reliability is at or above that of the biopsy." STI's technique is in clinical trials in Tripler Army Medical Center and entering Phase II of FDA trials. There still is a long process before it gets final approval, but its potential hardly can be overstated. "It's a $70 billion business," Susner says. Health care STI is doing ground breaking work in the detection of cancer. Photo: STI Any company pondering expansion or relocation will find this interesting: Hawaii has one of the highest ratios of doctors to residents and the state's health-care facilities rank among the best managed in the United States. Emblematic of a clean, active lifestyle and an exceedingly healthy environment, Hawaii's average lifespan is longer than that of any other state. "In the center of the Pacific, where East meets West, we are combining the best in leading-edge medical technology with the wisdom of complementary, patient-centered care to create a model for health in the 21st century," says Dr. Earl Bakken, president and director of the North Hawaii Community Hospital and cofounder of Medtronic. The Mayo Clinic, Johns Hopkins University, and Houston's M.D. Anderson Cancer Center have acknowledged the benefits of Hawaii's medical care. These world-renown institutions are partnering with Hawaii's healthcare providers in several undertakings to serve local residents and international patients. The Queens Medical Center, for instance, partnered with Hamamatsu Photonics of Japan in the operation of a Positron Emission Tomography scanner, for the early diagnosis and treatment of strokes, epilepsy, heart disease, and cancer without surgery. Hawaii's superlative medical care is seeing an influx of business executives and even heads-of-states for their medical exams, aimed at restoring mind, body, and spirit. Holistica Hawaii has inaugurated preventive medical services as a medical spa destination at the Hilton Hawaiian Village in Honolulu. The company's Hawaii Wellness Retreat, featuring two-day, seven-day and custom designed programs (to address the specific needs of executives with busy lives and high levels of http://www.californiaceo.com/current\_issue/tradeReport.html (9 of 25) \[1/21/2003 10:23:08 AM\] California CEO : December 2002 : Trade Report : Hawaii stress) of comprehensive medical evaluation, is the first of its kind to offer such high-tech medical services in a resort setting. "Our goal is to lead the way in the science of prevention and early detection -- keeping people healthy in the first place -- and by advising lifestyle changes to reduce their health risk at the earliest possible stage," says Dr. John Klock, the co-founder and chairman of Holistica Hawaii. Holistica offers some of the most advanced medical technology available today. With Electron Beam Tomography, high-resolution Ultrasound detection, and Genomic (gene) testing, Holistica Hawaii is able to give patients as complete an evaluation as is possible at any hospital or clinic on the Mainland or in Asia. The EBT scanner performs virtual colonographies, for instance, without sedation or the uncomfortable, invasive five-foot probe, a procedure that is less painful and faster than a traditional colonoscopy. Highresolution ultrasound visualizes the anatomy and function of blood vessels in the neck, abdomen, legs, and also detects abnormalities in the stomach and pelvic areas. Gene testing is a centerpiece of preventive medicine, identifying those genes that play a role in causing disease, and Holistica Hawaii offers an advanced screening technique of genetic blood testing for this purpose. The science and technology of the Hawaii Wellness Retreat are the first priority of Holistica's patients, but the setting is not a typical medical facility. "At Holistica Hawaii you will find not a clinical atmosphere, but all the amenities of a well-run resort," says Dr. Klock. "Not anonymity but highly personalized and attentive care by our staff." Retail The vitality of Hawaii's economy can be seen in its retail sector. The 20 percent increase in the state's population, according to the 2000 census, has drawn investment from some of the world's biggest retailers, eager to sell their wares to this bigger customer base. K-Mart, Costco, Wal-Mart, Toys-R-Us, Pier 1 Imports, Circuit City, CompUSA, and Home Depot have all tagged Hawaii for storefront expansions. The site planners for these "big box" retailers do not select new locations lightly and their choice of Hawaii is as reliable an index as any of the state's robust economy. Honolulu's Ala Moana Center, the largest mall in the state has 220 stores. Home to up-market purveyors like Sephora, Gucci, Louis Vuitton, Bulgari, Ben Bridge Jeweler, Valentino, A/X Armani Exchange, Godiva Chocolatier, and Escada, General Growth Properties' Ala Moana Center generates the highest amount of revenue per square foot in the nation. "The Royal Hawaiian Shopping Center retailers on the second and third floors have sales above $1000 per square foot, all well above the national average of about $320 per square foot," says Randy Yeager, president and CEO of Retail Strategies. "Many brands have their top producing stores internationally located here. Hawaii draws from a variety of cultures and economies for our customer base. While we all miss the days of the booming Japanese economy, the actual numbers illustrate that even ‘down' for us is way up for anywhere else." Growth in the retail industry is being fostered by the state's attempts at cluster developments in designated resort areas by supporting investment in infrastructure and improvements that will strengthen the industry in Hawaii's eight major islands. A significant part of this revitalization is on Waikiki, the heart of the visitor industry and the window through which much of the rest of the state is seen. In the works is Outrigger Enterprises' 7.9-acre Waikiki Beach Walk, which will transform the Lewers-Kalia area into a new retail, entertainment, and hotel project. This $300 million investment will take the existing dated and http://www.californiaceo.com/current\_issue/tradeReport.html (10 of 25) \[1/21/2003 10:23:08 AM\] California CEO : December 2002 : Trade Report : Hawaii crowded city streets and make the area pedestrian-friendly with a central gathering place plaza, wider sidewalks, tropical foliage, and water features, complete with vintage Waikiki architecture. Outrigger, the largest lodging company in Hawaii, will phase out some of its older properties as Waikiki Beach Walk morphs into a new hotel-retail, mixed-use destination. David Carey, president and CEO of Outrigger Enterprises, is excited about the renovation. "Waikiki has always been the cornerstone of our company," he says. "The magnitude of our holdings in the Lewers Street area gives us the unique opportunity to not only breath new life into an important section of Waikiki, but to do so in a way that can restore the lure of Waikiki as a favorite gathering place for island