Thailand starts 'Factory Sandbox' to protect $28.6 billion manufacturing sector

Thai exports in the second quarter surged 27.5 per cent from a year earlier. PHOTO: REUTERS

BANGKOK (BLOOMBERG) - Thailand has launched a pilot programme to test, vaccinate and isolate factory workers to limit Covid-19-related disruptions to its export-driven manufacturing industry, one of the few bright spots in an economy crushed by the virus.

The "Factory Sandbox" initiative aims to protect three million jobs and support manufacturers who contribute about 700 billion baht (S$28.6 billion) to gross domestic product, according to a government statement this week.

The plan will focus on plants that employ at least 500 people and will "build confidence for both Thai and foreign investors at a time when supply chains in rival countries are shutting down", the statement said.

Thai exports in the second quarter surged 27.5 per cent from a year earlier, with growth in manufacturing one of the few economic bright spots amid weak retail spending, "diminishing effectiveness" of interest-rate cuts and the void of tourism, according to a report by Goldman Sachs.

The project's name is a play on words based on the "Phuket Sandbox", a programme that has aimed to revive tourism in Thailand's most-popular island. The South-east Asian nation has faced a relentless surge of Covid-19 infections since early April, with more than 500 clusters detected in factories.

Driven by the Delta variant, the outbreaks have triggered production halts and supply shortages beyond Thailand's borders, with several factories in Vietnam forced into temporary closures.

The Sandbox programme will focus on large factories that manufacture cars, electronics, food and medical equipment for exports in provinces that are key production hubs.

To qualify, the plants must have at least 500 workers, a field hospital or isolation facility, and shuttle services for employees. All workers will also be tested for the coronavirus and those who test positive will be isolated while cohorts will be inoculated, with subsequent tests done every seven days.

Sixty factories in four provinces with a combined workforce of 138,000 will participate in the initial phase, according to the government statement.

The regions comprise Nonthaburi, Pathum Thani, Samut Sakhon and Chonburi, all of which are within an hour's drive of Bangkok.

Last month, the Federation of Thai Industries proposed a similar test-isolation programme that could be applied to about 60,000 factories. That plan called for testing one-fifth of the staff and, if the positivity rate exceeded 20 per cent, all employees would be confined to the site. The Federation also called for faster inoculations of factory workers, a cohort that has a combined vaccination rate of only 10 per cent.

"The government should focus on acquiring vaccines and inoculating as many people as it can and as fast as it can," said Ms Maria Lapiz, managing director of Maybank Kim Eng Securities Thailand. "It should strive to step up to double dose because a single dose is inadequate and won't help reduce fear."

As of Wednesday (Aug 18), 7.3 per cent of Thailand's population has been fully inoculated, with 25.5 per cent having received their first shot, according to government reports.

Earlier in the pandemic, when Thailand was considered a success story for its relatively limited number of virus cases, the government said factory workers would be a priority group for vaccinations. But the Delta-driven wave forced the government to shift its focus to inoculating the elderly and other vulnerable groups to reduce hospitalisations and deaths.

Thailand's importance in the regional and global supply chains was underscored a decade ago when the worst floods in 70 years in the central part of the country triggered shortages of products ranging from Intel hard-disk drives and parts to vehicles from Honda and Toyota.

Join ST's Telegram channel and get the latest breaking news delivered to you.