HANOI - If it had been in business a decade ago, Nguyen Anh Thuan's restaurant would have been a target for late-night police raids to arrest lawbreakers and stamp out "social evils".

But Comga Cafe, in the heart of Vietnam's capital, is no gambling den, after-hours bar or front for dealing drugs. It is an enterprise friendly to people of all sexual preferences in a country where conservative values are strong.

Yet Thuan is experiencing success instead of resistance. Prejudice is giving way to some liberalism, he says, in a country now one of Asia's most progressive on gay, lesbian and transgender issues.

That has spawned a niche market of an estimated 1.6 million Vietnamese at a time of galloping growth, offering money-making opportunities to firms that provide services from travel and weddings to insurance and healthcare.

"Our business benefits a lot from the LGBT community," said Thuan, who also advises businesses on lesbian, gay, bisexual and transgender issues, which are often abbreviated as LGBT.

"Many LGBT people hold high positions in big firms and don't have to hide themselves. Society is more open to them."

Tran Khanh Sinh, a gay person, poses for a photo in front of lamps in the colours of the gay rainbow flag at Comga restaurant where he is working in Hanoi February 5, 2016. Reuters

While transgender, gay and lesbian people are persecuted and even jailed in many Asian countries, Vietnam has quietly become a trailblazer, with laws to decriminalize gay marriage and co-habitation and recognize sex changes on identity documents.

"I see a lot more openness in Vietnam now," said Bach Linh, a lesbian. "Many LGBT people make lots of money and want to spend it. This will attract the attention of businessmen soon."

Seminars and corporate-sponsored "Viet Pride" festivals get free rein, and state media discuss once-taboo issues of sex and gender preferences.

It is unclear what prompted the relaxation by the government, which has never openly spelt out its policy.

The Justice Ministry did not respond to questions from Reuters, and vice health minister Nguyen Viet Tien, who was once quoted speaking in support of gay marriage, told Reuters his ministry was not responsible for policy and declined to comment.

Marketing firms are tracking consumer trends among lesbian, gay, bisexual and transgender people, including private healthcare providers such as Safe Living, which estimates such clients contributed about 30 percent of its 2015 profit.

MB Market Makers, which specializes in development of what it calls "the uniquely lucrative LGBT market", aims to include Vietnam in its 2016 consumer research.

It recently valued the Chinese market at $850 billion annually and the U.S. market at $950 billion, though there are no comparable figures for Vietnam.

"Radical change"

Budget airline VietJet Air is targeting the same audience, with a television advertisement featuring an in-flight lesbian wedding.

"There's no law against it, so why not?" Managing Director Luu Duc Kanh told Reuters.

Vietnamese transgender people have strutted the catwalk at a fashion event with rainbow bridal dresses and a gay wedding.

"After the show, dozens of LGBT customers came to me for my advice and to use my designs," said organizer Caroll Tran.

In 2014, USAID said attitudes had undergone a "radical change" from a decade ago, when gay activity was treated as a crime and a mental health issue.

But family problems, workplace discrimination and violence in schools persisted, it added.

Vietnamese gay rights activist Luong The Huy (2nd R) attends a news conference with transgenders Ngoc Tu (L), Anh Phong (2nd L) and La Lam (R) in Hanoi. Reuters

Vietnamese academic Luong The Huy said the changes reflected political will and greater public discussion.

Randy Berry, U.S. special envoy for human rights of LGBT persons, told Reuters that, whatever its reasons, Vietnam had actively engaged with an issue neighbors still consider taboo.

Gay sex is illegal in Singapore and mainly Muslim Malaysia, where some states also outlaw cross-dressing.

In Brunei, sharia religious law forbids sodomy, and activists in Muslim-majority Indonesia recently called growing hostility toward gays "a witch hunt".

Thailand does not formally recognize same-sex unions or sex changes, but a new constitution is expected to include "third gender" provisions.

"Progress in places like this shows it's completely possible to honor tradition and be embracing of diversity," Berry said.