International Journal of Social and Local Economic Governance (IJLEG) E-ISSN: 2477-1929 Vol. 3, No. 1, April 2017, pages 49-55 http://ijleg.ub.ac.id 49 LOCAL ECONOMIC DEVELOPMENT-BASED ON FARMING MANUFACTURE OF COCONUT SUGAR IN WEST SEI KEPAYANG DISTRICT Khairani Alawiyah Matondang 1 , Agus Suman 2 , Sasongko 3 , Putu Mahardika A.S. 4 1 State University of Medan. 2,3,4 University of Brawijaya, Malang. Email: 1 khairani_1404@yahoo.com, 2 agussuman@yahoo.com, 3 sasongko0406@gmail.com, 4 putumahardika@gmail.com Abstract The existence of coconut commodity abundance in the district of West Sei Kepayang of Asahan regency of North Sumatra province has not been utilized to the fullest. Though the potential of this commodity can be the basis of local economic development (LED). Of some its derivative products, coconut sugar has the economic potential to improve farmers welfare due to various advantages as well as a good market share prospect.This study aims to analyze the potential for the farm manufacture of coconut sugar to be used as a base of LED in the district of West Sei Kepayang. Data collected by survey method and then analyzed by descriptive quantitative by a financial feasibility analysis those are the Net Present Value (NPV), Net Benefit Cost Ratio (NBCR), Internal Rate of Return (IRR) and Payback of Period (PP) and by descriptive qualitative. The results of a financial feasibility analysis showed that the NPV is positive, NBCR is greater than one, the IRR is greater than the actual interest rate and PP can be restored in a relatively short time. Keywords: Local Economic Development, Coconut Sugar, Financial Feasibility Analysis. 1. INTRODUCTION Sugar is the very important basic needs of human life. The consumption of cane sugar in the province of North Sumatra is estimated to increase by 3 percent each year (Purba, et all, 2014). In 2014, the average total consumption of sugar cane in North Sumatera province reached 148,653 tons, only 27.30 percent domestic production can be fulfilled (Statistics of Indonesian Plantation, 2015). The impact, sugar prices tend to be volatile and sensitive, to the detriment of consumers (Purba, et all, 2014). Meanwhile, coconut sugar can be used as substitutes of cane sugar. That is, demand and supply gap of cane sugar products in North Sumatra province likely to be filled with coconut sugar products. Coconut sugar have the advantage of health aspects because it has 35 percent of a low glycemic index (Monahar, et all, 2007). The existence of coconut coomodity abundance in the district of West Sei Kepayang of Asahan regency of North Sumatra province has not been utilized to the fullest. Though these commodity can produce a variety of derivative products of economic value for farmers and thus potentially become the basis of local economic development (LED) (Mahmud and Ferry, 2005; Damanik, 2007; Bank Indonesia, 2009 and Kuswanto, 2011). The development of farm-based on the derivative productsof coconut commodity is determined from the intensity of farm value (Kuswanto, 2011). The successed of based on the derivative products of coconut commodity farm will have a direct impact on improving farmers and communities welfare (Manurung, 2004; Damanik, 2007). The potential of farm manufacture of coconut sugar as a driver of LED will be known through the financial feasibility, so the study on "Local Economic Development Based on Farm Manufacture of Coconut Sugar in West Sei Kepayang District" is important to do. The research question is "Is that farm manufacture of coconut sugar feasible as the base of local economic development in the district of West Sei Kepayang?"