 Aloha, and welcome to Business in Hawaii with Reg Baker. We broadcast live every Thursday afternoon at 2 o'clock from 2 to 2.30 in the downtown Pioneer Plaza in the studios of Think Tech, Hawaii. Normally, I would say beautiful hallowoo, but unfortunately, it's a little rainy today and we had a tsunami warning, so we've had some challenges, but it's all going to be good. Today, we're going to be talking a little bit about some of the resources that are available to support small businesses in Hawaii. We are a show that promotes small business and their successes and the owners and how they make it all work. And there are people behind the scenes that provide the resources and the support to make sure that that all happens. And today, we've got Jamie Lum and Mark Ritchie from D-Bed, NT, and to come and explain a little bit more about D-Bed and what it does and how it supports small business. And D-Bed is actually a pretty big operation, isn't it Jamie? Mark? I mean, there's a lot of moving parts to this. Yes, it is. D-Bed, Department of Business Economic Development and Tourism is the state's economic development agency, so basically charged with economic diversification for the state and making sure that we have good quality jobs for our residents and so forth. So we do have Mark and I are from the Business Development and Support Division. So we've been working a lot with small businesses, helping them to export, helping them with some of our programs like Enterprise Zones that give them some tax breaks and community economic development. And so that's our area. Yeah, it's big. It's statewide. It's, like you said, I mean, tourism all by itself is a big operation, you know, and you're there to support that. And so I want to talk about D-Bed and find out all the different moving parts and all the different departments and divisions in there, but first, you know, tell me a little bit about yourself, Jamie, were you born into this position or is this something that you kind of evolved into at some point? I'm actually, I'm an old timer with D-Bed. I came into the department over 25 years ago, but I actually came through tourism. I was working for the Hawaii Hotel Association, which is now the Hawaii Logistics and Tourism Association, that Woofy Heads. And so I came in, I worked in the tourism, we were a tourism office, tourism branch, we took on all sorts of different forms until it became the Hawaii Tourism Authority, which is a separate entity, speaking of, they are an attached agency to D-Bed. And then I decided I wanted to make a change. And so I moved over to the business development side and got to find out more about some of the other industries and sectors that are growing in Hawaii. When you work in the tourism side, you're very focused on tourism. It's hard to see everything else that's going on in the state. So it's been very interesting for me. It's been about 14 years now that I've been on the business development side. Very good. And business development, how does that impact tourism? Is there a lot of opportunity for businesses to still get into that side of the economy? It's interesting. There are so many links. And actually a lot of things start from tourism. For instance, we work in helping companies that try to get their products overseas. And in a lot of cases, so many companies want to go into Japan because they see that when the Japanese tourists come here, they buy their products in Hawaii. And so naturally that starts to build a market for those products over in Japan. So naturally. Right. And there's a lot of linkages. We work also in the international education side, trying to attract international students. A lot of that starts with maybe a family comes here for vacation, and they learn more about Hawaii and then can see sending, you know, the student can see coming to study here. It's a nice middle ground too for people to send their students from the Asian rim to Hawaii. It's a nice transitionary place. It's got cultures from different sides of the ocean, and it's comfortable for them. And they can get that foreign exposure that the parents are probably looking for. Exactly. And it's one of our selling points. Mark, you've done things in the past as well, right? Yes. I've been at D-Vid just a little over three years now. Prior to that, I was working at a life science startup company or small company in Hawaii. And then prior to that, I was doing some economic development work in Hawaii. And prior to that, originally from Northern California, I worked in Silicon Valley. I had a big Silicon Valley company, Silicon Graphics. I don't know if people remember that company, and then doing economic development work there. So I've kind of been working for a large company, startup companies, and then also economic development work. Well, you know, and that sounds like a perfect fit for business development in Hawaii too, because these are some of the industries that we've been looking at for quite a while. Right, right, right. And I've sort of seen it from the small company side, and then also kind of seen what other sort of governments, what other sort of economic development entities have done in other places as well. So a little bit of kind of what works, what doesn't, that type of thing. Very good. And you've