The role of Local Government and institutional capital mostly the strategic issues for reconstructing the competitive tourism industry. The community participation and successfully collaboration with entrepreneurial tourism and other stakeholders should be believe as the key instruments for supporting the sustaimable tourism development. Our research have found that the local governemt policy have directly impact to encourage community norm and regulated as instrument for social values establishment. However, our research found that mobilization of community potensial asset values empirically does not support mediated to have strongly impact to sustainable tourism. The government policy action with focusing on collaboration with community as the key for doing partnership with tourism industry stakeholder, where local government should be take the power of tourism masterplan, regulated and revised some social capital norms that inconsistence with the capacity need for sustainable tourism development.