Setting up a warehouse or factory is one of the crucial steps for many businesses as it either makes or breaks a company. Therefore, many people love to explore as many options as possible, especially the procurement method, whether buying or renting the warehouse. Buying is suited for a long-term commitment and equity in a property, but severely expensive startup costs create unnecessary financial risks. Renting is a simple solution for new businesses as it is less startup cost and easier to start or relocate. This article will highlight the advantage of renting warehouses or factories over buying or constructing them in Thailand, tailored into 6 simple reasons for you to read before making a crucial decision!
1. Lower Upfront Payment
Constructing a warehouse or factory in Thailand requires a high investment for the upfront land purchasing, construction fee, utility installment, government document fees, and many more. All this investment can be reallocated for other budget allocations to further your operation development, such as buying more machines, procuring logistic services, investing in human resources, or all of them if possible. Additionally, renting is a cheaper alternative for warehousing or operating a factory. Instead of spending a large sum of finance on constructing a warehouse or factories and creating unnecessary business risk, it is an ideal approach to start by renting warehouses or factories first with lower investment and less management risk.
2. Renting in Thailand to get tax deduction benefit
Why renting a warehouse or factory in Thailand is better than buying or constructing one? It is tax-deductible in Thailand. With the new policy to attract foreign investors and boost local businesses, private companies that rent a warehouse or factory in Thailand would receive a tax benefit on this incentive, reducing the income tax in the several first fiscal years. Using the rental transaction receipt, you can declare the rental fee as a business expense and can be used for a tax deduction incentive.
3. Time efficient
Renting a warehouse or factory in Thailand means that your business is nearly ready to jump into action right away. Only a few more operational preparations and you are good to go! It is time-efficient for new businesses to rent a warehouse or factory because all the construction is done and necessities are provided. In other words, it is time-efficient for your business, and you can focus your effort elsewhere. Meanwhile, construction required a lot of hours of effort and commitment to ensure its success. It takes a lot of time and processes such as the government to approve the land permit for industrial purposes, finding the right contractor, obtaining a construction license, finalizing the construction plan, risk of delays, utility installments, maintenance, and many more. It takes a lot to build your warehouse, and many people are unsure about this, so why don’t you consider renting first?
4. Low to ZERO Maintenance costs
In addition to time efficiency, renting a warehouse or factory has low to no repair and maintenance costs! With a reliable warehouse service, the maintenance of a warehouse or a factory reparation will be taken care of by the landlord in Thailand. The rental services often cover the maintenance cost, especially for the warehouse or a factory tenant that rents it in the long term, allowing your business to allocate your financial budget elsewhere. Meanwhile, buying or constructing a warehouse comes with the maintenance cost that companies have to manage by themselves. By managing time and financial resources for the maintenance, this circumstance could affect your business in the long term.
5. Flexibility to relocate for more options and expansions
One of the advantages of renting a warehouse or factory over buying one is the flexibility of relocating your businesses to other areas or provinces, if necessary. There are many industrial developments in Thailand, and more exciting business opportunities will open for your business in the future, relocating to Eastern Economic Corridor (EEC) is a great example and opportunity for the future. Renting allows your business to move or expand to the desired strategic location while taking less time and processes. On the contrary, purchasing or building a warehouse restricts your agility in relocation as you require to focus a lot of resources in one place for it to thrive, not to mention the complicated process should you decide to move the operation elsewhere, which can halt your entire business.
6. Fewer documentation process
There is a lot of paperwork for business owners required to go through even BEFORE building a property. In Thailand, constructing a factory has various requirements such as construction permits, property permits for industrial use, property address registration, application of utilities, and many more from Thailand authorities, all of which can take more than a year to finish all processes. Even then, your construction might still delay because of your contractors!! As a result, many new businesses rent a warehouse or factory because they barely have to go through any documentation process, only a rental contract that is important. It is a hassle-free alternative for new businesses who want to start to work as soon as possible and cannot risk a longer documentation process.
To sum up, there are many benefits to renting a warehouse or factory over buying them in Thailand. Renting required lower upfront investment offers the tax benefit from government incentives, is time-efficient for new businesses, relocates friendly, and less documentation process. Hence, it is an effective solution for new businesses to start their operation by renting the right warehouse and factory that suited their needs, size, and requirements from a renting service that can help them thrive!
If you are looking to rent warehouses and factories of various sizes from 300 sq.m to 30,000 sq.m in Samut Prakan kindly contact us.