The Federation of Thai Industries (FTI) has suggested that the government relocate factories out of residential areas, following the plastics factory inferno, to prevent accidents in the future.
Some incentives should be offered to factory owners, including a 2% reduction of land tax and a reduction of corporate income tax.
"Factory relocation requires support from the government because it incurs high costs," said FTI chairman Supant Mongkolsuthree.
Firefighters and rescuers spent more than 24 hours battling the fire after a huge explosion and blaze at a factory in Samut Prakan's Bang Phli district in the early hours of Monday.
The explosion and fire, which killed one firefighter and left dozens of people injured, damaged 73 houses and forced the evacuation of 1,900 residents within a five-kilometre radius.
They were also warned the smoke and fumes were toxic.
According to FTI, most factories are located far from communities, but as the city expands, houses and factories are getting closer in proximity.
Factories which cause pollution and are dangerous to nearby communities must move out to areas with strict safety regulations, said Mr Supant.
He suggested the Industrial Estate Authority of Thailand (IEAT) develop industrial areas specifically for small and medium-sized enterprises and offer them low land prices.
FTI also has a policy to encourage members to develop their factories into environmentally friendly factories under a cooperation with the IEAT. Currently, there are 300 factories under the Eco Factory project.
The federation on Tuesday reported the Thailand Industry Sentiment Index in June declined for a third consecutive month to 80.7 points from 82.3 points in May, the lowest in 12 months.
The drop resulted mainly from the third wave of Covid-19 which dealt a further blow to the reeling economy and caused the government to impose a partial lockdown, especially in Bangkok which is a hotbed of the contagion.