Singapore’s toughened haze law will let the government order banks to stop lending to companies linked to Indonesia’s fires. But whether those orders will extend to parent companies – where much of the borrowing is concentrated – may remain unclear until the powers are first used, according to a Singapore Management University (SMU) academic.
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“Whether an order follows the money up to the parent or stops at the named subsidiary is a question the first designations will have to answer,” Holly Yang, Professor of Accounting at SMU, told Eco-Business in response to queries.
Singapore’s Parliament unanimously passed the amendments to the Transboundary Haze Pollution Act on 4 November, raising the maximum fine tenfold to S$20 million (US$15.6 million) and allowing the government to designate companies without a conviction. The National Environment Agency (NEA) can also direct companies to hire private assessors at their own expense.
Yang’s research highlights the difficulty of identifying the companies ultimately responsible for fire-affected concessions. She and her student Ashmit Bansal examined about 2,400 Indonesian concessions, and could not identify the ultimate controlling parties for about 80 per cent of them, even with commercial ownership databases. Those concessions accounted for about 75 per cent of the fires recorded in 2026, she said.
The financial exposure is substantial, according to SMU’s Yang. Malaysian and Singapore banks have extended several billion US dollars of credit since 2013 to groups connected to this year’s fire-affected concessions, based on her reading of Forests & Finance data. Lending to such a group does not establish responsibility for any fire.
Much of that lending goes to parent companies, rather than concession-holding subsidiaries, Yang said. A parent company could argue that a designated subsidiary is a separate legal entity over which it does not exercise control, potentially complicating efforts to restrict financing at the group level.
Designations may also struggle to reach beyond Singapore-registered companies. Of the ownership chains Yang could trace, about 20 per cent involved offshore entities and about 25 per cent involved nominees or corporate service providers. Some of the concessions with the most fires in 2026 also belong to long-term or exclusive suppliers of Singapore-based groups, according to her.
“An assessor appointed by a Singapore company may be able to examine its subsidiaries and contractual relationships, but investigating the ownership of independent suppliers, particularly those located overseas, would be much more challenging without additional regulatory support,” she said.
Lenders could press groups to disclose ownership links
Even where the law’s reach is uncertain, pressure from lenders could push parent companies to disclose their ownership structures and concession holdings, Yang warned.
The financial consequences for a company subject to a lending order could be severe. An order would cut off new credit and loan renewals, while a designation could trigger an “event of default” under clauses requiring borrowers to comply with the law, potentially allowing lenders to take action, she said.
The difficulty is that the law names legal entities, while banks lend to groups. The minister or NEA can publish lists of companies directed to appoint assessors, designated, put on notice, or given adverse or qualified reports, and a bank would then have to work out how a listed company is connected to the group it finances, according to her.
“I think these lists are necessary, but they are not sufficient,” she said.
Banks’ public disclosures offer little insight into those connections, she noted. In her review of the sustainability reports of 33 lenders, fewer than one-sixth fully disclosed their exposure to the palm oil and forestry sectors, and none disclosed fire-related information about their borrowers.
Still, Yang expects the threat of lending restrictions to prompt banks to demand more information before any order is made.
“I would also expect the orders to work before they are used: the credible threat of one is enough for a credit committee to require ownership and concession mapping as a condition of the next facility, which is the disclosure the market has lacked,” she said.
Handing over those maps could put companies in a bind. Indonesia’s office of the coordinating minister for the economy advised palm oil companies in 2019 not to share their plantation data with other parties, including consultants and foreign agencies, describing the data as strategic for the national economy. The letter was a recommendation rather than a regulation, and Indonesia’s Supreme Court had ordered the land ministry in 2017 to release the land titles behind such maps, which the ministry had still not done by 2019.
Political will and regional limits
How Singapore uses its new powers will depend partly on diplomatic considerations. Minister for Sustainability and the Environment Grace Fu told Parliament that the government would be judicious in setting business restrictions.
People’s Movement to Stop Haze (PM.Haze) considers the higher penalties adequate but questions whether the designation power will be used. Restrictions reaching suppliers, buyers and related companies could “greatly raise the cost of business as usual for errant companies”, said Low Ying Hui of the Singapore advocacy group.
“It remains to be seen if the Minister will wield this power, since there will be diplomatic implications due to its wide-reaching sanction-like nature,” Low told Eco-Business.
The group also questioned the law’s preventive reach. It interprets the new provisions as addressing the risk of haze reaching Singapore, rather than land-drying practices that increase fire risk.
The debate comes as Malaysia weighs its own law. The Association of Southeast Asian Nations’ (Asean) haze agreement has no mechanism for inter-country enforcement or compensation claims, Malaysia’s Deputy Natural Resources and Environmental Sustainability Minister Syed Ibrahim Syed Noh told Parliament on 5 November.
Malaysia has urged the Asean to revisit the pact but has yet to legislate domestically, citing jurisdictional and evidence-gathering difficulties. Officials are studying Singapore’s approach.
Shahrul Mizan Ismail, associate professor at Universiti Kebangsaan Malaysia’s Faculty of Law, said political commitment is the immediate obstacle, while evidence and institutional capacity will determine enforcement.
“There is a circularity in rejecting legislation because evidence is unavailable while declining to create powers that could improve its availability,” he said.
But restrictions need safeguards, including recorded grounds, a meaningful hearing, expiry dates and access to the courts, he added.
“The critical danger is punishment through administrative procedure: imposing consequences comparable to a final sanction while relying indefinitely on suspicion,” he said.
Blanket financing or supplier restrictions could also obstruct firefighting and restoration or hurt workers and smallholders without changing harmful practices, he warned.
Malaysia’s Foreign Minister Mohamad Hasan has pledged to raise haze at an Asean foreign ministers’ meeting in Manila on 12 November. Singapore, which chairs Asean in 2027, will share its approach to acting against companies responsible for haze, Fu told Parliament.
