Many businesses struggle amid declining consumer demand

According to HUBA's report, 50% of businesses in Ho Chi Minh City are facing difficulties due to declining consumer demand. (Photo: VGP)

The Ho Chi Minh City Business Association recently released its first-quarter 2025 business report, highlighting significant challenges faced by businesses and proposing various support measures.

The report revealed that 50% of businesses are struggling due to declining consumer demand, while 37% are experiencing a shortage of new orders.

Notably, while small and medium-sized enterprises (SMEs) show signs of recovery, the overall outlook remains uncertain. Although 69.5% of surveyed businesses reported increased sales revenue, a significant 30.4% still experienced declines.

Adding to these concerns, rising input costs—including raw materials and labor—have led to profit reductions for 39% of businesses, impacting overall business confidence.

According to HUBA, Vietnam’s economy has achieved impressive growth, with a strong increase in GDP. However, domestic consumption has not contributed significantly to this expansion. Consumer spending is slowing, and traditional markets are witnessing a sharp decline in activity.

Additionally, new global trade policies raise the risk of escalating trade tensions. Vietnamese exports are facing stricter scrutiny, while the domestic market may soon be flooded with low-cost Chinese goods shifting from other markets.

“Small businesses and individual entrepreneurs play a critical role in economic stability, market balance, and employment generation,” HUBA stated.

HUBA is urging Ho Chi Minh City to advocate for bold policy reforms at the national level. The association calls for institutional improvements and breakthrough policies to empower private enterprises—unleashing their full potential to drive economic growth in the new era.

The organization also emphasizes the need to encourage greater consumption of Vietnamese goods among individuals, workplaces, and public projects. This, they argue, is a key strategy for reviving domestic businesses and building a resilient economy.

At the same time, HUBA recommends modernizing traditional markets to preserve Vietnam’s retail culture while making them more attractive to consumers. In particular, HUBA is advocating for government policies under the Law on Support for SMEs to be extended to all businesses. Since SMEs account for over 98% of all enterprises, broadening these policies would reduce bureaucracy and implementation costs.

Furthermore, HUBA stresses that tax and financial incentives should be integrated into the Tax Law and the Budget Law to ensure legal enforcement. Currently, the lack of legal foundations in the SME support law prevents tax and budget authorities from implementing support measures effectively.