Local Economic Development (LED) policy supported by Provincial Government has been implementing for more than a decade in Central Java. It was expected that the policy may boost local economy and creating significant employment so the utilization of local potential may contribute to an optimum outcome. However, considering GDP Non-Primary and Employment Non-primary performance during the period of LED policy implementation, it is found out that the achievement of the policy has not met a satisfying result. Accordingly, the Economic and Resources Development Forum (ERDF) in Provincial level was established in 2001 and Forum for Economic Development and Employment Promotion (FEDEP) in district level was established in 2003 to support provincial and district (local) government with expectedly a more integrated development policy. LED framework was developed in early 2010 as a guidance for local government in district level to implement LED by fostering the development of small-medium based of industrial cluster, and Monitoring and Evaluation (M&E) mechanism was developed at least since 2011 to identify a more detailed understanding of LED performance in every district in the province. The intention of this paper is therefore to further examine best and bad practices of LED implementation in Central Java Province mainly based on the M&E 2011-2012 focusing on governance as this aspect has been acknowledged as the most influential factor to boost the LED policy implementation. Annual survey i.e. questionnaires to all 35 districts and interviews with selected districts were used as main input to further evaluate the LED achievement. As the result of the M&E 2011-2012, in general it is indicated that there are improvement in terms of growth or quantity of local economic activities mainly in the form of small based industrial cluster. But, there are still great challenges in terms of quality of those developing local based activities. Lack of governance capability represented by FEDEP as LED forum to achieve their operational and strategic function appear as critical factor of the current ‘status quo’ progress.
Keywords: Local Economic Development, Central Java, Monitoring and Evaluation.