On April 23, VCCI held a workshop to release findings from its 2026 Household Business Survey, conducted between February and April with more than 1,000 active businesses across 34 provinces and cities.

Speaking at the event, Dau Anh Tuan, Deputy Secretary General of VCCI, acknowledged candidly: “The current picture is not very optimistic, but it is very real.”

According to the survey, 73.7 percent of household businesses reported only minimal profits in 2025. More than 81 percent saw revenue decline, and 75 percent reported a drop in customers, while just 1.9 percent achieved profits in line with expectations.

These figures indicate that most household businesses are operating on extremely thin margins, sufficient only to sustain operations, without the capacity to accumulate capital or build buffers against future shocks.

The weakening health of the sector has translated into a widespread defensive mindset. About 60.8 percent of businesses plan to maintain their current scale over the next two years, 33 percent intend to downsize, and only 1.8 percent are considering expansion. The dominant priority is no longer growth, but survival.

Notably, legal challenges have emerged as the most significant source of pressure, even surpassing familiar concerns such as input costs or market demand.

Some 73.3 percent of respondents said legal issues have a major or severe impact on their operations. In practice, 71.2 percent face difficulties collecting customer information for electronic invoicing, 67.6 percent struggle with deductible expense accounting, and 66.8 percent find it challenging to keep up with policy changes.

Time spent on regulatory compliance is considered the greatest burden, with 73 percent rating its impact as high or very high. This burden extends beyond financial costs to include time, effort, and prolonged psychological pressure on business owners.

A notable finding is that compliance burdens do not ease as businesses grow - instead, they tend to increase with scale. As operations expand, businesses face more complex accounting systems and heavier tax procedures, leading to higher staffing and technology costs.

This dynamic discourages expansion, as many owners perceive growth as synonymous with increased pressure. As a result, the institutional environment may inadvertently keep household businesses small, defensive, and reluctant to grow.

Regarding formalization, only 15.6 percent of businesses plan to transition into enterprises within the next two years. Most remain hesitant due to concerns over more complex tax procedures, stricter accounting requirements, higher social insurance costs, and increased inspections.

However, the survey also highlights a positive insight: businesses with a clearer understanding of tax and accounting policies are significantly more willing to formalize. This suggests that familiarity with the regulatory framework enables more balanced cost-benefit assessments, rather than fear-driven decisions.

Limited motivation to expand

According to the VCCI research team, household businesses remain a vital pillar of the household economy and serve as a social safety buffer. However, the sector is currently characterized by weakening performance, thin margins, and a prolonged defensive stance.

The prevailing trend in the coming years is to maintain or reduce scale, while the proportion of businesses planning expansion or formalization remains very low.

Experts argue that the sector’s bottlenecks lie not only in weak demand or rising input costs, but also in the mismatch between increasingly complex regulatory requirements and the limited compliance capacity of predominantly micro-scale businesses.

As legal challenges become the primary pressure point and tax and accounting procedures turn into barriers, reforming the business environment for household enterprises must focus on improving ease of compliance, rather than merely tightening regulations.

This requires not only reducing administrative procedures but also redesigning the regulatory system to be simpler, more transparent, and better aligned with real-world business operations.

At the same time, the development of support tools such as simplified accounting software, clearer tax guidance, and local advisory systems will play a crucial role.

Support policies should also be more targeted, focusing on the most vulnerable groups while enabling high-potential businesses to access resources and transition into formal enterprises.

For the transition process, mechanisms are needed to reduce real costs, including financial incentives and support in tax and accounting during the initial phase, along with a suitable roadmap for obligations to avoid overwhelming newly formalized businesses.

Hong Khanh