residents." Kapolei Photo courtesy of Kapolei Property Development LLC Companies interested in setting up shop in Hawaii have a myriad of factors to consider. Besides all the factors discussed so far, many firms need to know that the right facilities are available for their needs. The City of Kapolei on Oahu's central plain is a startling example of the comprehensive resources Hawaii has to offer. Totally master-planned, Kapolei is Hawaii's E-city, with everything: hospitals, schools, fire, police, and other municipal services and shopping centers. Most importantly for the expanding, relocating, or startup business, Kapolei has real estate for nearly any manner of commercial, retail, or industrial development. Since the end of the 1950s, some of the biggest international companies such as Coca-Cola, Reynolds's Aluminum, and Chevron have operated out of Kapolei's James Campbell Industrial Park, the largest site of its kind in Hawaii, and adjacent to the deep-draft Kaloeloa/Barbers Point Harbor. Likewise, the Kapolei Business Park is comprised of nearly 100 acres of commercial real estate available for sale or lease. In addition to its various amenities, infrastructure, and landscaping, the Kapolei Business Park already has Enterprise Zone status, a serious consideration for companies involved in international trade. Kapolei's most salient feature is the Kapolei Teleport, designed to provide optimal telecommunications connectivity in the 21st century. The satellite earth station, run by Verizon Hawaii International, provides access to the Pacific region Intelsat satellite system. Fifteen satellite dishes operated by Verizon, Loral CyberStar, USAsia Telecom, Vision Accomplished, and TransVision International presently lie within the Teleport. Any business in need of exquisite and substantial data receipt and transfer capabilities would be hard pressed to find greater facilities than those on Kapolei, and the city's built-in infrastructure can accommodate whatever telecommunications traffic the Teleport can deliver. Connections to seven trans- Pacific fiber optic cables produce 200 gigabits per second of transmission capacity and with two more planned cable landings on the drawing boards, capacity will jump to a staggering 10 terabits per second. http://www.californiaceo.com/current\_issue/tradeReport.html (11 of 25) \[1/21/2003 10:23:08 AM\] California CEO : December 2002 : Trade Report : Hawaii Convention center The Hawaii Convention Center Photo courtesy of Hawall Visitors and Convention Bureau Hawaii's support of the business community is evident by the $350 million investment in the Hawaii Convention Center. With some seven million visitors each year to Hawaii, the Convention Center is attracting the business traveler coming to the islands for meetings, seminars, training, and incentive purposes. The 1.1 million square feet of meeting space has all of the latest telecommunications and other services, no matter the company or group requirements. A typical calendar finds the Hawaii Convention Center hosting a broad cross-section of organizations and companies including Nike, the American Society of Travel Agents, the Wedding Expo, Chevron Retailers, the American Academy of Neurology, the Leukemia & Lymphoma Society, and the American Association for Geriatric Psychiatry. Aloha Spirit Hawaii has much to offer and its business climate is as inviting as its natural climate. Government incentives, infrastructure, the ability to do business with the Pacific Rim along with the Mainland, having a lifestyle that is second to none -- all of these things give the state a magnetic pull. But there is still another intangible that makes Hawaii far greater than the sum of its parts: the Aloha Spirit. The Aloha Spirit can be found in the people of Hawaii in their coordination of the mind and heart and it brings each person to the self. The Aloha Spirit sees each person thinking and passing on good feelings to others. More than just a colloquial salutation, Aloha means mutual regard and affection and extends warmth in caring with no obligation in return. The essence of the Aloha Spirit is a relationship in which each person is important to every other person for collective existence. A decision to expand, relocate, or startup an enterprise in Hawaii must account for a company's individual circumstance. Even though Hawaii is an island state, it is safe to say that no company or individual is ever an island. The friendliness, the thoughtfulness, and the industriousness of Hawaiians -- an embodiment of the Aloha Spirit -- have a value beyond dollars-and-cents calculations. The Aloha Spirit is the extra something that makes doing business in Hawaii worth the investment. Kenneth Joyce is Managing Editor of California CEO. http://www.californiaceo.com/current\_issue/tradeReport.html (12 of 25) \[1/21/2003 10:23:08 AM\] California CEO : December 2002 : Trade Report : Hawaii Boardroom Perspective Hawaii's business and community leaders discuss the state's prospects. Edited by Kenneth Joyce Participants: 1\. Susan Matsushima, Alluvion; 2\. Mike Fitzgerald, Enterprise Honolulu; 3\. Scott Fivash, CEO Media; 4\. David Watumull, Hawaii Biotech; 5\. Miki Okumura, Goodsill Anderson Quinn & Stifel; 6\. Nonie Toledo, Sprint; 7\. Mason Williams, Marsh; 8\. Kitty Lagareta, Communications-Pacific; 9\. Jackie Ingamells, AT&T Hawaii; 10\. Randy Yeager, Retail Strategies; 11\. Ed Cadman, John E. Burns School of Medicine; 12\. Jeff Bloom, CTA; 13\. Vince Mitchell, 6-D Studios; 14\. Bruce Coppa, Pacific Resource Partnership; 15\. Robin Campiano, AIG Hawaii; 16\. Kenneth Joyce, CEO Media; 17\. Burt Lum, NetEnterprise; 18\. Rob Hale, Architects Hawaii; 19\. Deena Nichols, Macy's West; 20\. Rick Blangiardi, KHON-TV; 21\. Patrick Sullivan, Oceanit and CEO of Hoana; 22\. Peter Apo, Native Hawaiian Hospitality Association; 23\. Dr. Gary Okamota, Queens Health System; 24\. Don Horner, First Hawaii Bank; 25\. Will Alameida, STI. Not Pictured: Mitch D'Olier, Kaneohe Ranch and the Harold K.O. Castle Foundation; Ron Higgins, Technology Entrepreneur; Mike Rosenberg, KITV; Harry Saunders, Castle & Cooke; Roger Drue, Hawaii Pacific Health; Duncan MacNaughton, The McNaughton Group; Mike O'Neill, Bank of Hawaii; Francis Oda, Group 70 International; Tareq Hoque, Hawaii Technology Trade Association. In September, CEO Media traveled to Hawaii for an in-person CEO Round Table with the state's top business, civic, and community leaders. Enterprise Honolulu hosted the event, which was held in the Honolulu law offices of Goodsill Anderson Quinn & Stifel. Mike Fitzgerald, CEO of Enterprise Honolulu; Scott http://www.californiaceo.com/current\_issue/tradeReport.html (13 of 25) \[1/21/2003 10:23:08 AM\] California CEO : December 2002 : Trade Report : Hawaii Fivash, publisher of CEO Media; and Kenneth Joyce, managing editor of California CEO, moderated the morning-long discussion. The diverse group provided an unparalleled give-and-take on where the