Singapore will move this week to extend the reach of its haze law across its borders, as the fallout from Indonesia’s fires spreads from public health into regional energy security and the future of the Asean Power Grid.
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Malaysia is weighing a transboundary haze law of its own. Indonesia, meanwhile, has cut gas exports to Singapore and cooled on plans to sell it electricity, raising questions about how far the region can rely on its neighbours for energy and about the Asean Power Grid, the plan to link Southeast Asia’s electricity networks.
Regional transboundary laws to come?
Malaysia is watching Singapore’s next move. Natural Resources and Environmental Sustainability Minister Arthur Kurup told Malaysia’s Parliament on 28 October that implementing such a law would be difficult, particularly on questions of jurisdiction. Malaysia shelved a planned haze bill in 2020, and said in 2023 it would not proceed, citing the difficulty of gathering evidence.
Singapore’s own law has run into that problem. Passed in 2014, the Transboundary Haze Pollution Act (THPA) applies to conduct anywhere that causes haze pollution in Singapore, with fines of up to S$100,000 (US$78,165) for each day of haze, capped at S$2 million (US$1,563,354).
During the 2015 haze, the National Environment Agency (NEA) served notices on six Indonesian companies and sought information from Asia Pulp & Paper’s (APP) Singapore branch. None of the six cases led to a penalty, and no company has been fined or sued under the Act since it came into force. NEA closed two of the investigations in 2017, and the other four remain open.
The sticking point has been proving causation. To act, Singapore must show that a company’s conduct caused or contributed to haze in Singapore, much of the evidence, from who holds the land to who lit the fires, sits in Indonesia.
This week, Minister for Sustainability and the Environment Grace Fu will table amendments that would let NEA compel companies to appoint assessors to examine their operations and supply chains, and make it an offence not to comply. The companies would have to give the assessors access to their documents and premises, which NEA cannot now require. The changes, which build on notices NEA served on 10 Singapore-registered companies on 23 October, go after the evidence through companies registered in Singapore. Malaysia, which faces the same obstacle, will see how far that reaches.
Workers’ Party Member of Parliament He Ting Ru has also filed an adjournment motion on how well the Act deters polluters.
Energy: How will Asean Power Grid pan out?
The haze dispute has played out against a wider turn inwards on energy. Indonesia’s coordinating Minister for Downstreaming and Energy Transition Bahlil Lahadalia said on 22 October that the country could stop supplying energy to countries that did not respect it. Two days later, Indonesia began cutting pipeline gas exports to Singapore.
Jakarta said the cut, about 8 per cent of those exports, was within contractual limits. Singapore’s Energy Market Authority (EMA) said it amounted to less than 2 per cent of daily demand. Bahlil went further on 29 October, alleging that Singapore resells some of the liquefied natural gas it buys from Indonesia. He gave no evidence.
“When there is a supply crunch, countries may also prioritise their own domestic needs, and this trend of resource nationalism is particularly concerning,” Minister for Energy, Trade and Industry (Energy and Industry) Tan See Leng said at Singapore International Energy Week on 26 October.
He also said Indonesia had good reason to put its own needs first. Singapore generates about 95 per cent of its electricity from imported gas, and its pipeline contracts with Indonesia expire at the end of 2028.
The same uncertainty hangs over the Asean Power Grid. Asean energy ministers agreed in 2024 to realise the grid by 2045, and Singapore’s plan to import about 6 GW of low-carbon electricity by 2035, which already faces licensing hurdles, is meant to help build it. EMA granted conditional approval on 26 October for a further 1.3 gigawatts (GW) of imports by Sembcorp Utilities, from Vietnam and Malaysia.
Seven of the approved projects, with about 3.4 GW of planned capacity, are in Indonesia. Bahlil said on 19 October that talks on electricity exports had stalled over pricing.
“Indonesia has a fairly strong bargaining position, including politically, because we are the ones supplying electricity to Singapore,” he said.
A week later, he said he doubted the exports would happen in the near future.
Tuesday’s sitting is Parliament’s first since NEA began serving notices and Indonesia cut its gas exports. Bahlil has not said whether the cut is permanent, and Singapore’s gas importer has not said whether it found a breach of contract.
Finance: Change in risk assessment for banks
For banks, the haze has become a matter of credit risk. Eco-Business estimated last month that this year’s haze could cost Singapore more than the S$1.83 billion it lost in 2015. The Monetary Authority of Singapore (MAS) said on 28 October that banks should take into account information NEA releases under the Act. Where customers may be linked to the haze, banks are expected to engage them and find out how they prevent and fight fires.
Where banks find heightened risk, MAS said they could impose conditions, revise financing terms, limit further exposure or reassess the relationship. Clear breaches of environmental law would warrant stronger steps, including exiting it.
Five companies, including Wilmar International and two APP entities, have agreed to engage assessors, and two more have said they are willing, NEA said on Saturday.
This week’s bill would give the assessments legal force. Their findings could become grounds for banks to reprice loans, cap lending or walk away from companies found to be linked to the fires. The bill’s text, published on Tuesday, will show what NEA can compel and how much of it will be made public.
