Forbes didn’t look at
what we’re doing right

State has taken important steps
to counteract downturn in economy

In a recent article, Forbes magazine has again written about Hawaii's poor business climate. We do not dispute the need for change.

Many of our regulations were developed to control the rapid pace of growth in Hawaii, which occurred almost continuously from statehood through 1991.

Short, cyclical downturns have occurred in the past, but the quick resumption of rapid economic growth kept regulations in place to control growth, preserve the beauty of our islands and extend some of the benefits of high growth to the work force.

In the 1990s, however, our economy has barely grown and jobs have declined. The current slower growth environment has required a re-examination of past practices.

Recognizing the structural rather than cyclical nature of the slowdown, Governor Cayetano took office in 1995 with policies to fix the fiscal imbalance and build the reserves. The actual number of state government employees was reduced for the first time in state history, and the size of government as a share of the economy and share of jobs fell.

Policies to streamline processes and reduce costs are being put in place. Past practices of state government competing with the private sector in housing were ended.

Although much remains to be done, significant accomplishments have been made in recent years.

Workers compensation reforms have reduced premiums by 17 percent since November 1996.

State telecommunications reforms preceded the federal reforms, increasing the number of providers in the state from four in 1990 to more than 100 today.

The state is providing tax incentives to hotels that remodel to support the relaxation of rules by the city governing buildings in Waikiki.

The enterprise zones program which offers tax incentives for firms was expanded and eligibility requirements eased to allow most non-retail activities.

Changes have been made to ease permitting procedures, regulations and taxes in the film industry.

The completion of the runway on the Big Island (which was built in Kona and not Hilo as stated in the Forbes article) boosted growth on the Big Island. The strong demand has led to additional flights by airlines.

With these and other changes, the economic climate has been improving. It is true that some companies have left the state, but new growth companies are also moving in.

Several large retailers including Saks, Neiman-Marcus and Nordstroms are coming to Hawaii soon. Square USA, a large computer graphics firm, has already begun operations and Uniden, a cellular phone competitor of Motorola, plans to establish operations here. Eight major film and television productions will be made in the state this year.

Forbes' reporters came with a preconceived story line and selectively used facts, half-truths and totally inaccurate statements to support an article. None of the recent positive changes mentioned above were raised.

Additionally, the article failed to point out that Hawaii is the only state where all education expenditures are done at the state level. Thus spending at the state level is by definition relatively higher than other states.

Nor did the article mention that the poverty rate in Hawaii is almost 40 percent lower than the national average and that homelessness is less prevalent in Honolulu than in other cities of similar size.

This is irresponsible journalism, certainly well below the standards to which a respected magazine like Forbes should adhere.

The slow growth and the resulting difficulties and challenges that Hawaii faces are large enough issues to analyze without the exaggeration found in Forbes.

Disentangling decades of policies to control growth and yet maintaining necessary protections is a difficult task that must be done with care.

Under the leadership of Governor Cayetano, the state is determined to continue our efforts in this direction.

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Seiji F. Naya is director of the state
Department of Business, Economic Development and Tourism.
The opinions in Other Views columns are the authors' and
are not necessarily shared by the Star-Bulletin.