been at D-Vid for three years? Just a little bit over three years, I think that in November it was three years. Congratulations. Thank you. So, you know, you're both from D-Vid. You've been there for a long time, you're relatively new. But, you know, and I've been in Hawaii for, since early 70s, and D-Vid's always been out there. They've always been doing things, and they've gotten bigger, and they've done more and more. But not only are they involved in the actual, you know, I guess the economic development arm for the state, but they also provide a lot of resources to help businesses tap into those opportunities too, don't they? Yes, definitely. We're going to start. Some of the programs that our division does is, I think, as Jamie mentioned earlier, we work at the enterprise zone program, which is basically in exchange for companies increasing the number of employees they have in sort of economically distressed areas of the state. They can get tax incentives, and so that's a very active program that our division runs. So, let me ask some questions about that as we go forward, if you don't mind. Okay, enterprise zone. So, there are going to be areas within the borders of Hawaii on the different islands that are identified as special areas that need some economic development. It's basically, it goes by census track, and then there's a very specific formula, which is a little bit complicated, but you always have to go back to the last 10-year census for the statistics on that. And then it's a county-state partnership, and the counties actually choose the zones. Our planning folks will show which areas of the state are eligible according to the definitions, but then the counties actually designate the zones, and then the governor approves of that, and those zones last for 20 years. And this program really started back in the early 90s, so a lot of those zones now are coming up for renewal. So there's been some tweaks and changes. Some islands are very successful, like Maui. They're actually losing census tracks because they're doing well. It works. It works. It worked. And that's exactly what you want to have. That's exactly it. But once the county and the state get together, they collaborate, they identify the area that this enterprise zone is going to be located, what's available in that zone? What makes it so attractive? Well, it depends on which zone it is. Some zones are very different. Somewhere probably like ag kind of areas. Some are kind of urban areas. Are Kakaako area here on Owa, who actually is in an enterprise zone. That was way before a lot of the condos and a lot of the current development you see, that will no longer be eligible when that zone expires here in a couple of years. So those tax incentives will no longer be available there. So depending upon the type of zone it is, it would be different type of incentives to promote whatever it is that they want to promote there. Right. So according to the enterprise zone statutes, it's only available to certain types of business activities and other certain industries. So ag is one of them, manufacturing, wholesaling, and then a couple of other sort of business activities are in the statute. So it's not available to retail and some other sectors. So it's specific to what they want to stimulate and to grow. And what are some of the incentives that's available within the enterprise zone? So within the enterprise zone, the state offers incentives and that would be a tax credit. And that starts, and it's for seven years, and it starts at, it's a non-refundable tax credit, meaning you only get the credit if you owe the state money. But it starts at 80% and declines by 10% each year. You get a GET waiver, so that you don't have to pay GET on things sold in the zone or on that county. And then the counties also have to offer up zones. And some of that may be with the property tax, you know, if you put in a new building or something, they won't, the property tax increase won't hit you for a couple of years. Some is just expedited permitting, that type of thing. But they actually, the counties try to offer these incentives to sort of go along with their sort of economic development plans. And so the state wants to offer up, you know, the enterprise zone program as a tool for them to sort of reach their economic development objectives. And if somebody wanted to find out more information on this, where could they go? Oh, they can go to our website, which is invest.hawaii.gov. And there's all these pull-down menus and just go to enterprise zones. And everything is described there. And everything is online, including the application. And then because these tax incentives are available to companies that increase job totals. And so when they enroll in the company, they get their sort of over seven years what the job totals have to be. And every year they go online and they report to us. And D-Bit certifies those things so that when the company files its taxes, that they can take those tax incentives. Yeah, that's it. Oh, that's our exporting program. Exporting program, which is another program that you can do. Very good. And is that something you can speak to, Jamie? Sure. So the state has received a $700,000 grant from the Small Business Administration. And the whole point of