Formalization and simplified micro and small enterprise regimes: Towards reform of the Viet Nam household business legislation

As in many developing economies around the world, informal employment is pervasive in Viet Nam and accounts for around two-thirds of the country’s total workforce. Informality is recognized in the country’s current Socioeconomic Development Strategy as a critical development constraint. Tackling this massive challenge and facilitating the transition from the informal economy to the formal economy requires an integrated policy approach that prioritizes in particular support for micro and small enterprises (MSEs).

In support of the Ministry of Planning and Investment in this critical initiative to reform the legal framework for HHBs in Viet Nam, the International Labour Organization (ILO) conducted a global analysis of MSE regimes in order to compile and highlight sound international practices. Based on that analysis, this paper proposes concrete recommendations to better integrate MSEs in Viet Nam in the formal economy, in addition to highlighting the importance of registration systems within a comprehensive and integrated policy framework for business formalization. As well, this report presents more than 20 country examples of business registration regimes around the world which can serve as a reference for good initiatives to promote enterprise formalization.