The problem is encouraging business in Hawaii. The problem is that to be really successful, the business cannot stay only in Hawaii.

All 76 members of the Legislature, plus the governor and lieutenant governor, will tell you that Hawaii must diversify its base, rely on more than tourism and military spending, and grow new jobs.

The need for new jobs is not new. As far back as 1954, Democrats in the Territorial House were warning that Hawaii must not rely on just tourism, Pearl Harbor and the sugar and pineapple plantations.

The obvious solution is knowledge-based industry. Hawaii agriculture taught much of the tropical world how profits could sprout from sugar cane and macadamia nuts, and what we learned, the rest of the world now does.

The new hope is high tech. The mortality level of high-tech companies is high, so the trick is to encourage local high-tech companies without risking state money.

The state does this by using the state’s power, but not its money.

To prime the pump, the state offers to help local firms with special purpose revenue bonds (SPRB) that allow a company to get financing through the low-cost state bond sales.

The plan, which must be approved by the Legislature, allows the state to lend its tax-free bond issuing power to the private corporation or organization so that the interest on what would otherwise be a private bond issue becomes free of income tax. The SPRB is the responsibility of the company getting the money and is essentially not a risk for the state.

One of the first high-tech SPRBs was for $10 million, given back in 2005 to Hoku Scientific, Inc. It built a facility in Kapolei to develop fuel cells.

The initial start-up was successful and the company branched out to solar energy production and then selling solar panels. It looked to the mainland for growth, and landed in Pocatello, Idaho, where it would make the stuff for solar panels.

Along the way, there were delays, the price of solar panels dropped and Hoku plummeted.

The Associated Press reported this week that Hoku stopped construction of its $400 million plant in Idaho that was planned to make polysilicon. One hundred workers were laid off.

The company is now Hoku Corp. with a subsidiary solar business in Hawaii. The whole company is a subsidiary of TIANWEI New Energy Holdings, an affiliate of China South Industries Group Corp.

A somewhat cheerier note is Sopogy, another local high-tech company, also based in the solar industry and also the recipient of a SPRB. It received $10 million in 2007 and another $35 million in 2008.

It was started in 2002 and has expanded to California with projects around the globe, although it is still based in Honolulu.

Darren Kimura is the Hilo entrepreneur and University of Hawaii grad who started the firm. He recently gave up the job of CEO and is now the firm’s "global strategist" who will watch over domestic and international expansion and marketing.

The company has had lots of local help and has remained a local-based company.

For the state, the trick is to keep local entrepreneurs here in Hawaii.

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Richard Borreca writes on politics on Sundays, Tuesdays and Fridays. Reach him at rborreca@staradvertiser.com.