Hawaii’s Transformative Efforts Creating New Opportunities

28 Nov, 2012

By Rachel Duran

Hawaii offers a unique business proposition, offering solutions for both Western and Asian markets. “Business people from Asian markets feel comfortable here because of our diverse population,” says Jim Tollefson, president and CEO, Chamber of Commerce of Hawaii. For example, Tollefson was recently visiting with an attorney from a law firm in Honolulu that has entered into a partnership with a legal entity in Shanghai. “The Chinese attorneys will spend time in Honolulu with this firm to learn more about the U.S. legal system and apply their knowledge in Shanghai,” he says.

In 2011, Honolulu played host to the Asia Pacific Economic Cooperation’s Summit, where Chinese attendees showed interest in Hawaii’s clean energy initiatives and industries. Recently state officials signed an agreement with a Chinese organization to pursue such opportunities. “We will continue to see opportunities to export knowledge and learn more about Asia because of our location,” Tollefson adds.

Hawaii is a crossroads, home to a diverse group of people with different backgrounds, says Karl Fooks, president, Hawaii Strategic Development Corp. “What we are doing in Hawaii is creating the infrastructure and platforms to facilitate creative people in taking their ideas and building their businesses.”

To that end, Fooks’s organization and other stakeholders are boosting the state’s venture capital funds by implementing a broad investment program with the support of a $13 million federal award. “We are identifying local funds in Hawaii with local fund managers and investing in those funds backed by capital matches by local investors,” Fooks says. “This has been one of the pieces missing in our business landscape in the state.”

The plan is to develop three funds. An existing one focuses on spinning out technologies from the University of Hawaii Foundation. A second fund will focus on general health care with the major hospitals in the state. A third fund will focus on IT, Web, mobile and other technologies.

“We intend to use the remainder of the $13 million in a program we just started to create venture accelerators,” Fooks says. “We want to create a ladder where entrepreneurs are engaged and focused on building businesses; and have the seed funds to capitalize them. Our pension funds and the major institutional investors in our market have committed a piece of their endowments, which combined is close to $60 million.”

In related activities, Hawaii has received a $703,505 grant from the State Trade and Export Promotion program of the U.S. Small Business Administration to increase the number of local small businesses that want to export, as well as the value of exports for those small businesses that currently export. Hawaii’s state trade and export promotion program is called HiSTEP, which consists of a little more than a $1 million budget. The state and its partners will provide an additional $308,828 in cash and in-kind services.

“The primary goal of the program is to expand and elevate export-oriented programs throughout Hawaii,” says Richard Lim, director, Department of Business, Economic Development and Tourism. “We will thereby grow our small businesses’ productive, innovative and competitive edge in the world while helping to build a sustainable economy here at home.”

In addition to empowering the entrepreneurial and small business base, businesses of all sizes will be interested to learn that Hawaii’s Governor Neil Abercrombie aims for the state to become the first in the nation to define 1 gigabit universal access, an effort which is spearheaded by the Hawaii Broadband initiative. The goal for the implementation of this affordable, ultra-high-speed Internet is 2018.

Another new initiative is a 12-year business and technology transformation plan. The plan features four components: governance, business and information technology and information resource management, and enterprise architecture and projects. The plan outlines steps to drive Hawaii’s business and technology transformation and streamline business processes. Spearheading the effort is the State Office of Information Management and Technology.

Industries and Innovations

In regard to technology and innovation, Hawaii offers natural advantages, for example in regard to developments and research in ocean and earth sciences. “We are surrounded by water, and this research is one of the university’s strengths,” Tollefson says.

Businesses can also play off Hawaii’s physical location, which offers a high quality opportunity in the area of astronomy, with large telescopes located on the islands of Hawaii and Maui.

Another of the state’s strengths is the ability to support clean energy initiatives. “The proposal I would put forth is we are a great testing location; we are unique in that we are isolated,” Tollefson says. “We are small enough yet large enough to do testing in the areas of solar, wind and geothermal.” What’s more, an emerging renewable energy sector focuses on wave energy research.

