Paradoxically, despite its economic size, knowledge of the informal economy is extremely
limited in Vietnam, as it is in most developing countries, and researchers, whether Vietnamese or
foreign, have paid little attention to the subject. This situation is due to a number of factors.
Firstly, the concept of what constitutes informal is vague with a multitude of definitions having
been put forward by different authors. Secondly, measuring the informal economy is problematic
since it operates on the fringes of the economy. Thirdly, the informal economy suffers from a lack
of interest on the part of the authorities as it does not pay (or pays little) taxes and is seen,
especially in towns, more as a nuisance and a mark of underdevelopment, doomed to extinction by
the country’s economic growth. These elements explain why there has been no real significant
effort to date to improve knowledge in this area. Moreover, in Vietnam as in other developing
countries, the current international economic crisis is supposed to provoke employment losses and
employment restructuring. This increases interest in the informal economy, which is one of the
main victims of the crisis.
This is why the ILO in Vietnam has decided to commission a Study on the informal
economy in Vietnam. Apart from the ILO’s obvious interest in labour market functioning and
policies for statutory reasons, it should be reiterated that the ILO was one of the pioneers of the
concept of informal sector that drew on the African experience documented in the famous 1972
study. This report sets out to amend this situation by providing accurate statistical data and
in-depth analyses on the informal sector and informal employment in Vietnam for the first time. It
draws on the results of several statistical surveys conducted with support from the authors and
largely refers to a book recently published on this subject (Cling et al, 2010). It is also based on
some research lead by the authors on the impact of the economic crisis in Vietnam and on several
interviews conducted with officials from the Ministry of Labour, Invalids and Social Affairs,
(MoLISA), the Ministry of Planning and Investment and the Ministry of Finance, as well as with
Vietnamese academics. Lastly, this report has benefitted from the debates which took place during
the National Workshop on the Informal Sector and Informal Employment in Vietnam, organized
by the Labour Market Project (European Commission-MoLISA-ILO) on 4th March 2010 in
Hanoi.1

Prior to 2007, statistical information on the informal economy (in terms of labour, income
and production) in Vietnam was scarce. Two main sources provided data on non-farm household
businesses (NFHBs) and among them, registered and non registered businesses: the Vietnam
household living standards survey (VHLSS) and the Annual household business survey (AHBS).
The two sources provide highly discrepant estimates. While the VHLSS estimates the number of
NFHBs in Vietnam at 9.3 million in 2002, the respective figure given by the AHBS is 2.9 million.
Despite careful intents to reconcile the two databases, the gap remains highly significant. As
regards informal employment, this relatively new concept had never been measured in Vietnam.