The role of Local Government and poverty alleviation mostly the strategic issues for political target rather than the honest action for poverty alleviation. Our survey indicates that the innovation of poverty alleviation using Puwatu slum industrial project located at Kendari urban city, of south east Sulawesi Indonesia look so beautiful for political image, but its still difficult to categorize as innovation model of poor household reduction at regional level. Our statistical result indicated that local government have directly influenced poor household to generate their income, but fail to revise social capital of poor communities to be more strengthen for the next powering to be exit from poverty. The poor household mpved from rural sector to Puwatu Slum Industrial of Local Governemnt take parts as employee as unskilled labor, and by economic reason, would back to rural sector and still remain as unskilled labor. Theoretically, their basic income will be greater if they well trained. Our research finding have note that local government policy on Puwatu slum industrial project look like the best strategy for poverty alleviation, as a matter of fact, there are no poverty reduction. There are no data change for poverty. Poor people moved from rural to urban, and by economic reason, they will back to village as poor household.