Household businesses represent a unique feature of the Vietnamese economy. Before 1986, household businesses existed as small-scale commodity production units consisting of handicraft household-based and individual producers, farmers and small-scale service providers who did business with government permission. According to the General Statistics Office (GSO), as of 1975, these small-scale private production units accounted for 8.3 per cent of gross domestic product (GDP) (Statistical Yearbook 1983). In 1986, small-scale non-agricultural household businesses accounted for 23.2 per cent of total employment and generated 15.3 per cent of gross industrial output (Statistical Yearbook 1988).

After the Doi Moi (the Reform) policy was issued in 1986, household businesses flourished and became the business form preferred by millions of entrepreneurs and proprietors. Until now, starting a business in the form of a household business remains a widely popular option thanks to its simplicity, low cost and convenience. The household business sector has become an important pillar in Viet Nam's economy and plays an extremely important role in fostering economic resilience, especially in times of external shocks. Currently, about 8.49 million women and men are employed in the household business sector. The household, individual businesses and other forms of sole proprietorship contribute 30 per cent to GDP, but only 1.6 per cent to the annual State budget (General Department of Taxation, 2018).

Despite its important role, household businesses are classified as being in the informal sector as its legal status is unclear. Household businesses face numerous operational difficulties due to the ambiguity of its legal status.

In such a context, the study “Legal Status for Household Businesses in Vietnam: Key to Formalisation” is implemented by Economica Vietnam. The study is expected to contribute to the success of the scheme that should: (i) create a supportive, transparent, and equitable business environment for business households to establish, operate, and thrive to increase contributions to economic growth; (ii) reform the legal framework on supporting and developing household businesses to create conditions for business households to develop similarly to other economic units; and (iii) develop a policy to formalize household businesses through regulations on business registration and other regulations.  

Please click here for the study in both English and Vietnamese.