Registration of individual businesses in Viet Nam: Drivers, challenges and lessons from international experience

Viet Nam has made significant progress in reducing informality, yet a large share of individual businesses and household businesses continue to operate outside the formal economy. Their unclear legal status, fragmented regulatory framework and limited access to business development services, finance and social protection present challenges for both enterprise growth and inclusive economic development.

This report examines the legal, institutional and policy environment governing individual businesses in Viet Nam and identifies opportunities to promote their formalization. It combines a review of legislation and policy across multiple regulatory domains with analysis of Labour Force Survey data, a field survey of registered and unregistered household and individual businesses, focus group discussions and in-depth interviews. It also draws on international experience, particularly simplified business regimes implemented in other countries, to identify policy options relevant to the Vietnamese context.

The findings show that business registration can improve legal certainty, access to finance, government support and market opportunities, while barriers to formalization remain linked to limited awareness, administrative complexity and compliance costs. The report recommends clarifying the legal status of individual businesses through a simplified regulatory framework, complemented by streamlined registration procedures, coherent tax and social insurance arrangements, and targeted measures to expand social protection and support sustainable business growth, thereby promoting formalization and inclusive economic development in Viet Nam.