Aloha State is headed. Scott Fivash, CEO Media: We really want to talk about the business climate over here -- challenges, opportunities -- and get to the bottom of some of those. Mike Fitzgerald, Enterprise Honolulu: It's another beautiful day in paradise. Over the last five years, at least, and particularly in the last three, there has been the making of a renaissance in terms of new investments. Investments that have been very significant in every single category of the business sector that I can identify including diversified agriculture, retail, and tourism, not to mention the technology and industry sectors. I sense a positive appetite for change. Don Horner, First Hawaii Bank: BNP Paribas out of Paris purchased First Hawaii Bank. They're active in 87 different countries and the fact they bought our bank for $5 billion dollars says a lot about their interest in Hawaii and beyond. Randy Yeager, Retail Strategies: We're the exclusive leasing agent for Royal Hawaiian Shopping Center representing Kamehameha Schools/Bishop Estate in re-tenanting, so we are squarely in a position of talking with presidents and CEOs of many of the principal mainland brands of retail across the United States. What's extremely gratifying and exciting is that many of the mainland businesses know that Hawaii is one of the most vital retail markets. Kalakaua Avenue in Waikiki, in particular, is one of the strongest retail streets on the planet and our $17.8 billion industry is actually up slightly in the last year, even considering the effect of 9/11\. Average sales across the U.S. are about $350 per square foot, but on Kalakaua the numbers are in excess of $1000 a square foot. The six million visitors to Hawaii have a higher retail contribution ($5 billion) than the 32 million visitors to Las Vegas ($4.7 billion). Our retail numbers are off the radar screen for most businesses. The message we are sending to businesses on the mainland is one of tremendous investment in a very vital, dynamic industry that still ranks right at the tip of the retail sector worldwide. Bruce Coppa, Pacific Resource Partnership: It's been 10 years of economic hell for the construction industry. In the 1980s we were about a $4 billion industry and today we are about $2.3 billion. The Carpenter's Union in Hawaii is one of the most progressive unions in the nation and we always seem to take steps forward to see how we can help. For the first time in the history of Hawaii, the Carpenters' Union settled one month before the contract expired and it was one of the most reasonable contracts ever. Nonie Toledo, Sprint Hawaii: We've been able to garner the investment by Sprint corporate to invest in Hawaii. Over the last two years, $100 million in infrastructure technology for Internet access has been invested here. Sprint sees Hawaii as a very strategic location for tying together the mainland to Asia and to Australia and the opportunity to provide Internet services. So now companies can have large bandwidth at a very reasonable price. If a company asks, "Am I going to get isolated from a communications standpoint?" the answer is "No." Burt Lum, NetEnterprise: In Hawaii you're able to explore a variety of different service areas and broaden your business approach and marketing plan to encompass services that our customers need. We're a little different from some of the mainland models where you specifically identify a particular niche area and expand into it. Here we have a much broader breadth of services. http://www.californiaceo.com/current\_issue/tradeReport.html (14 of 25) \[1/21/2003 10:23:08 AM\] California CEO : December 2002 : Trade Report : Hawaii Mike Rosenberg, KITV: The broadcast industry is reliant on the gross state product as much as any industry in town. With the weakness of the gross state product, the broadcast economy has been reasonably weak. I got out here in 1985 and in 1986 the television broadcast market was worth about $60 million. Today, 15 years later, it's still worth $60 million, which is unfortunate. But the good news is that we have bottomed out as far as the major advertiser business and we have changed our focus as a group. Local billing in '85 and '86 was in the area of 12 percent and now it is 29 percent, meaning the agency billing from major clients has diminished and made up that money by looking at new businesses. There is room for optimism in the broadcast economy and this year will be a reasonably good year for the Hawaii broadcast economy. The federal government has mandated that we all have to be broadcasting in digital, giving us, as a group of broadcasters, six megahertz of bandwidth for digital broadcasting. Most of this high definition mode is used in primetime with standard definition in the other day parts and that leaves us the equivalent of nine T1 lines available for other than broadcast, whether it's video, audio, or data. We can lease this for other purposes and that's a pretty exciting concept. Peter Apo, Native Hawaiian Hospitality Association: The reality is, as tourism goes, so goes Hawaii. No matter how successful we are in diversifying the economy, it is hard to come up with scenarios that bring in the kind of revenue that tourism does. Tourism is an industry that is natural to what we are and everything that we stand for as a people -- the whole concept of ho'okipa, of going that extra mile, and unconditional aloha to strangers. Our immediate challenge here is to try to get the corporate structure to embrace some of these Hawaiian values into their operating systems and to do that by offering training programs. Harry Saunders, Castle & Cooke: Since the 1950s we saw the need for better land use through efficiencies and we looked toward residential and commercial development. Castle & Cooke has separated itself from its food interests. We no longer own Dole Pineapple. We are a lot smarter in the way we produce our housing, creating a better product at a more affordable price. Homes today are actually more affordable than they were in 1992, a benefit for any of the companies who are bringing in people. For many years Honolulu ranked first as the most expensive place to live in the United States. Now I think it's number 40\. Expensive homes and medium incomes have risen 50 percent since 1992 and the homes have gotten bigger and more attractive. We work with the big box retailers. One example is Costco, which recently opened at Iwilei on our site. Their first day of sales was one of their best openings ever and they averaged $1,100 a minute in sales. Resort-related sales were $750 million last year and this year they're going to be about $1.2 billion. The military's privatization of all base housing will be an investment of about a billion dollars over the next ten years just on the army housing. Roger Drue, Hawaii Pacific Health: My first job in the mid-'60s was to analyze this new law coming out of congress called Medicare, that said the government was going to pay for