This year’s haze is set to cost Singapore more than 2015’s S$1.83 billion. Who pays for the losses?

More than a decade after Singapore passed the Transboundary Haze Pollution Act to make polluters pay for such losses, no company has been fined or sued under it. Malaysia, where the haze is estimated to cost up to RM50 million (US$12.3 million) a day, has yet to pass a similar law.

The estimate comes as Singapore responds to the haze that has blanketed large swathes of Southeast Asia in the past week. Singapore’s Minister for Sustainability and the Environment Grace Fu announced on Friday that the National Environment Agency (NEA) has identified seven companies after tracing fires on their concession lands to smoke that could have reached Singapore.

The NEA has issued preventive measure notices under the Act to seven companies: Bumi Andalas Permai; Bumi Mekar Hijau; Paramitra Mulia Langgeng; Sumatera Alam Anugerah; SBA Wood Industries; Hutan Lestari Raya; and Bangkanesia.

The notices require the companies to deploy firefighting personnel to extinguish or prevent the spread of fires on land they own or occupy; stop or refrain from burning on that land; and submit action plans to the NEA for extinguishing fires and preventing their recurrence. 

Why this haze will cost more

Quah, who is the Albert Winsemius Chair Professor of Economics at Nanyang Technological University (NTU), has been estimating the haze’s cost to Singapore since the 1997 Southeast Asian haze crisis, which he put at between US$163.5 million and US$286.2 million, or 0.18 to 0.32 per cent of gross domestic product (GDP) at the time, most of it in lost tourism.

Across the region, a study for the Economy and Environment Program for Southeast Asia put the damage from that year’s fires and haze at nearly US$4.5 billion, about US$1.4 billion of it from the haze alone.

In Malaysia, the cost of treating haze-related illness rose from RM21 million (US$6.9 million) in 1997 to RM410 million (US$130 million) in 2013, according to a review of studies in the Malaysian Journal of Public Health Medicine. Once medical leave, lost productivity and lost income were counted, the review found, the 2013 haze cost Malaysia more than RM1.7 billion (US$540 million).

Quah’s estimate for 2015, produced with his NTU colleagues Chia Wai-Mun and Tan Tsiat-Siong, covered the two months the haze lasted, and counted the toll on health, tourism, business and productivity, as well as what government agencies and households spent on mitigation and adaptation.

For Indonesia, where the fires burned, the World Bank put the cost that year at US$16.1 billion, about 2 per cent of GDP; the 2019 fires cost it at least US$5.2 billion more. 

This year, Singapore’s 24-hour Pollutant Standards Index (PSI) entered the unhealthy range on 4 September for the first time since October 2023, and reached 192 in the central region on 9 October. As of 16 October, the haze had affected Singapore for about 34 days, Quah told Eco-Business.

“The preliminary estimates on damage costs have already exceeded the 2015 damage costs over the same period thus far,” he said, adding that he expects to complete his full estimate around early November.

He put the higher bill down to how much Singapore has changed since 2015: the economy has grown, so lost productivity costs more; more people live in Singapore, and medical treatment costs more than it did; more tourists visit, so more can stay away; and Singaporeans now spend more of their time outdoors, which the haze takes from them.

In Malaysia, schools in Johor, Melaka, Negeri Sembilan and Putrajaya had been closed by 12 October, and Yeah Kim Leng, a Professor of Economics at Sunway University, has publicly estimated that the haze is costing the country between RM20 million (US$4.9 million) and RM50 million (US$12.3 million) a day. 

Why the Act has yet to fine anyone

The Act was last invoked over the 2015 haze, when the National Environment Agency (NEA) issued legal notices to six Indonesian companies; it closed two of the investigations in 2017, and the other four remain open. Alan Tan, Professor at the Faculty of Law of the National University of Singapore (NUS) who wrote an analysis of the Act in 2015, said his understanding was that the companies “were not forthcoming”, since anything they shared would likely incriminate them.

When NEA obtained a court warrant in 2016 for a company director who had failed to attend an interview, Indonesia’s environment minister said her ministry would review its cooperation with Singapore; Singapore’s foreign ministry, for its part, said it had repeatedly asked Indonesia to share information on companies suspected of illegal burning.

