- Hi-tech drive moves into the fast lane -

Investment in telecoms and infrastructure is bringing Hawaiian companies into the global e-marketplace while investment in education is equipping workers with the skills to compete

here are a few places in the world that evoke most people’s idea of heaven on earth – a combination of sun-kissed tropical island and modern comforts. Hawaii is such a place and its reputation as a holiday resort par excellence is unrivalled.
But what of the economics of America’s 50th state, almost 2,400 miles off the coast of California? How is this group of exotic islands in the Pacific Ocean facing the challenges of the 21st century?
While Hawaii remains dependent on the holiday industry, government and business leaders are turning to hi-tech, international e-commerce, and convention tourism as new sources of income.

The state is transforming the dynamics of its economy. Its emergence as a strategic centre for hi-tech business signals “a new era in the history of our islands”, says governor Benjamin Cayetano.
“The components critical to our future prosperity include progressive legislation offering new technology business tax incentives, a world-class telecoms infrastructure that supports hi-tech devel-opment, and a workforce equipped with the skills needed in the new economy.


‘We are a place of business growth in the Pacific Rim’

“By combining these elements in the home of the world’s finest climate and beaches, we have established Hawaii as a place of business growth in the Pacific Rim,” he says.
In his second term of office, Mr Cayetano is the first person of Filipino ancestry to hold the post. His administration has been credited with turning round a moribund economy, particularly through the encouragement of hi-tech industries, which have tripled in number over the past decade.

“When I took office, there was a $750 million deficit. We struggled with it and by last year we had recovered,” he says. “The private sector went through a difficult time, but all businesses have made the transition to new technology, which has helped them a great deal to do business all over the world. Our isolation is a disadvantage, but we have been able to deal with that through investment in telecommunications and infrastructure.
“We have worked very hard in marketing both hi-tech and biotech, and we have had a fair amount of success. We certainly encourage venture capital in startup companies in Hawaii. Healthcare is the second-largest industry and we are planning to build a medical school with strong research capabilities,” he says.

Today, Hawaii has one of the best telecommunications networks in the US, according to Mr Cayetano. Hi-tech and biotech companies have set up business on the islands “because of the quality of life here” he adds.
Hawaii’s technology sector has grown by an impressive 17 per cent since the mid-1990s, creating 1,800 jobs between 1996-99. More than 12,000 people work in hi-tech, most of whom earn 50 per cent more than the average wage in the private sector.
Telecommunications, including broadcasting, has been the fastest growing sector, accounting for more than 50 per cent of all jobs. This is followed by IT, accounting for 29 per cent.

Of these, software is the driving force, providing 40 per cent of IT jobs. Around 1,600 people work in software at 210 sites around the state. The growth in software development jobs has been impressive, rising 178 per cent from 1996-1999.
Biotechnology has been phenomenally successful, partly as a result of the islands’ wide range of climactic and topographical features as well as their unpolluted seas. The sector is dominated by the cultivation of sophisticated varieties of seed corn, produced for export.


‘Aiming for the cutting edge, spearheading new technology’

Overall, agricultural biotechnology accounts for about 85 per cent of total biotech activity. It includes food crops grown under cover and aquaculture. Other types of biotech include medicinal, botanical and diagnostic research.
The majority of the state’s technology staff force work in the city and county of Honolulu. Maui County, Hawaii County and Kauai County also have substantial pockets of hi-tech industry.
Jeremy Harris, mayor of Honolulu, says: “We want to be on the cutting edge, spearheading new technology. We are offering e-commerce services and we are involved in a three-year programme to become a paperless city where everything is done electronically.
“We see our ultimate destiny not with tourism – although that will always be
a strong component of our economy – but as a centre between East and West, a centre for knowledge-based industries and technology transfer with Asia.

“Over the next 20 years most of the economic growth and population growth will be in Asia, and we have tremendous attributes to be a part of that global community. If we can tap into the special Asian global economy, then enormous possibilities open up. Our geographical location means that you can do business in the US East Coast markets and Asia on the same day,” says Mr Harris.

Software is the dominant force in the IT sector


‘There has been a tremendous rise in entrepreneurial spirit’

Research and development, including cloning techniques, are conducted at the University of Hawaii. Meanwhile, the federal government conducts research and development (R&D) into missile launching and testing at the Pacific Missile Range Facility on Kauai.
Geographical location is paramount in the equation. Hawaii is the only state in the US where a business can communicate with New York, Tokyo, Hong Kong and Singapore on the same working day. The state offers all the benefits of operating close to the international markets while enjoying the political stability, legal protection and freedom of the US.
Manuel Menendez, executive director of the Office of Economic Development of Honolulu, points out that 90 per cent of all businesses in Hawaii are small. In his administrative area there are five ‘enterprise zones’ in which companies can gain tax exemptions if they provide new employment. Other incentives are available to investors, such as tax breaks for land developers.

“There has been a tremendous rise in the entrepreneurial spirit,” he says. “And there is a great push to expand. Hawaii can be used by hi-tech businesses to bring in teachers and trainers from Asia.”
One of the most impressive developments has been Kapolei, Hawaii’s e-city. Now more than a decade old, Kapolei is fast becoming a major telecoms hub for the Pacific.
Kapolei has a remarkable history. It is part of the Estate of James Campbell, a private trust created in 1900 to administer the assets of one of Hawaii’s foremost business pioneers. Today, the trust’s total assets are worth some $2 billion. The estate owns 62,500 acres of land, office, retail and industrial properties in Hawaii and 15 mainland states.

Kapolei is the estate’s largest project to date and is the centre for business activity in the west of Oahu. The city comprises retail and commercial developments, a shopping centre, parks, entertainment and childcare centres, a government civic centre, a library and police station.
The key element is the state-of the-art telecommunications infrastructure linking Kapolei to mainland US and Asia via five trans-Pacific fibre-optic cables. Next to the city is Kapolei Teleport, where domestic and international satellite dishes provide internet-based businesses with clear and reliable communications.

The big centre for new e-business is Kapolei in Oahu

David McCoy, estate’s chief executive, says: “You can have a very high quality life here. It’s just a matter of getting the word out that the capability is here too.”

Just as the City of Kapolei is wired for global business, its schools are wired for hi-tech education. Kapolei Elementary School principal Mike Miyamura says: “The idea was to use technology as a seamless part of the curriculum. The kids did their research on the internet and produced presentations using technology.”

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