healthcare for senior citizens. About 1980, the government got smart and decided they were going to start discounting this payment program. Where they used to pay us about 80 percent, now for every dollar we bill Medicare, we receive 40 cents. We lose money for every Medicare patient we see. So we had to change our paradigm to grow our market and save some expense. We had to take our assets http://www.californiaceo.com/current\_issue/tradeReport.html (15 of 25) \[1/21/2003 10:23:08 AM\] California CEO : December 2002 : Trade Report : Hawaii and redistribute them and repackage them and change them to survive and grow and live up to the mission that we have of taking care of our segment of the marketplace, which 20 years ago was essentially women and children. Now of course, it is adults of all gender and ages. We now have a company of 6,000 people, four hospitals, and 25 clinics and more business than ever before in our history -- and less expense. On gross revenue of $1.2 billion we only receive $550 million because of the heavy discounting. In another area we have been working with Japan and have an exclusive contract to do all the clinical trials for the country. It's a partnership between us and Quintiles Transnational from South Carolina. We will hire 50 people and bring in about $30 million initially to the state economy. So there are opportunities to grow. Mason Williams, Marsh: The insurance industry is in absolute turmoil and it is creating an opportunity for Hawaii because the state has very attractive laws regarding captive insurance. 100 captives and about $1.7 billion in invested capital and surplus premiums and retained earnings and some 370 million dollars is invested in our economy. We could go to $3 billion in money that comes into Hawaii and one billion would stay here. You may remember Bermuda -- an island that people would go to as a tourist spot, which today it is one of the leading insurance centers, with thousands of jobs in the insurance industry. It's the kind of opportunity we have here in Hawaii today. Miki Okumura, Goodsill Anderson Quinn & Stifel: At Goodsill we face the same challenges that our clients face. We must be competitive and more entrepreneurial in what we are doing. As a law firm, we are attempting to know more about the business of our clients and be part of the business solutions that Hawaii is looking for. I think we can add value to what the business community, the public sector, and the University of Hawaii are all doing by our expertise and involvement. Deena Nichols, Macy's West: The decision to come into a market like Hawaii was a big one for Federated, a big box organization. We looked at areas of future growth, and it is about regionalization, being able to step into a smaller market and make a difference in those communities. To capture the market we have to try new things and be as innovative as our peer department stores have been in capturing the market. Patrick Sullivan, Oceanit and CEO of Hoana: Oceanit is a diversified technology company doing work in space, defense, biotechnology, information technology, and consulting. We are a type of idea factory. Hoana is a medical device company that measures your physiology without hooking up wires and cuffs in a very clever way, like the sick bay bed in Star Trek. It is really cool technology with incredible possibilities. It was an equity-funded company that was funded through Act 221\. When the rest of the United States was shut down for Christmas at the end of last year, Hawaii was buzzing because funds were getting raised for equity startup companies. Hawaii is investing in itself -taking back control of its future -- instead of relegating it to Japan's or California's economy. I think it is the first time in modern history where we are investing in ourselves, a powerful message, because we also raised money in Northern California -- Hoana raised about $2.7 million and one third of that came from Northern California. It's a real exciting time to be in Hawaii and a great time to be in the tech business. We are looking at our kids and saying "I think we've got a future in Hawaii." We've got smart, capable, energetic, bold people here that are making Hawaii an incredible place. Kitty Lagareta, Communications-Pacific: We are extremely excited to be in Hawaii. It's a choice you http://www.californiaceo.com/current\_issue/tradeReport.html (16 of 25) \[1/21/2003 10:23:08 AM\] California CEO : December 2002 : Trade Report : Hawaii make if you are any kind of businessperson. A huge part of who we are as a company is that we have passionate people. For every hour that we do of billable work and work for our clients, our people put in another hour working in the community. Our company put in over $150,000 of pro bono time in terms of services to help create a cultural improvement district in downtown Honolulu, and there is momentum and it is making tremendous progress. There'll be a 24-hour arts and cultural and entertainment district downtown around the Hawaii Theatre -- it's the kind of thing we believe in doing. Our vision for Hawaii and our commitment to Hawaii is huge and we live it every day. Our biggest challenge is that if a company comes from the mainland, they are automatically given three times the credibility of a local company. We have found that our people can do the kind of work that anybody does -- it's world class. Duncan MacNaughton, The MacNaughton Group: There are some 5,000 Starbucks around the world and Hawaii has two of the top ten. Jamba Juice has about 500 stores nationally and Hawaii has five of the top ten. One retailer has said, "Hawaii is a community of a million people, but they purchase like three million people." Marketing in Hawaii is very efficient. It's an island community and everybody knows everybody. Whether it's TV or print, it's broadcast statewide and the penetration is enormous. Another aspect of Hawaii that is largely untapped is the Royal Trust, particularly Kamehameha, which has grown in its liquidity in the last 10 years. It's an enormous resource for Hawaii. I am very optimistic about what we can do here in the future. Mike O'Neill, Bank of Hawaii: Investors and rating agencies have been surprised by the resiliency of Hawaii. Everyone assumes that post-9/11 we are flat on our back. That is not the case. Our unemployment rate is lower than that of the mainland by two percent. We have set an all time record this year for westbound visitors. Although eastbound visitors are down, tourism has come through very nicely. We have a lot of new projects on the horizon. Marriott, Hilton, and Starwood are investing significant sums in timeshare projects. I am very bullish on the prospects of Hawaii. Like lots of others in this room we're putting our money where our mouth is. Francis Oda, Group 70 International: We in Hawaii can reach out to the Pacific and do our work there. Our advantage is cultural sensitivity that comes from living on an island that