Local administrative organizations are the key for upcoming the ASEAN community and becoming vital mechanisms to create the ASEAN economic integration. To achieve economic and social prosperities, local administrative organizations can support a local economic development through decentralization and local economic reforms to improve socio-economic development. This is why ‘local governance’ is a necessary factor to strengthen local societies.
According to Asia Development Dialogue (2016), local economic development stresses on “…enhancing community well-being through improved productivity and competitiveness, and the promotion of inclusive economic growth. Small and Medium-Size Enterprises (SMEs) are the backbone of ASEAN economies… In short, SMEs are the engine of growth and development for communities. They are also vital points of entry to stimulate young entrepreneurs and to create opportunities for women to participate in economic development.”
To pursue local socio-economic development, Dr. Bernadia Irawati Tjandradewi (2016), a secretary general United Cities and Local Government Asia Pacific (UCLG ASPAC) mentioned that there are several factors should be considered:
1) Human and Social Capital
a. Organizational and leadership capacity: partnerships and networks
b. Knowledge and information: business, markets and economic data, competition, quality of life, demographics, household and family
c. Capacity, competency and innovation: institutional, experience, labor force
2) Financial Capital: Services, Access (credit)
3) Natural Capital: Resources and ecosystem services
4) Physical Capital: Technology, machines, factories, and infrastructure
Consequently, decentralization and devolution of power is a crucial condition to create local governance and to improve capacities of local administrative organizations because local governments are close to the people and local administrative organizations can provide instruments for better delivery of basic goods and public services to the people. Last but not least, ASEAN member states actually need the cooperation of national and local governments to initiate local governance into the regional network.