In other industry activity, the biodiversity native to Hawaii lends itself to supporting the development of drug therapies, among other products. Fooks says a company in Maui is using the noni fruit to develop therapeutic remedies. Another group is synthetically producing astaxanthin, which naturally occurs in algae, to develop anti-inflammatories or food ingredients such as Omega 3s.

Life science research supported by the new venture capital funds include a company that is exploiting proteins in a native jellyfish that fluoresces red, which is important for biomedical markers, the majority of which are currently green. Another firm is reformulating technologies to increase the efficacy of drug therapies. Yet another firm is developing real-time MRI imaging software in order to stabilize captured images.

And a company that received funding through a previous venture fund several years ago has created a library of cultures that select and identify strains of algae for specific uses.

Talent and Education

The innovation sector is another area where Hawaii’s economic development officials are engaging and growing, encouraged by the advocacy of M.R.C. Greenwood, the president of the University of Hawaii system. “She has stepped up the focus on research and attracting high level research faculty to the university,” Tollefson says.  “Our intellectual property aspects [ocean and earth sciences] are unique,” Tollefson says. “It makes sense to focus on technologies that can play off the physical location of Hawaii.”
The University of Hawaii is also completing its new certified cancer research center, which will provide further economic development opportunities. What’s more, based on Hawaii’s diverse population base, companies and organizations conduct health-related testing on the state’s residents.

Development officials are also expanding the state’s research capabilities in the defense sector. “We have a large military presence here and we are working with dual-use companies to help them grow as they work with the DoD,” Tollefson adds. As of September 30, 2011, there were 42,371 active-duty DoD personnel stationed in Hawaii.


Economic development officials in Hawaii readily admit the state ranks near the bottom of many business climate rankings. And two years ago, several tax relief measures for various projects and businesses were eliminated. “We are watching closely this year to see if they will be reinstated,” Tollefson says.

That said, although the business climate is sometimes challenging, a review of quality of life rankings and reports by publications finds the state at the top or near the top as a great state to live. What’s more, Fooks points out that the state’s small economy allows company officials to network with professionals and government officials with relative ease in order to address concerns or issues.


The Department of Business, Economic Development and Tourism’s Web site says the state’s diverse heritage gives rise to many Asian and Pacific festivals along with Western celebrations. Hawaii’s amenities include 73 museums, state monuments, zoos and similar attractions. Honolulu is home to 12 theatrical groups, the Hawaii Opera Theater, the Honolulu Ballet and the Honolulu Symphony.

Don’t discount Hawaii’s scenic beauty, which has attracted the production of hundreds of movies and commercials to the islands. Hawaii is also a pioneer in managing statewide land systems, reflecting its residents’ concerns and commitment to protection of the environment.

For complete details about conducting business in Hawaii, visit:





Down to Business

Hawaii is at the forefront of national research in astronomy, ocean and earth sciences.

INNOVATE Hawaii (formerly a Manufacturing Extension Partnership) has opened a new innovation lab at the Manoa Innovation Center. The innovation center is located near the main research campus of the University of Hawaii in Manoa Valley.

Hawaii was selected as a Rural Health Care Pilot Project by the Federal Communications Commission. The Pacific Broadband Telehealth Demonstration Project, it enables improved health care through high-speed connections for telehealth and medical education throughout the state.

The total spending by the armed services in Hawaii was $6.5 billion in 2009, which resulted in direct and indirect impacts exceeding $12.2 billion to Hawaii’s economy, and accounting for more than 101,000 jobs.

Outdoors and Recreation

Low humidity, cooling trade winds, and a lack of industrial pollution make Hawaii’s air quality the best in the nation. Hawaii residents enjoy the longest average life expectancy in the nation. Hawaii’s near-ideal year-round climate supports a variety of outdoor activities, particularly golf, tennis, and a wide range of ocean sports.


Rachel Duran

Rachel Duran is the editor in chief for Business Xpansion Journal. Contact her at rduran@latitude3.com.

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