is very multicultural and with an indigenous population that everyone honors. When we go elsewhere, we don't think that we are these experts getting off of planes, but we try and work with the local communities, and we find it very successful. We can speak with a voice that can be heard in other cultures. Our focus is to build culturally sensitive and environmentally responsible. Since we live on an island, getting on a plane and traveling 2,000 miles lets you see what the world is really like. We start from a base of knowing where we come from, who we are, prizing and honoring the things we have, and not taking them for granted. That is something we can offer the rest of the world. Tareq Hoque, Hawaii Technical Trade Association: The technology talent pool of Hawaii is immense. We have proved that you could build a world-class large high-tech company here in Hawaii, and that you did not have to leave once you reached a certain point. At HTTA, we created an economic incentive package for technology investment that is truly unrivaled http://www.californiaceo.com/current\_issue/tradeReport.html (17 of 25) \[1/21/2003 10:23:08 AM\] California CEO : December 2002 : Trade Report : Hawaii anywhere else in the country. A 100 percent tax credit for technology investments radically changes the investment decision for people to invest in Hawaii companies. In the rest of the country, high-tech investment is decreasing. But in Hawaii, we are seeing revitalization, a birth of it. The whole dynamic has changed. The company I'm running now, Landmark Networks, is the first time a company from California is moving to Hawaii. Any company that is going to play a critical role has a greater chance of succeeding here in Hawaii that it has in Silicon Valley. It is a radical transformation. Technology and technology development can become a key pillar of the economic diversification of the Hawaii economy. With the effort of companies like ours, and others in this room, we are off to a good start. Susan Matsushima, Alluvion: I'm here to talk about Alluvion and the importance of agriculture to Hawaii. Without agriculture, tourists might not come here. We have good food and a nice environment with green spaces. Agriculture also takes care of our water system. On the North Shore, agriculture is making a difference. We are going back to the Hawaiian way of doing things, the ahupua'a talked about the uka, the mountainous area; the kua, the growing areas; the Kai, the ocean areas. On the North Shore we have a grass fed operation -- the North Shore Cattle Company -- as well as hydroponics operations. For instance the yellow watermelons you see in the markets are all grown on the North Shore. Also, the Tongan government has about 600 acres that they have leased to do production of ethnic vegetables. You can find Waialua coffee that used to be part of Dole. There's taro produced by HPC Foods, not to mention the diversified crops of papaya, lichee, mango, tomatoes, bananas, and asparagus. North Shore is the agricultural breadbasket of Hawaii. Robin Campiano, AIG Hawaii: We're a subsidiary of American International Group and we have experienced a big spurt in auto insurance, growing from 1.2 percent to 2 percent of a $300 billion market. Here in Hawaii we have up around 20 percent. Every time I hear a car screech, a two-car screech, it is a heck of a good chance that at least one of them is mine! Here in Hawaii, we are a laboratory for our parent company in areas like marketing and distribution channels and product innovation. We have hosted delegations from China, Japan, and Indonesia trying to learn the insurance business. I think we are a bit friendlier than the people back east in New York and more able to talk to them in the language and in the way they understand. You cannot forget that the work ethic here is a very strong one. So, quite frankly, we are bullish on Hawaii. Rob Hale, Architects Hawaii: The time zone factor really helps and we have flexible hours. Our offices have people there by 6:00 a.m. when we're dealing with the East Coast and we have people up there till 8:00 or 10:00 p.m. working with the Asian market. This community has enormously talented people, who can speak the language of Washington bureaucrats and also people who can do construction documentation in Chinese. It is that array of talent and the people here that really make a huge difference for what we are able to do in Hawaii. Mitch D'Olier, Kaneohe Ranch and the Harold K.O. Castle Foundation: We own about 1,600 acres on the other side of the Koolau mountains and about half the downtown of the City of Kailua, with two beaches rated as the best in the world. Previously, I was president and CEO of Victoria Ward Ltd. We were acquired in May by General Growth Properties, which intends to do the next round of funding investment at Victoria Ward and in Kakaako. http://www.californiaceo.com/current\_issue/tradeReport.html (18 of 25) \[1/21/2003 10:23:08 AM\] California CEO : December 2002 : Trade Report : Hawaii They're engaged in a joint planning process that is historic with Kamehameha Schools, the Hawaii Community Development Authority, and the University of Hawaii for their medical school project. A new community has been created down there that should lead to a very positive enthusiasm for the development of a tech and high-tech industry in our state. Ed Cadman, John E. Burns School of Medicine: We are breaking ground with a $150 million medical school project. Hawaii is an ideal site. Technology is the product of research being done at mostly medical research centers. Research is big business and we have to create the space and the environment for the people to do their work. The estimated economic benefits of this new facility are $100 million annually and we have brought in through grants and contracts $37 million this year. We are well on our way. The opportunity to help Hawaii diversify its economy in biotech is about $200 million in annual business that will create at least 1,000 new jobs. This is a real exciting time for Hawaii. I am just delighted to be a part of the management team to create this medical school. The private-public partnership will create the environment for this new industry for Hawaii. David Watumull, Hawaii Biotech: We have built a broad pipeline of potential pharmaceutical candidates, including our Dengue fever vaccine. Our vaccine platform is also applicable to West Nile disease. We see our future closely tied together with local banks, developers, utility executives -- even Goodsill Anderson is an investor. The amount of research, the kind of research that is being implemented and put into place in Hawaii, is the catalyst for the biotech industry all over the country. We believe it can happen here and we believe that we can be the beneficiaries of that research. In biotechnology, I see that it can be successful if you actually help people. You have to improve their lives to be successful