It is against that record that Prime Minister Wong, in a Facebook post on 15 October, wrote: “We are looking into which companies may be responsible for the fires. Where warranted, we will take action under Singapore’s Transboundary Haze Pollution Act, and also explore joint action with other countries.”

Tan’s view is that it cannot do so alone: “There is no way Singapore can investigate and prove facts on the ground without the Indonesian authorities’ direct involvement and co-operation.”

He added that he expects Singapore to act only against companies that Indonesia has itself identified and charged, since a case resting on meteorological and map evidence would have to prove guilt beyond reasonable doubt.

Jakarta, meanwhile, has tightened access to that evidence. Since September, Indonesia’s forestry ministry has made its Sigap mapping platform, the official source of geospatial forest data, view-only; extracting its data without written approval now carries penalties of up to nine years in prison.

What the companies face

Under the Act, a company found responsible can be fined up to S$100,000 (US$78,600) for each day of haze it causes or contributes to, capped at S$2 million (US$1.57 million), plus up to S$50,000 (US$39,300) a day for ignoring a notice to take preventive measures.

Anyone in Singapore who suffers injury, damage or economic loss can also sue, with no cap on damages. The maximum fine would amount to less than a thousandth of what this year’s haze could cost Singapore.

In Malaysia, companies face no such law; successive governments have considered one since at least 2015 but declined to table it, most recently citing legal advice and the difficulty of obtaining evidence from neighbouring countries.

Regionally, the Asean Agreement on Transboundary Haze Pollution requires disputes to be settled “amicably by consultation or negotiation”.

In Indonesia, where the fires burn, courts have ordered companies to pay more than Rp21 trillion (US$1.3 billion) in fire-related penalties since 2015, by one count; almost none of it has been collected.

Members of the Roundtable on Sustainable Palm Oil (RSPO) can be suspended or expelled if its independent Complaints Panel upholds a complaint against them; the standard bars members from using fire to prepare land, and the panel’s decisions are published.

“Losing certification carries a real commercial cost as the volume can no longer be sold as RSPO-certified,” said RSPO chief executive Joseph D’Cruz, who added that because certification is a contractual requirement in many procurement contracts, losing it can trigger defaults.

The panel can also order a member to remediate environmental damage it is responsible for, but “compensating third parties for economic loss, whether communities in Indonesia or parties in neighbouring countries is the jurisdiction of national law and the courts,” D’Cruz said.

Smoke over Sumatra and Singapore on 15 October 2026. Image: NASA Worldview.

What Singapore and Malaysia stand to lose

Tan had previously observed that it is “unlikely that states in the region will risk their close political and economic ties with the regional giant economy that is Indonesia to pursue an action before an international tribunal”.

In 2016, Indonesia’s foreign ministry protested against NEA’s warrant, warning that Singapore’s regulations should not harm trade and cooperation between the two countries’ businesses.

Singapore has been Indonesia’s largest source of foreign investment for more than a decade, accounting for about 30 per cent of it in 2025, according to Indonesia’s Investment Coordinating Board (BKPM); Malaysia, which invested US$4.5 billion that year, was the fourth-largest. Since 2015, Singapore’s investment in Indonesia has nearly tripled, to US$17.4 billion in 2025.

BKPM, however, records an investor’s origin by where the investing company is incorporated, and Indonesian officials have said for years that much of the money recorded as Singaporean is Indonesian capital routed through the city-state; between 2010 and mid-2015, about 12 per cent of investment recorded as Singaporean went into food crops and plantations.

For the seven companies handed NEA notices, the question is whether Singapore can get further than it did in 2015. Some may be beyond its reach altogether. “Not all the companies have a presence in Singapore – the smaller ones typically do not,” Tan said, and “as such, they are likely to be outside the reach of the Act.” Should a prosecution fail for want of evidence, he added, “it could signal that the Act is futile.”

(Editor’s note: This story has been updated to include the NEA announcement identifying the seven companies contributing to the haze.)