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Hawaii News

Future of tourism called into question

Dan Nakaso

Hawaii business leaders received a “wake-up call” Thursday from the new director of the state Department of Business, Economic Development and Tourism, who told them they need to help pay for public-private projects to drive the local economy.


The director of the state Department of Business, Economic Development and Tourism outlined new ideas for Hawaii businesses Thursday:

» Invest in improving state lands.
» Build a 21st-century infrastructure.
» Support high-growth industry “clusters,” such as film and digital media, culture and the arts, and music and entertainment.

Source: DBEDT

Businesses need to partner with state government and provide private capital to develop new industries, improve public lands and link the islands with an undersea cable to deliver broadband technology and renewable energy, Richard Lim told the Hawaii Economic Association.

Lim, who has been running DBEDT for six months, outlined a gloomy economic picture for the islands and said tourism has essentially remained stagnant for the last 20 years and can no longer be relied on to move the economy into a prosperous future.

The state continues to wrestle with a projected $1.3 billion deficit while programs such as Medicaid, education, health and human services, debt payments and retirement and health benefits for public workers make up 80 to 90 percent of the state’s budget, Lim said.

“We’re not looking for any money from the state,” he said. “We really need the private sector to kick in. … In all successful efforts in the United States, it was the private sector that led the way.”

Lim’s one-hour presentation surprised some of the members of the association, a nonprofit group that promotes discussion of economic issues.

Lucien Wong, a member of the governor’s Economic Momentum Commission, said Lim’s speech was a “wake-up call.”

Paul Brewbaker, principal of TZ Economics and chairman of the state Council on Revenues, told Lim that his ideas “provoked a lot of good thinking in this room. This is the first time I’ve heard any of this.”

Lim acknowledged reluctance on the part of business leaders in the islands to invest in projects not directly linked to tourism, the state’s No. 1 industry.

“When I talk to some of the people on Bishop Street, they’re skeptical and you can’t blame them,” Lim said. “Tourism has been such a mainstay in our economy for so long. And they believe that we’ll be taking our eye off the ball of tourism and detract from tourism.”

But businesses must adjust to economic realities and keep up with changing needs and technologies for tomorrow, Lim said.

As he stood before the group at the Plaza Club downtown, Lim imagined someone just like him “30 or 40 years ago … standing here making the case for tourism. ‘We just can’t be thinking of pineapple and sugar. … There’s this new thing called tourism. Even though it’s not an industry, we need to think about it because sugar and pine won’t be around forever.’”

Today the state wrestles with a projected budget shortfall, but “unfortunately the problem is much deeper,” Lim said.

He cited “a high level of debt,” “outsized obligations” and “the burden of an aging population” at a time when Congress is considering capping Medicaid reimbursements and Hawaii’s seniors are already relying on emergency rooms for basic health care, which ends up stressing the health care system.

“We all end up picking up the tab in the form of higher medical bills,” Lim said.

Part of the solution is asking businesses to partner with state government to improve parks and other state lands that have been taken over by “undesirable elements … and drain our economy due to the vicious maintenance costs (caused by vandalism).”

He said a dozen companies remain interested in Gov. Neil Abercrombie’s plan to deliver renewable energy to Oahu from the neighbor islands and offer broadband service throughout the state via an underwater cable.

Businesses also need to lobby legislators and push back against community opposition that killed projects such as the Hawaii Superferry, Lim said.

“Ten surfers and a couple of well-heeled NIMBYs can wipe out economic development in the state,” Lim said, referring to “not in my back yard” opposition.

Businesses also can lead the way in developing companies focused around film and digital media, culture and the arts, and music and entertainment, Lim said.

He called them “high-growth industries” that overlap with tourism and can help provide returning visitors with new experiences in the islands.

“While we have three key priorities — making better use of our land, building a 21st-century infrastructure and supporting high-growth industry clusters — they all have one thing in common,” Lim said. “They all need public-private partnerships to be successful.”

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