For Immediate Release: January 31, 2006
DBEDT Release News 06-03

HONOLULU--The Department of Business, Economic Development and Tourism has submitted an application to U.S. Secretary of Commerce Carlos Gutierrez to expand Hawaii's Foreign-Trade Zone No. 9 to include the Natural Energy Laboratory of Hawaii Authority's 870-acre site at Kailua-Kona on the Island of Hawaii. When approved, this would be the second FTZ site on the Island of Hawaii.

"We are very excited about the potential for FTZ status for companies located at NELHA," said Theodore E. Liu, Director of the state Department of Business, Economic Development and Tourism. "It is important that we expand the advantages offered by the Foreign-Trade Zone concept to other members of Hawaii's business community, especially on the Neighbor Islands. We are confident that this new site will enhance economic development in West Hawaii by lowering the cost of doing business for firms interested in starting or expanding international trade."

Ron Baird, Chief Executive Officer of NELHA, said, "This will open the door for the water bottling and aquaculture companies at NELHA to operate under zone procedures. It is yet another step in government helping private industry compete in a very dynamic world trade situation. It will also improve international competitiveness of the firms at NELHA and help the continuing diversification of the West Hawaii economy."

Zone status will give NELHA tenants the option of operating under special customs procedures. A foreign-trade zone is controlled under U.S. Customs and Border Protection supervision and is considered outside the customs territory for tax, duty, and quota proposes.

"The many water bottling companies located at NELHA are a perfect example of how a company can benefit from foreign-trade zone status", said Greg Barbour, FTZ No. 9 Zone Administrator. The procedures would exempt these firms from U.S. Customs duty payments on foreign items that are used in production for export.

It is not unusual for a bottling company using plastic to purchase raw materials for the bottles, caps and labels from foreign countries. As long as their final product is exported overseas, they are exempt from paying any duties on these raw materials.

Current data shows several million dollars worth of bottled water exports to Asian countries. "Based on company projections, the water bottling companies are expected to ramp up production significantly in the next few years," said Ron Baird.

In addition, these firms could receive a logistical benefit in that they may have access to streamlined customs procedures which could reduce the number of forms required with each shipment.

The process to obtain federal approval normally takes up to one year. The application is published in the Federal Register for public comment and then undergoes a interagency review including the Departments of Homeland Security, Treasury, and Commerce. After complete review the application then goes to the Foreign Trade Zone Board for final approval.

When the expansion is approved, the number of approved zone and subzone sites in Hawaii will increase to 14. The existing sites include Pier 2 at Honolulu Harbor, Hawaii Convention Center, Hawaii Fueling Facilities Corporation, Hilo Foreign-Trade Zone, James Campbell Industrial Park, Mililani Technology Park, Maui Research & Technology Park, and Unicold Corporation. Subzones include Chevron Products Hawaii, The Gas Company, Maui Pineapple Company, and Tesoro Hawaii Corporation.

Right to left: Ron Baird, CEO, Natural Energy Laboratory of Hawaii Authority, discusses NELHA FTZ application with Greg Barbour, FTZ No. 9 Zone Administrator, Ted E. Liu DBEDT Director, and Mark Anderson, DBEDT Deputy Director.

For more information, contact:
Gregory P. Barbour, Foreign-Trade Zone No. 9
Phone: (808) 587-5372
Email: gb@ftz9.org