Lessons learned from current practice implies radical rethinking of strategies for local economic development in Indonesia, and a parallel reinvention of local government among many challenges, for stand out:
(a) How to make local government more responsive to the needs and demands of those directly involved in local economic activities - producers, traders, exporters, the business community at large, and small scale farmers, fishermen and entrepreneurs in particular;
(b) How to restrcture local government agencies involved in local economic development to replace sectoral and compartementalized initiatives with a more holistic and integrated approach;
(c) How to shift government initiatives for local economic development from a supply driven mode of operation based largely on internal considerations of each line agency, to one that is more flexible, "entrepreneurial" and capable of responding to ever changing market conditions;
How to make the best use of the human and financial resources of local government, not to engage directly in business ventures, but to support and facilitate efforts of others among the business community and private sector.
These are big challenges. As a starting point for addressing them, we propose a set of principles derived from lessons learned covering implementation, economic considerations and the instutional framework.1. Implementation principles
First and foremost, any initiative shold aiim for action and reslts. Too often, efforts to promote local economic development have devoted mch time and effort to collecting and analyzing data, writing reports, and discssing the issues, all with little concrete reslt. Hence the poplar slogan: NATO (no action, talk only).2. Economic principles
Experience shows clearly that any initiative for local economic development must start with demand, preferably non-local demand where opportunities and prospects for growth are greater. In line with the ideas outlined for export growth and strong local multipliers involving numerous small scale producers. The aim should be to link those producers and suppliers to export enterprises already active in non-local markets. To allow stakeholders to learn the process, local governments might start with a single cluster, and expand later to other clusters as they gain experience.3. Institutional principles
To attract and maintain stakeholders interest, a program for local economic development must also be based on the principle of participation in planning and decision making. This implies the need to identify key stakeholders associated with the selected cluster and setting up a forum of some kind to promote development of the cluster. Stakeholders should include not only government officials, but also the business commnity at large, especially small scale enterpreneurs, as well as other interested organizations.
(see also: Hugh Evans and Risfan Munir. "Local Economic Development in Indonesia: Current Practice and Lessons to be Learned," CIPPAD-USC).