Vietnam has made considerable progress in its transition from a centrally planned to a more market-oriented economy as a result of the reforms implemented under doi moi. This period of transition has been accompanied by high growth and dramatic reduction in poverty. In the recent socioeconomic development strategy, Vietnam aims to double its GDP and to create1.4-1.5 million new jobs annually by 2010. In the next accelerated integration, however, those ambitious goals would not be achieved without a more vibrant private small and medium sized enterprise sector in general, and non-farm household enterprise sector in particular. The main objectives of this in-depth study are (i) to investigate how non-farm household enterprises develop in the transition from a centrally planned to a more market- oriented economy and (ii) to examine how trade liberalization impacts non-farm household enterprises’ performance/ behaviors, with the hypothesis that non-farm households enterprises would playa bridging role in the transitional process of Vietnam, from an agriculture-based economy to an industry-based one. Additionally, given the vulnerability of non-farm household enterprises/sector, the study also attempts to examine opportunities of and challenges to the development of these enterprises in the next greater economic integration into the world economy. The study is developed mainly by using both qualitative and quantitative analysis techniques based on available data from nation- wide household level surveys (VLSS 1, VLSS 2,VHLSS) and small- scale in-depth interviews with selected entrepreneurs and related local agencies/ institutions which will be carried out in the project. The outputs of the research are expected to set the bases for policymaking process so as to promote non-farm household businesses and to prevent them from the negative impacts in the next accelerated and greater trade liberalization, which helps create a premise for the development of viable, strong, creative, and flexible private small and medium sized enterprises in a shortly coming free market environment