Public consultation mechanisms represent a critical instrument in participatory policymaking for Micro, Small, and Medium Enterprises (MSMEs) capacity development, yet their legal framework and practical implementation remain underexplored. This study examines the implementation of public consultation as a policy instrument for MSME capacity development in Lumajang Regency, East Java, Indonesia. Employing a qualitative approach with normative-empirical legal research methods, this study analyzes primary data from in-depth interviews with 45 informants comprising MSME actors, government officials, and education providers, supplemented by document analysis of local regulations and policy documents. The findings reveal significant disparities in consultation implementation, with public forums dominating (60%) while direct MSME forums constitute merely 15% of total consultation activities. Legal analysis identifies gaps between Law No. 20/2008 on MSMEs and its operational implementation, particularly regarding mandatory consultation mechanisms. The study demonstrates that effective public consultation requires restructuring legal frameworks to mandate inclusive participation, developing digital consultation platforms accessible to Generation Z MSME actors, and establishing accountability mechanisms for policy responsiveness. This research contributes novel insights into the juridical dimensions of participatory governance in MSME development, proposing a legal framework model that balances administrative efficiency with substantive stakeholder engagement in regional economic policymaking
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