For decades, nearly 5.2 million family-run businesses have played a significant role in Vietnam’s economic development. However, despite their contributions, there has yet to be a comprehensive solution to protect the survival of this individual household economy.

Recently, I returned to a familiar eatery only to find it permanently closed. The owner had shut it down before Tet, and the young student workers who used to serve there were gone. Some of them had once shared with me that they came from impoverished rural areas and relied on part-time jobs to continue their studies. Now, with many small shops and street businesses shutting down, I couldn't help but wonder where they would find new employment.

Vietnam’s household economy consists of countless small-scale entrepreneurs - the owners of pho shops, street vendors, livestock farmers raising thousands of pigs, and farmers cultivating vegetables and fruit orchards.

These businesses are present in every region and across all economic sectors. They serve as the final social safety net, sustaining themselves while creating jobs for the community. More than that, they contribute to economic expansion by reinvesting their earnings.

Unfortunately, this vital sector seems to have been overlooked. While the role of private enterprises in Vietnam’s economic and social progress has been increasingly recognized, the individual household economy has not received the same level of attention or support.

The individual household economy is not only a fundamental part of Vietnam’s private sector but also a cornerstone of the national economy. Over the years, it has been referred to by different names, such as family economy, individual business establishments, or household production and business units.

However, under Circular No. 07/2025/TT-BKHDT, issued by the Ministry of Planning and Investment on February 13, 2025, and effective from May 1, 2025, the Vietnamese government officially recognizes it as an independent economic sector.

To understand its true scale, we turn to the 2023 Statistical Yearbook, the most recent economic dataset available. In 2022, the gross domestic product (GDP) structure by economic type was as follows: the state sector accounted for 20.96 percent, the private sector made up 50 percent, with individual household businesses contributing approximately 22 percent and private enterprises around 28 percent, while the foreign-invested sector comprised 20.54 percent.

This means that household businesses contribute nearly a quarter of Vietnam’s GDP, including the agricultural, forestry, and fisheries sectors. Excluding agriculture, this sector still accounts for around 11 percent of GDP.

Employment statistics further highlight its significance. In 2022, workforce distribution across economic sectors showed that the state sector employed 7.9 percent, the foreign-invested sector employed 10 percent, and the private sector accounted for 82.1 percent of all jobs.

Among these, household businesses in non-agricultural sectors employ nearly 39 percent of Vietnam’s workforce. These figures confirm that the individual household economy is not only a major contributor to GDP but also a leading source of employment.

The concept of the household economy is not new. It was officially recognized in the 1986 Party Congress Resolution VI, which emphasized its importance and potential: "The household economy holds a crucial position with vast potential. It should be encouraged and supported for development. Household income not only improves living standards but also serves as a source of capital for expanded production."

For nearly four decades, Vietnam has relied on 5.2 million family-run businesses to contribute to economic growth and provide essential social safety nets. However, no strong policies have been implemented to protect or promote their development.

Challenges remain, including weak enforcement against smuggling, allowing illicit goods to flood the market and undercut local businesses. Vietnam’s import tax policies remain lenient, failing to shield small businesses from overwhelming competition. Without stronger protections, the survival of household businesses is increasingly at risk.

Developing a national economic plan - whether for one year, five years, or ten years - requires accurate and up-to-date data on economic performance. However, Vietnam’s General Statistics Office currently only publishes economic reports by industry sector (agriculture, industry, services) rather than by economic ownership type.

This lack of detailed statistics makes it difficult for policymakers to fully understand the contributions and challenges of different economic sectors, including household businesses.

Recognizing this gap, the Ministry of Planning and Investment has taken steps to address it by issuing Circular No. 07. If preparations go as planned, by 2026, the General Statistics Office will begin publishing GDP breakdowns by economic type, in addition to the existing industry classifications. This change will provide a clearer picture of the role that household businesses play in Vietnam’s economy.

Vietnam has a long history of prioritizing statistical data for economic planning. Shortly after the country gained independence, President Ho Chi Minh issued Decree No. 61/SL on May 6, 1946, establishing the Vietnam Statistics Bureau. Over its 78-year history, the agency has spent 46 years as a government office and 32 years as part of the Ministry of Planning and Investment.

To genuinely support household businesses, Vietnam must implement practical and effective policies. Immediate measures should include reducing or exempting taxes for household businesses to ease financial burdens, increasing import taxes on certain goods that directly compete with local businesses, especially those sold online, tightening anti-smuggling enforcement at border crossings and in e-commerce transactions, and reviewing exit bans on household business owners due to tax debts, ensuring fair and reasonable enforcement.

Vietnamese policymakers must take a proactive approach to supporting the individual household economy. These businesses are essential for economic growth, job creation, and social stability. Ignoring their needs will not only weaken this vital sector but also undermine Vietnam’s broader economic resilience.

Now is the time to implement meaningful reforms that will protect and strengthen household businesses, ensuring their long-term sustainability and continued contribution to Vietnam’s economic future.

Tu Giang