that grant is for the state trade expansion program, Step Grant. For us, we call our program, we've labeled it High Step. And it's to help companies that are interested in exporting, get into exporting, and those that are already exporting to expand. Very good. So. Well, and I would imagine that there may not be any percentages or demographic information on this. But I would imagine a lot of the companies in Hawaii would like to export if they're producing something. I mean, why not? That's just an extension of their market. Sure. I mean, it's definitely a way for them to grow, always a limited market. And the High Step program is designed, and we have three components to it. One is sort of the export training and counseling. So companies that say, yes, I want to start an export program, I think my product will be popular, let's say, in Japan, but to let them go through all the steps needed and what they have to think about in terms of regulatory environments, cash flow, how you logistics and things with exporting. So that's one component is to do sort of the whole training part of it. And then we do pavilions. And then also we offer individual company assistance for companies going into trade shows and things overseas. Is DBET a resource to help address some of the regulatory issues of getting into these markets as well? I think we can be a voice and an advocate in helping to work with other agencies, particularly maybe the federal agencies. And that's actually one of the things that, as we try to help our companies, if they have any trade barriers, that's one of the things that we, that SBET wants to hear about so that they too can kind of help at the federal level. And that's one of the hats that I wear is I'm on the board of the regulatory fairness for the Small Business Administration. And I help try to identify these regulatory challenges or hurdles. And then at the federal level, try to do something about it. But I want to talk a little bit more about the exporting program. But we've got to take a short break right now. And we'll be back in about 60 seconds. So we'll continue this. This is Business in Hawaii with Reg Baker. We're talking with DBET. And we're finding out about all the resources that are available to small businesses in Hawaii to help them grow and prosper. We're going to take a short break. And we'll be back in about 60 seconds. Hi, I'm Donna Blanchard. I'm the host of Center Stage, which is on Wednesdays at 2 o'clock here on Think Tech. On Center Stage, I talk with artists about not only what they do and how they do it, but the meat of the conversation for me is why they do it, why we go through this. A lot of us are not making our livings doing this. And a lot of us would do this with our last dying breath if we had that choice. And that's what I love to talk to people about. I hope you enjoy watching it. And I hope you get inspired because there's an artist inside you, too. Join us on Center Stage at 2 o'clock on Wednesdays. Bye. Aloha. My name is Richard Emory, host of Condo Insider. More than a third of Hawaii's population live in some form of association. And our show is all about educating board members and owners about their responsibilities and obligations and providing solutions for a great association. You can watch me live on Thursdays, 3 p.m. to 4 p.m. each week. Aloha. Aloha, and welcome back to Business in Hawaii with Reg Baker. This episode, we're talking with D-Bed, and we're finding out about all of the resources that are available to small businesses throughout the state of Hawaii in trying to promote and increase the success of their business. And we were just talking about the export program that D-Bed has and how that can really help grow business and get them to diversify into an international market. And so, Jamie, if I was a business and I wanted to get into the exporting side of things, how would I do that? Well, under the High Step program, you would go to our website. Which is? Which is invest.hawaii.gov and under the exporting. Which is on the screen. There's a, you go to the High Step. And like Mark was mentioning, so we have our training component and then we have some other elements, financial assistance and our Hawaii pavilions. But what we want people to do, what we want companies to do is sign up, because we're going to have a general intake form. Tell us about your company a little bit, about what product or service it is you want to sell overseas. What market are you interested in? And, you know, those kinds of things. And then we'll go from there. We're working closely with the Small Business Development Center and also the Hawaii Pacific Export Council. Is this a competitive type of program? Not, no, no, not at all. Not this part of it. There is a part of it that is a, the financial assistance is a competitive part. But we want companies to sign up so that, because we want to take them through the process of learning about what it takes to export. So it's primarily an educational and awareness program on how to go through the process. Initially, yes, yes. We are going to have a kickoff on January 24th. And what is that kickoff? It's basically to make a formal announcement on the program. We want to invite companies to come and learn more about what's involved in the