financially. That kind of kokua, that kind of help is part of the Hawaii tradition. It is part of its culture and it is what can attract this specific industry. That's a particular asset that we have. We can connect our Aloha Spirit with the spirit of the biotechnology industry. At the end of the day, we have something that can really help people. Will Alameida, STI: We are in three areas: protecting national security, protecting the environment, and saving lives. We are a dual-use technology incubator in the transfer of technology developed for national security defense applications into the commercial sector. We hope to do our share in growing and diversifying Hawaii's business base and expanding the technology industry by being a good corporate citizen. We have offered our technology for many applications to the state and for various other uses. We support the National Marine Wildlife Sanctuary with its annual marine mammal whale count. With our sensors we can see deep within the ocean and monitor the progression of whales far better than the human eye can. Last year we offered our sensors in the Hilo flood, and were able to help declare the area a national disaster. STI wants to do our part in the development of industry so that people like me, who left many, many years ago to get education on the mainland, won't have to do that. So that they can stay in Hawaii. Vince Mitchell, 6-D Studios: We help companies create engaging content and consistently deliver that across multiple platforms. I came to Hawaii in 1986 as an Air Force programmer and I immediately fell in love with the community, http://www.californiaceo.com/current\_issue/tradeReport.html (19 of 25) \[1/21/2003 10:23:08 AM\] California CEO : December 2002 : Trade Report : Hawaii the lifestyle, and the weather. When I left the Air Force in 1989, it was a pretty easy choice between Philadelphia and staying in Hawaii. And now that we've got a Dave & Buster's here, I can get a really good cheese steak. Two years ago we had a product concept and took it to the VC people on the west coast and the first thing they asked me was, "When are you going to get out of Hawaii?" It really opened my eyes to how outsiders view Hawaii's business community. They do not understand what is going on here. There has been a real surge in mentoring groups like HiBEAM, that are helping the growth of technology companies. My company is a founding member of HTTA and we are very excited about the growth opportunities that we see in Hawaii. Jeff Bloom, CTA: Doing business in Hawaii has always been a passion. Technology crosses all the lines of any business whether healthcare or tourism, it all has affects on technology. My passion for Hawaii has been for 15 or 16 years and the question is, "How do we grow our own children, our grandchildren, people of Hawaii, to really move into the next generation of what we need to do?" Hawaii has incredible potential. One, the culture. Two, the quality of life. Three, where we are in relationship to the world. What we need to do in the business community is to take control of our destiny. When I first came here in 1974, the top two issues were education and the economy. In 2002, they are the same top two issues. There seems to be a problem and it seems to be systemic. One of my hobbies is farming. I grow a lot of fruit trees and flowers and I understand the concept that you have to plant a seed, nurture it, and be a good steward to reap the crop. It does not happen overnight, it is not Jack in the Beanstalk. We have never had a strategic plan for the state and I think we have a real opportunity to put Hawaii on the map. The Department of Defense pumps close to $400 billion into the economy each year. I am doing business throughout the Pacific to Diego Garcia and across Europe based on what the Department of Defense is doing in Hawaii. If you understand what the Pacific Command does, they own everything from the West Coast of the United States to the East Coast of Africa -- half the world -- and it is sitting right here on this little rock. If we do not look at this seriously, I think we are missing something. Jackie Ingamells, AT&T Hawaii: There are many reasons we are out here. There is a good and committed workforce in Hawaii and they are loyal. Our attrition rate is lower than many mainland companies. With the time zone difference, we follow the sun and serve customers from New York to California. Our location, close to Asia, is an advantage. The Pacific area is another opportunity. Our agents speak many languages: Vietnamese, Korean, Cantonese, Mandarin, and Tagalog. We have doubled our core center size and are hiring 15 tele-agents each month. We are very committed to Hawaii. Gary Okamota, Queens Health System: The philosophy of Queens for the past 143 years is that we must take care of sick patients. The economics of healthcare have changed dramatically over the years. We are challenged to fulfill the commitment of Queen Emma and King Kamehameha to provide in perpetuity quality healthcare services to Native Hawaiians, in addition to all the people of Hawaii. Healthcare is redefining its metaphor and the future hospital will be made up of an emergency department and an intensive care unit. ERs represent rapid access and ICUs represent complex care for very sick people. At Queens, we are attempting to define a new citizen, a healthcare citizen, who in their own thinking and behavior embodies http://www.californiaceo.com/current\_issue/tradeReport.html (20 of 25) \[1/21/2003 10:23:08 AM\] California CEO : December 2002 : Trade Report : Hawaii the importance of research, education, and care. When we study the thoughts of Queen Emma and King Kamehameha back in 1850, health was not defined as an absence of disease, it was really about how to stay healthy. This is truly the Hawaiian way. We are moving away from the paradigm that hospitals are a place of sickness to one of hospitals as institutionalized symbols of wellness and health. This is where Queens is right now. Ron Higgins, Technology Entrepeneur: At Digital Island we built a global network connecting 28 different countries. It was the first public network to connect to Moscow and the first to Mainland China. It was to help multi-national companies deploy applications globally and our first data center was in Hawaii as a means of leveraging the fiber-optic cables under the Pacific. Hawaii is in a state of change and it is an opportunity for an entrepreneur. As in the stock market, you don't make money when it is flat, you make money when it goes up or goes down. Looking at California, it is easy to see that it developed its own patterns and it got trapped and did not know how to handle what happened in 2000\. There is a lot of activity here and Hawaii is unique. We will be building a lot of new businesses and creating a substantial of wealth in the community. Tareq Hoque, Hawaii Technology Trade Association: When you are building a technology company, you