In the nearly 30 years since political and economic reforms, referred to as Doi Moi, were introduced in Viet Nam, the economy has experienced a vast economic transformation. More...
In the nearly 30 years since political and economic reforms, referred to as Doi Moi, were introduced in Viet Nam, the economy has experienced a vast economic transformation. Poverty has diminished greatly, with the percentage of people living below the poverty line decreasing from 60 percent in the 1990s to under10 percent today. The economy’s integration into world markets has significantly increased economic opportunities for Viet Nam’s population. In 2015, economic growth is driven chiefly by exports produced by multinational investors, with traditional exports of garments, furniture, and footwear now supplemented with high-tech and higher-value products. SMEs are also a key sector: they constitute 99 percent of all businesses, employ 77 percent of the workforce, and produce 40 percent of Viet Nam’s GDP.
In this vast community of small enterprises, Viet Nam’s informal sector is extensive. Studies indicate that the informal economy—which ranges from tiny, family-owned enterprises to larger ones that provide goods or services to other informal actors—contributes about 20 percent of national GDP. As such, nearly one-quarter of the economy’s 46 million jobs are “off the books.” Unfortunately, this informality deprives many businesses the ability to grow and do business with other companies and the government. Viet Nam’s Ease of Doing Business ranking, measured by the World Bank Group, highlights the challenges of transitioning out of the “gray” economy and into the formal sector. Although Viet Nam ranked 78 out of 189 economies surveyed in 2014, one of the economy’s less successful areas in this survey is “starting a business.” For many small businesses, the challenge of entering the formal sector through the business registry is daunting because of the number of procedures, the costs, and the obligations that arise, including taxation and other contributions to social safety nets.
Women’s labor force participation rate in Viet Nam is approximately 70 percent, one of the highest in the world. According to a 2014 study on women and employment, earnings, and social protections, about 70 percent to 80 percent of working women can be found in the informal sector, of which about 60 percent is in agriculture and 20 percent the nonagricultural sector. Viet Nam’s Statistics Office estimates that women own 30 percent of formally registered SMEs in the economy.
In Viet Nam, formally established SMEs owned by women reportedly grow at a faster rate than those owned by men. Moreover, 25 percent of leaders and CEOs in Vietnamese enterprises are women. While women are reaching the top ranks in Viet Nam, a “missing middle” for women’s businesses has been observed, in that informal, micro, and small enterprises rarely jump to the next level of growth.
Cultural and structural factors significantly constrain many businesses owned by women from achieving their full economic potential. Gender stereotypes in Viet Nam have a strong influence on women’s business practices. Women’s businesses often prioritize family income, rather than growth and profit. In addition, they often focus in lower-income sectors considered “appropriate” for women, including health, education, or manufacturing. In contrast, men often work in the more lucrative areas of construction, politics, science, or technology. Moreover, women are often expected to consult with their families before making major business decisions and are expected to consider family responsibilities before starting a business.
Access to finance is a particular challenge for women in Viet Nam. While women with established businesses use bank loans, smaller women-run businesses typically seek support from family or friends, or they access informal lending which comes with a high interest rate. A 2014 Goldman Sachs report estimates that, if the credit gap were closed for women’s SMEs in Viet Nam, per capita income could increase by 25-28 percent. Another barrier disproportionately affecting women is limited access to business development and networking opportunities. This relates to other constraints on women’s time, including family obligations that limit their ability to attend after-work events. A 2010 UNIDO and VCCI report found that significantly more women than men perceive domestic responsibilities to be a constraint on their business operation and growth.
Women’s opportunities also vary by region. When asked about the difficulty of starting a business as a woman, 49 percent of respondents in the North (where the capital of Hanoi is located), 71 percent in the central region, and 51 percent in the South reported it was more difficult. A 2010 USAID report found that labor conditions and employment opportunities vary depending on whether a woman lives in a rural or urban area and the sector in which she is employed, whether it is agriculture, service, or other.
Despite the barriers women face in their business pursuits, the World Economic Forum’s 2014 Global Gender Gap Report ranks Viet Nam fairly high in women’s economic participation and opportunity, 41 out of 142 countries. Within this metric, women’s labor force participation ranks even higher at 21st. Overall, Viet Nam is ranked 76 on the Global Gender Gap index, indicative of low rankings on other indicators including health and survival, literacy rates, and women in ministerial positions.
In recent years, the Vietnamese government has increased efforts to improve the business environment for female entrepreneurs, including through implementing the Law on Gender Equity, the Law on Investment, the Law on Enterprises, and regulations supporting female entrepreneurs. These reforms aim to foster a more supportive environment for all entrepreneurs and to level the playing field for men and women.