program and how they can sign up and how they can benefit and what the different components are, what they can get out of it. And that would be, that more information on that would be on the website as well. Would the form be there to sign up? They don't have to sign up to go to this January 24th event. They don't have to sign the form then. No registration. We'll have probably registration, but they don't need to fill out the form to come to this. We want them to find out. So even a company just thinking about exporting, they haven't even made that decision yet, should definitely come to this session to see about the resources available. Where is it going to be? A bit the foreign trade zone. Oh, that's right downtown here. The new Maxi, Homer Maxi international trade. They'll be signs up. The newer sign. Yeah, well, that's a beautiful building over there too. And it's two or three stories and it's really used. I think it looks brand new. It's a great building. Yeah, very good. All right, well, that's great. That's a great opportunity for somebody that's just maybe thinking about it. They could come out and learn more about it. They could find out some of the mechanics on how this works. Then if they are interested, then they sign up for the program itself. And then they could go through this and get a little bit more formal in the education. And then you've mentioned finance. Now, we all know access to capital is always one of the biggest challenges that small businesses have. What does this mean when you say that there might be some financing? So that's combined with our Hawaii pavilions. We actually do pavilions where we'll take 20 companies, 30, 50 companies sometimes, into a trade show. We get the boost space, do all the branding and everything, and then companies can come and exhibit. One example of that is the Tokyo International Gift Show. We take over 50 companies into that show each year in September, it usually is. But there's a lot of other companies in other industries and things where we don't do the Hawaii pavilions. And companies that maybe just are going overseas for business meetings and things like that. So for those types of companies, we have what we call the company assistance program. And between $5,000 and $15,000 is available per application for companies that have an export development program and are looking to go into a particular market or expand in a particular market. And for that, there's a very simple application, but also we're looking for their export development plan. And that export development plan is we want to see how they're going to get from point A to point B. Because since this is an SBA grant and also for our own state metrics and things, we're looking at increasing exports. So that is a competitive process is that we want to make funds available to companies that we think can actually get from point A to point B. In other words, increasing exports revenue and be successful in the year that those funds are available. And you've got limited resources, and you want to make sure that you give it to those that have the highest probability of success. So there's got to be a ranking that you go through to do that. How many companies do you think usually get through the process and actually get an award of some kind? For last year, we had over, because we did the same program last year, although the amounts were lower. It was, I think up to 5,000, up to 6,000 was the amount. But we had 72 applications put in for that. Well, that's good participation. Yeah. We'll end up with about 60 companies actually that actually got funded. Very good. So, but we expect this year because we raised the ask amount that will be, it'll be a little bit more competitive. It goes all the way up to 15,000. Right. That's a big increase. Right, in the application, we're not looking for them really just to talk about, let's say, one trade show they want to go to or something. We really want to see sort of a whole plan on how, maybe yes, that trade show fits into their export development and their market expansion somewhere. Very good. And what's interesting here is that we've only really talked about two of the different programs, but deep it's got a lot of things going on too, don't they? Right. Well, we've got our state energy office and they cover a whole gamut of energy issues from policy to some of the tax credit things and so forth. We have our creative industries, which the film office falls under. We have an attached agencies like HTDC, the High Technology Development Corporation and also Innovate Hawaii, which has a manufacturers grant which fits nicely into the sex port development because it's how you scale up your company to meet production figures if you're going to be expanding and going into other markets. So there's a lot of different programs that are available out there and a lot of different ways that companies can take advantage of the opportunity. And I know you, we talked during lunch, we had a brief conversation and I know the Business Action Center used to be part of the debate, but then it kind of transferred over to the DCCA. But that was an excellent idea and that worked, I think, has worked very well over the years. And for the audience who has not been familiar with what the Business Action