have to address either investors or customers and you need to overcome the perception that you are not a serious company because you happen to be in Hawaii. It is a balance between a great place to visit and a great place to do business. That is part of the function of Enterprise Honolulu, to help overcome those perceptions and let people know that Hawaii is a serious place to do business. Mike Fitzgerald, Enterprise Honolulu: It is not only a problem for technology, it is a problem for the next era of tourism. It is very difficult to get business conferences here, which are the next very big areas of tourism. Kenneth Joyce, CEO Media: Is there anything that can be done that is presently not being done? Act 221, for instance, everyone seems to agree, has had a positive influence in spurring technology enterprises. Does anyone have any thoughts on other actions that might be taken? Peter Apo, Native Hawaiian Hospitality Association: We need to rethink the mission of the Hawaii Tourism Authority in terms of its marketing. It is far too narrow, tourism directed. Hawaii should be marketed as a place to do business. Helping the Hawaii Convention Center is tantamount because we have not reached new markets -- those people who might not ordinarily come here. If we can get them here, we can begin to do our thing. Bruce Coppa, Pacific Resource Partnership: On the issue of going to the mainland to get our expertise, I want to point out that Hawaii was the first state to introduce steel in home construction. Today 60 percent of homes are steel construction. Why did this happen? It was the research into the termite problem in Hawaii. I was in Northern California recently and this is not even on their radar screen. Mike O'Neill, Bank of Hawaii: There has to be an entirely new approach in working together and I think that Enterprise Honolulu has helped to foster it. I am optimistic that cases where people have been taking off in their own direction, will now start to come together and we can present a better picture to the world. Mitch D'Olier, Kaneohe Ranch and the Harold K.O. Castle Foundation: In public education, for example, things are not really so bad when you closely look at it. We have pretty wonderful private educational institutions, whose knowledge we can leverage to improve our public schools. Hawaii private schools aren't as expensive as we think. Eighty percent of private schools are $6,000 per year or less and a http://www.californiaceo.com/current\_issue/tradeReport.html (21 of 25) \[1/21/2003 10:23:08 AM\] California CEO : December 2002 : Trade Report : Hawaii lot of people do not realize this. Patrick Sullivan, Oceanit and CEO of Hoana: If you look at the kids in Hawaii, they are fearless, they're smart, and they're competitive. But if the only opportunity for them is to work in an industry that doesn't pay very well, then, if they are successful in school, they will get a one-way ticket out of the state. Getting them to return is a big struggle. The industries we are building today and the jobs that go with them gives these kids hope that if they do well in school, there will be a good job waiting for them. We want the kids to know that if they have an opportunity to make a difference, they will not be disappointed. Ron Higgins, Technology Entrepeneur: A big challenge is the fear of failure. The community has to accept it when someone fails and realize that with failure comes learning. It is part of the process and from failure comes success. David Watumull, Hawaii Biotech: We have to get over the point that the Hawaii political system is not going to get in the way and not chop you off at the knees if you try and get going. It was this political system, the legislature, that passed Act 221, after all, which is the most advantageous investor and research credits in the country. Jeff Bloom, CTA: We should reach out from the business community to do project-based learning. Hawaiian Electric was one of the leaders here with their electric car. Their solar car projects have had incredible success. Deena Nichols, Macy's West: We have to encourage the principal players in our community. Players on the front line need to be part of the change, because the tendency is not to volunteer. But as change agents, we have to keep in touch and in tune with the front line. Robin Campiano, AIG Hawaii: We have to conquer what John Burns used to call "the subtle sense of inferiority" amongst us all. Pound for pound we do a very good job in education and we do a very good job in attracting federal dollars for military spending. Pound for pound we also do very well with our high tech industry and a lot of other industries. Mitch D'Olier, Kaneohe Ranch and the Harold K.O. Castle Foundation: In some ways, Hawaii is a victim of its enormous success. Of any of the states, Hawaii has the best brand name. Go to Europe, Asia, or South America and say "Hawaii" and magical things happen to people's faces. I have had people say "Hawaii 5-O" to me within about three seconds after telling them I am from Hawaii. We need to show that Hawaii means business, as well as tourism. Thanks and aloha to Mike Fitzgerald and CEO Media for getting us on that road. Rick Blangiardi, KHON-TV: From the standpoint of television news, the role of the media is very powerful in influencing the people of Hawaii. We will begin to restructure a lot of what we do with our news operation, how and what we report on. I understand the role and the responsibility and I think it is a very exciting time for us to get on board with that. Gary Okamota, Queens Health System: Hawaii enjoys an extraordinary reputation for having the fastest growing population of older people and this speaks very well to the social, psychological, and economic climate of Hawaii. Having said that, we cannot overlook the dark side to this health picture. http://www.californiaceo.com/current\_issue/tradeReport.html (22 of 25) \[1/21/2003 10:23:08 AM\] California CEO : December 2002 : Trade Report : Hawaii We also have very high rates of methamphetamine addiction, alcoholism, spousal abuse, and child abuse. And there are people in our own organizations that are undergoing enormous stress because of some of the economic forces and social forces alluded to today. We need to place not only corporate responsibility, but also individual responsibility for health. That is, health defined in its broadest sense: physical, mental, and emotional, as well as social. Scott Fivash, CEO Media: This has been a vigorous and enlightening discussion. I think Mike Fitzgerald of Enterprise Honolulu can bring this to a close. Mike Fitzgerald, Enterprise Honolulu: This has been particularly exciting. Success begets success and a terrific dynamism works just like exponential growth and it is underway across the board in all business sectors in pretty much all of the islands. Here in Hawaii, it is growing from within. The dynamism here is extraordinary. There are only a handful of