More businesses are entering Vietnam's market, and newly established firms are registering larger amounts of capital. Yet at the same time, business closures are increasing, profitable companies remain outnumbered by loss-making ones, and most enterprises continue to operate on a very small scale.

The picture suggests that Vietnam's business environment has not lost its appeal, but the underlying health of its corporate sector remains fragile. The key question is no longer how many new companies are established, but how many can survive, accumulate capital and grow sustainably.

Data from the first six months of 2026 show that Vietnam continues to attract new businesses. A total of 169,842 enterprises either entered the market or resumed operations, up 11.2% from the same period last year. The average registered capital of newly established businesses also increased by 35.7%.

Behind these positive figures, however, pressure on the corporate sector continues to mount. During the same period, 151,067 businesses exited the market, an increase of 18.8% compared with a year earlier, outpacing the rate of new market entries. Developments in June also highlighted a stronger market shakeout, with fewer new businesses being established even as the average size of new registered capital increased sharply.

As a result, the health of Vietnam's business sector can no longer be measured simply by the number of new company registrations, but by businesses' ability to survive, expand and develop sustainably.

More businesses, but not stronger businesses

According to Pham Ngoc Thach, Deputy Head of the Legal Department at the Vietnam Chamber of Commerce and Industry (VCCI), among more than one million active enterprises nationwide, around 420,000 reported profits while approximately 432,000 reported losses.

That means a large share of businesses are still unable to generate sufficient earnings for reinvestment and long-term growth.

The root of the issue lies in the structure of the business community. Around 70% of private domestic enterprises have registered capital below VND10 billion (US$381,000), while 81.4% employ fewer than 10 workers.

Most companies therefore remain micro or small enterprises with limited resources and little ability to build lasting competitive advantages.

This is reflected in profitability. The average profit margin of domestic private enterprises stands at only 2.22%, compared with 5.25% for foreign-invested enterprises and 8.3% for state-owned enterprises.

With margins this thin, Thach said, even relatively small changes in market conditions, operating costs or interest rates can quickly push businesses into financial difficulty.

A VCCI survey found that the greatest challenge facing businesses today is market demand. As many as 60.2% of companies said they struggle to find customers and secure stable sales for their products.

Even when businesses receive orders, access to financing remains another major obstacle. About 75.5% of enterprises reported difficulties obtaining bank loans, while 93.5% of approved loans still required collateral.

This continues to limit access to credit for many small businesses, startups and innovative enterprises, even when they have viable business plans.

The same challenges are reflected among Vietnam's household businesses.

The country currently has around 6.1 million household businesses employing nearly 10 million people. While they play an important role in the economy, their financial resilience remains weak, with 73.7% reporting only modest profits.

Against a backdrop of continuing global economic uncertainty, that resilience faces even greater pressure. Among manufacturing businesses, 53.5% said export orders had declined because of disruptions in international markets.

Overall, Thach said, Vietnam's business sector remains "large in number, but not yet strong."

The number of businesses continues to increase, but small scale, low profitability, limited capital accumulation and weak resilience remain common characteristics.

Institutional implementation remains the biggest opportunity

Alongside market challenges, businesses continue to face obstacles arising from the regulatory environment.

During the first half of 2026, VCCI received 879 business complaints relating to commercial regulations.

Among them, 51.4% concerned regulations viewed as unclear or difficult to implement, 36.7% cited high compliance costs, and 11.8% pointed to overlapping or conflicting legal provisions.

There have, however, been encouraging signs of progress.

During 2025, a total of 3,085 administrative procedures were either eliminated or simplified. Business satisfaction with online public services also reached around 90-91%, indicating that administrative reforms are beginning to produce tangible improvements.

According to Thach, policymakers should prioritize five key areas.

The first is improving access to working capital by gradually shifting bank lending away from a heavy reliance on collateral toward assessments based on cash flow and business viability.

For household businesses, he recommended reducing compliance costs related to taxation, accounting and electronic invoices while establishing a practical roadmap to support their transition into formal enterprises.

To strengthen resilience against external shocks, businesses also need support in lowering logistics costs, diversifying supply chains and export markets, and making more effective use of Vietnam's economic diplomacy.

Regarding institutional reform, Thach argued that success should no longer be measured simply by the number of administrative procedures removed, but by the quality of implementation, with greater emphasis placed on post-audit supervision rather than extensive pre-approval requirements.

Overall, Vietnam continues to maintain a steady flow of newly established businesses, average registered capital is increasing and administrative reforms have begun to deliver positive results.

However, weak profitability, small business size, market access difficulties, limited financing and continuing institutional bottlenecks indicate that much of the corporate sector remains vulnerable.

According to Thach, the greatest opportunity in the coming years lies in improving the effectiveness of institutional implementation so that reforms already adopted translate into meaningful improvements in Vietnam's business environment.

Lan Anh