DRIVING FACTORS AND CHALLENGES FOR THE FORMALIZATION OF HOUSEHOLD BUSINESSES IN HO CHI MINH CITY, VIETNAM

Small household businesses are widespread in Vietnam and are increasingly important for employment and economic growth. However, many are run informally which hinders their growth and harms the country’s economy as well. We utilize logistic regression based on the 2017 Economic Census and 2022 field survey data of formalized firms in Ho Chi Minh City. The size of the household business, use of information technology and revenue transparency influence the intention to convert household businesses into formal enterprises. The transition process can be complicated by various factors such as a household business owner’s unpreparedness, concerns about complications, fear of higher tax payments, limited internal resources, uncertain economic benefits and management regulations that are unsuitable for sole proprietorships.