Local Economic Development: Understanding Astra's Role for Citizens

Strong economic growth is now assessed not only by national figures but also by its impact on regional communities. As a result, local economic development has become increasingly important.

Both government bodies and companies play a strategic role in driving community-level economic growth. By supporting empowerment programs, training, and small business development, companies can create lasting social and economic impact.

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Definition of Local Economic Development

Local economic development involves optimizing local resources through collaboration among government, businesses, communities, and civil society organizations to grow a region's economy.

It also refers to empowering a region's economy by leveraging local strengths such as location, natural and human resources, technology, management capabilities, and experience.

Here are several key factors to consider for local economic development:

• Improving local economic resources through investment in both physical and human capital
• Strengthening the flexibility of the local economy
• Encouraging the development or entry of specialized business service companies
• Building regional education and research capacity
• Developing networks among local businesses, as well as between local communities and research and development institutions, and between local communities and educational and R&D institutions
• Attracting companies from outside the region that allow existing businesses to continue thriving through previously unavailable business services
• Marketing the region's capabilities and strengths to businesses outside the region
• Marketing individual skills and entrepreneurial potential until an improved quality of life is achieved across the region
  
  

Why Does Local Economic Development Need to Be Strengthened?

There are several reasons why local economic development is critically important.

• Reducing Regional Inequality: Areas with limited access to capital and training often fall behind. A locally driven approach can help create more equitable development.
• Improving Community Well-being: Stable income from local businesses raises the quality of life for families.
• Creating Employment Opportunities: Micro, small, and medium enterprises (MSMEs) and local businesses are the largest employers in many regions.
• Strengthening Economic Resilience: In practice, community-based economies tend to be more resilient in the face of global crises.
• Driving Sustainable Growth: Locally grounded development is more closely aligned with the area's social and environmental needs.
  
  

Goals and Targets of Local Economic Development

The following are the key goals and targets of local economic development.

1. Accelerating local economic development through the participatory involvement of government, the business sector, local communities, and civil society organizations

2. Establishing and growing synergistic strategic partnerships and alliances among stakeholders to accelerate local economic development

3. Building economic infrastructure that supports the acceleration of local economic development

4. Achieving sustainable economic growth and development of small and medium enterprises (SMEs)

5. Increasing Regional Original Revenue (PAD) and Gross Regional Domestic Product (PDRB)

6. Raising community income levels, reducing unemployment, and lowering poverty rates

7. Improving equity across groups, sectors, and regions

8. Building the economic resilience and self-reliance of local communities

Focus Areas of Local Economic Development

Local economic development focuses on several key areas, including:

• Increasing local content
• Substantial stakeholder involvement in strategic partnerships
• Strengthening economic resilience and self-reliance
• Sustainable development
• Ensuring the majority of local communities benefit from development outcomes
• Developing small and medium enterprises
• Achieving inclusive economic growth
• Building capacity and improving the quality of human resources
• Reducing disparities among social groups, sectors, and regions
• Minimizing the negative environmental impact of economic activities

Local economic development centers on three components: economic expansion, community empowerment and development, and regional development.

Legal Basis for Local Economic Development

The principle of equitable development is enshrined in the fourth paragraph of the 1945 Constitution of Indonesia, which calls for advancing the general welfare of the people.

In the context of optimizing local economic development under regional autonomy, this is further grounded in Law Number 32 of 2004 on Regional Government, which authorizes regional governments to manage and administer their own governance affairs in accordance with the principles of regional autonomy and co-administration. In other words, regional governments are expected to enhance their competitiveness in pursuit of high and sustainable welfare growth, while remaining open to both domestic and international competition.

Astra's Role in Local Economic Development and Empowerment

The social dimension is a key pillar of Astra's sustainability strategy. Supporting communities through economic empowerment demonstrates how local economic development is integrated into responsible business practices.

One of Astra's key initiatives in this area is the Astranauts program. In short, this is an initiative managed by the Group Digital Strategy that accelerates the growth of MSMEs and start-ups in the sustainable economy sector through technology.

Astra believes that supporting entrepreneurship and MSMEs is a critical step in boosting local economies. As of 2024, the Astranauts program has supported 1,285 MSMEs, 16 start-ups, and 4 Business Development Institutions (LPB).

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Optimizing Local Economic Development for Regional Community Well-being

In today's dynamic economy, local economic development is a practical strategy for achieving inclusive and sustainable growth.

Business empowerment and cross-sector collaboration enable local communities to grow more independently. Astra's contributions, as highlighted in the Astra Sustainability Report, show that companies can actively support community economies.