According to a 2007 IFC report, one of the most significant barriers female entrepreneurs face in Viet Nam is limited opportunity for networking. Women report that men have more resources and more time to build such networks. Business associations for women are an important way for female entrepreneurs to bypass “old boy networks” and create their own business connections. Networks such as the Viet Nam Women Entrepreneurs Council and the Viet Nam Women’s Union provide these types of opportunities. As noted in a 2010 USAID report, there is a positive trend in Viet Nam of new women’s business associations, including the Ha Noi Network of Entrepreneurial Women and the Saigon Women Entrepreneurs Club, launched by women who met through other organizations and took steps to formalize networking appropriate for them. Because family obligations constrain women’s time more than men’s, women are less free to participate in these networks.
A number of associations provide sector-specific networking and business support opportunities for men and women. A list can be viewed here and includes associations such as the Vietnam Tea Association, Vietnam Association of Seafood Exporters and Producers, Vietnam E-Commerce Association, Vietnam Software Association, and Vietnam Textile and Clothing Association. Viet Nam also offers established business professionals opportunities for networking such as the CEOs Club and the Ho Chi Minh Chief Executive Officer Club.
Networks that support women’s access to capital and assets:
Networks that support women’s access to markets:
Networks that support strengthened capacity and skills for women in business:
Networks that support women’s leadership, voice and agency:
Networks that support women and innovation and technology:
Viet Nam’s private sector has increased in size and influence since the mid-1980s when market economy policies (Doi Moi) came into effect. According to a 2010 USAID report, specific policies in Viet Nam’s legal framework are supportive of female entrepreneurs but the private sector has not put policy into practice. Most support for entrepreneurs is in the context of general programs and only limited technical support is available. Support services often don’t appeal to business women, which is why many business associations often splinter off. Another constraint is that limited sex-disaggregated data are available to define specific needs. NGOs focused on economic development are largely not conducting outreach throughout Viet Nam and often focus on fighting poverty rather than supporting entrepreneurship and business development. Private sector support for entrepreneurs’ technological innovation, e-marketing, and Internet presence is often available in neighboring economies but is notably lacking in Viet Nam.
The private sector could also play a much greater role in supporting women’s access to credit, a key gap for female entrepreneurs as discussed in the introduction. As a result of changing regulations in Viet Nam, private credit institutions are able to provide credit to SMEs. Policies issued by the State Bank of Viet Nam on new forms of credit have allowed lending to comply with international best practices.
Initiatives that support women’s access to capital and assets:
Initiatives that support women’s access to markets:
Initiatives that support strengthened capacity and skills for women in business:
Initiatives that support women’s leadership, voice and agency:
Initiatives that support women and innovation and technology:
The legal framework for business development in Viet Nam has been structured without glaring gender-based inequalities, but most laws do not discuss female entrepreneurs or take into consideration issues faced by this group. The framework took shape in 2000 with the passage of the Enterprise Law, which initiated a series of reforms to support the private sector and secure Viet Nam’s admittance to the WTO, which occurred in 2007. Some enterprise laws do take gender into account. These include Decree No. 90 in 2001, which notes that there should be “special importance to support programmes for enterprises that are managed by women.” Further, the Comprehensive Poverty Reduction and Growth Strategy states that there is a need to “develop programs to support SMEs that are managed by women,” noting that strategies should help women compete in domestic and international markets and improve access to finance. Similarly, the Gender Equality Law notes that men and women “are equal in setting up a business” and encourages economic measures to support gender equality including preferential treatment for businesses with female employees and provision of credit aid to rural women workers. Resolution II/NQ/TW, passed in 2007, requests that government support small women-owned businesses and create “favourable policies to support women in the development of small and medium businesses.” While these laws appear on books, they have not been put into practice and very few government programs target female entrepreneurs. In addition, there is no focal office or agency for women’s entrepreneurial endeavors and no individual or group who is responsible for these efforts. Still, a number of institutions have been designated to support gender equality in Viet Nam. These include
- The Ministry of Labor, Invalids and Social Affairs, in particular, its Department of Gender Equality, which oversees the Law on Gender Equality and CEDAW implementation;
- The National Committee for the Advancement of Women in Viet Nam, an inter-sector body advising the Prime Minister;
- Committees for the Advancement of Women in each ministry and province, which are monitored by MCFAW;
- The Committee for Social Affairs (National Assembly), which manages state functions on social affairs including gender equality; and
- The Women Worker Affairs (Department of Viet Nam General Confederation of Labor), which proposes activities for women’s advancement.