Center is, you might be able to explain it better than I am, but it's pretty much a one-stop shop to really get the business set up and running. It gives you a head-starting and getting through all of the GET and registration and DOL numbers and all that. They'll help you put your application together and they'll tell you, based on what kind of business you are starting, what you'll need. If you need a special license or all those kinds of things. So yeah, they really, really take you through. They're invaluable. We refer them to companies. Yeah, and I refer a lot of people over there and I've been there myself occasionally. Number one, because I'm helping a client out, but number two, because I want to go through the experience and see how it works and, you know, rarely have I seen a lion over there and if there was, it's only a few people and you can actually get through and the people that are working there are usually very knowledgeable about what needs to be done and they can expedite things. And then they also bring in resources sometimes, like I believe, I don't know if they still do it, but once a week they'd bring in from the Bar Association, some attorneys to help. I think there was a sign-up sheet one time when I was there where they can sign up for this. So they'll bring in other resources to help businesses as well. But that was something that started by D-Bed. Yes, yes. So now tell me, you know, we haven't spent a lot of time on the T part, so it's D-Bed plus T, you know, and but tourism, of course, is our lifeblood here in Hawaii. I mean, that's where all of our, you know, a lot of our economic activity comes from. What are there specific programs in the tourism side kind of like to, you know, create new businesses or help businesses to grow and do things? I mean, is there the same type of stimulus there that there would be in other areas? I don't believe so. I can't really speak for an HTA, but, you know, we've worked with them. For instance, when we talked earlier about trying to attract international students. So some of the areas where we think that there's, you know, where we can work together, but in general, HTA, I don't believe, has programs to help. It's a pretty mature industry. Right, right. But I also know that there's a lot of peripheral business around tourism. I mean, everybody thinks of tourism as just the hotels and the resorts. But there's an awful lot of support services that support that, you know, for example, the laundry business, you know, and transportation, you know, and the trolleys and then all the gift shops and all of the different support type of businesses that surround that. But I would imagine that some of them get help from other areas too. It doesn't have to come from the tea part. Right, right. Although I will say the program doesn't necessarily help the business itself, but they do have funds that help increase tourism products so that there are more things for visitors to experience when they come here. When I was there, I was very involved actually in that part where, you know, increasing the number of festivals or those types of things that are experiences for, for, for visitors. The bubble hall is down in Waikiki and that sort of thing. So they do have funding for those types of things for tourism product development. Right. And this is kind of off topic but a little related. I'm just curious about this. The Loha Tower was something that was, you know, gonna be developed as a tourist destination or a point that they would go to. But I guess that's all kind of changed now since HPU has come in and taken over that area. But you still got the Loha Tower down there and that's a historical place. So is it completely outside of the tourism focus now or I can't, every time I look at that Loha Tower, I can't think of the history that's behind it. Right. So nothing planned to try to get the tourists out there. I guess HPU is just kind of taken over. I think so. Well, but HPU has got a lot of international students. So, and I think from what I understand a percent, a large percentage of their student body is actually international. So there is a tourism international piece to that. So maybe that Loha Tower is helping with that. Right. Yeah. Well, you know, we're about ready to wrap up. I would very much like to have you come back again for another show and maybe we can talk more about the other different programs that are going on. Maybe you can give us an update on the kickoff that's going to be happening in July. I think, you know. January. January. Oh, January. Oh. That's right around the corner. Yeah. Well, then I don't know if I can have you come back before then. Yeah. We can certainly mention it. You're right. But, you know, there's just so much that the new bid is doing and it's such an important component of what we're trying to do, at least economically in Hawaii. We just need to keep the word out and create that awareness. So, very good. I appreciate you both being on the show. Hopefully we'll see you again soon. Thank you very much. This is Reg Baker, business in Hawaii. We broadcast live every Thursday afternoon from 2 to 2.30. We focus on small business topics help businesses to grow and expand and prosper here in Hawaii. Until next week, aloha, and we'll see you then.