places in the world with the assets, the location, the climate, and the people that Hawaii has. We are all lucky to be here at this juncture in time to invent a new future in this place. A new partnership is coming together and we at Enterprise Honolulu are committed to help forge it. Good teams are what are going to build this state in the future and the direct participation by all of you in taking business leadership. Business is driving this new agenda. The story of Hawaii is a perfect story and it is exciting to be part of it. Excellence Drives Opportunity The University of Hawaii offers one of the most unique, transformational academic environments in the world. By James R. Wills and Heather Tang From glowing green mice to telemedicine to powerful laser beams, state-of-theart technologies and innovative research are the norms at the University of Hawaii. Dedication to academic excellence is paving the way for Hawaii's economic diversification and positioning UH as an international leader in a number of technology segments. The University's College of Business Administration also is a visceral force in diversifying Hawaii's economy. The CBA, an AACSB-accredited school, ranks in the Top 20 business schools for International Business and is the leading business school focusing on the Asia Pacific region. The state government is doing its best to show support for UH programs. The university broke ground in October on a new $350 million medical center and research complex. Upon completion, the medical school is set to be a top-notch science center, a cornerstone of a local biotechnology industry, and an anchor for urban development. The medical school dean, Dr. Edwin Cadman, views the new med. school as an economic engine that will pay off by attracting top-flight medical researchers and bring in hundreds of millions of dollars each year in federal grants. The medical center plans to lure 40 to 50 top researchers to new faculty positions and attract between $80 million and $100 million per year in federal research money. Cutting-edge research http://www.californiaceo.com/current\_issue/tradeReport.html (23 of 25) \[1/21/2003 10:23:08 AM\] California CEO : December 2002 : Trade Report : Hawaii The University of Hawaii long has been a key source of scientific innovations. Ryuzo Yanagimachi's mousecloning technique has leveraged the UH to the forefront of this field. Yanagimachi's genetic research lab, with new state-of-the-art facilities, and a world-class research team, continues to do pioneering research on cloning and related bio-genetic processes. UH is designated a first-tier research university and has attracted hundreds of millions of dollars worth of research grants in recent years, including a record $142 million in 2002\. The school's total research and training grants exceeded the $250 million mark this year. A draft research business plan aims to achieve a rate of growth in research funding that increases grant volume by 10 percent a year through 2009\. Commercial potential also can be found in many other recent UH research breakthroughs. The university's electrical engineering department is home to several professors making revolutionary breakthroughs in studying high-speed frequencies, pivotal to worldwide wireless broadband communications. Armed with corporate financing and joint venture support, telemedicine researcher David Y.Y. Yun is juggling four separate biomedical projects. And physics professor John Madey has uncovered new ways to produce powerful laser beams at minimal cost. Asian-focused entrepreneurship The CBA is an essential player in the UH's efforts to diversify the state's economy. Positioned as the doorway to Asia, Hawaii is a choice location for any company seeking to do business with either the U.S. Mainland or Asia. The CBA is spanning the gap between East and West. The Japan-Focused and China- Focused MBA programs provide a solid global business education with an Asia focus. Additionally, the Pacific Asian Center for Entrepreneurship & E-Business offers the tools needed in today's increasingly dynamic global setting. The Pacific Asian Center for Entrepreneurship & E-Business provides numerous entrepreneurial programs. The PACE mission centers on the entrepreneurial spirit and has attracted the attention of business leaders on the West Coast and Hawaii. The center's programs are organized into three areas: an innovative curriculum in entrepreneurship reflecting an Asian Pacific theme; research projects that facilitate entrepreneurial practice and the advancement of our understanding of entrepreneurship in the Pacific Rim; and an active agenda of community outreach and involvement with entrepreneurs and entrepreneurial ventures. The CBA is highly proactive, working with the business community within Hawaii, as well as with companies across the Pacific Rim. CBA's Pacific Asian Management Institute is a leader in executive education. The institutes' client list for the executive education programs illustrates the point of excellence. Companies like ABB Power Generation, Bank of Hawaii, Korean Air, Motorola, and numerous others, each attest to the quality of executive education that is delivered at University of Hawaii. The Pacific Asian Management Institute serves as a resource of international business and management expertise with a focus on the Asia- Pacific Region. Recently, the CBA has teamed with the Hanoi Business School to deliver an Executive MBA program in Hanoi, a first of its kind in Vietnam. The University of Hawaii Vietnam Executive MBA, offers a full MBA curriculum in Hanoi. Vietnamese and expatriate executives join in the class together to gain a top-flight international business MBA. These days, programs abroad are essential for schools specializing in global business. The partnership of the CBA with the Japan-America Institute of Management Science has resulted in the formation of Japan- and China-focused MBA programs. The 15-month programs include three-month corporate internships in China, Japan, or the United States and the coursework has an intense emphasis on http://www.californiaceo.com/current\_issue/tradeReport.html (24 of 25) \[1/21/2003 10:23:08 AM\] California CEO : December 2002 : Trade Report : Hawaii language and cultural training. The timing is right for Hawaii's economic diversification. The island paradise is just one view of Hawaii, a powerful one. But if you dig a little deeper in the island sand, you will find a volcano of international hightech opportunity brewing at the University of Hawaii. James R. Wills is associate dean of the University of Hawaii College of Business Administration and Heather Tang is a graduate research assistant. Wills can be reached at wills@cba.hawaii.edu. Copyright © 2002 California CEO Inc. All Rights Reserved. This article may not be reproduced without the permission of the publisher. http://www.californiaceo.com/current\_issue/tradeReport.html (25 of 25) \[1/21/2003 10:23:08 AM\]