Brian Jeffrey
Economist Hai Loc now has reason to be optimistic. The household business sector has finally been acknowledged in Resolution 68, something he believes will promote its expansion.
“It has taken nearly four decades of doi moi (Renovation) for a Party resolution to verify the importance of household businesses. This is a monumental advancement,” he expressed.
Household businesses, operating outside any legal framework, were recognized ten times in Resolution 68, highlighting the resolution’s significance.
The resolution stresses the importance of providing meaningful and effective support to small, micro-enterprises, and household businesses. Key initiatives include enhancing the legal structure, offering free digital platforms, shared accounting tools, legal advice, and management training.
Furthermore, increasing access to and utilization of financial products for small and micro-enterprises and household businesses is essential, especially for young entrepreneurs, women, vulnerable groups, ethnic minorities, and individuals in remote, border, and island areas.
The household business sector has historically been overlooked, often missing out on state support.
Economist Le Duy Binh from Economica notes that Vietnam is home to approximately 5 million household businesses, with only 1.7 million registered for tax purposes, leaving 3.3 million unregistered.
This sector is responsible for nearly 8.5 million jobs, constituting 37 percent of the total workforce in the enterprise sector—more than non-state enterprises (37 percent), foreign-invested enterprises (22 percent), and state-owned enterprises (4.3 percent).
About one in every 20 Vietnamese engages in business, relying on household ventures for their livelihood. “This illustrates the widespread acceptance of the household business model among the Vietnamese population, functioning as an essential safety net,” Binh stated.
The 2020 Statistical Yearbook revealed that the individual economy contributed nearly 30 percent to GDP annually from 2015 to 2020.
However, this situation also highlights another dimension: Vietnam’s economy appears fragmented, small-scale, and vulnerable. Countless street vendors, noodle shop proprietors, small retailers, and farmers raising fish or cultivating vegetables form the backbone of the national economy.
While Resolution 68 represents a new chapter in developmental strategy, particularly in solidifying the private economy as a crucial engine for growth, it also recognizes an ongoing challenge: the private sector continues to encounter various obstacles that impede its growth, scalability, and competitiveness, failing to meet the expectations as a foundational element of the national economy.
What lies between this reality and the envisioned future?
The answer must be supported by empirical evidence.
The 2020 Statistical Yearbook indicates that the formal private enterprise sector contributed only 8.64 percent, 9.10 percent, 9.68 percent, and 9.65 percent to GDP in 2017, 2018, 2019, and 2020, respectively.
These statistics align with a 2023 report by the Ministry of Planning and Investment, which reviewed the progress of the 2017 Resolution 10, along with documents from the Central Economic Commission, now known as the Central Policy and Strategy Commission.
For many years, the private enterprise sector has accounted for less than 10 percent of GDP, suggesting it has not significantly advanced after nearly four decades of Renovation.
For instance, as per the latest 2023 Statistical Yearbook, the non-state sector contributed nearly 50 percent to GDP, accounted for 56 percent of total social investments, and provided over 82 percent of jobs.
This fusion obscures the specific impact of private enterprises on GDP.
Nguyen Dinh Cung, a former Director of the Central Institute for Economic Management and a respected economist, commented, “Statistics about this sector remain vague, still classified as the non-state economy. They have yet to be distinctly recognized as the private economy in statistical compilations.”
“This signals a lack of cohesive understanding when discussing the private economic sector.”
Vu Thanh Tu Anh, PhD, noted in various analyses regarding the private sector’s statistical contributions, “I believe no one truly knows the private sector’s exact impact on Vietnam’s GDP.”
Under Resolution 68, the private economy encompasses over 940,000 enterprises and more than 5 million household businesses, contributing roughly 50 percent to GDP, representing over 30 percent of state budget revenue, and employing around 82 percent of the labor force.
