Advertisement
Advertisement
A man walks past a bushfire in Labersa, Riau province, Indonesia. Photo: AP

Indonesia arrests farmers for illegal fires while Singapore suffers from haze

Singapore and Malaysia face economic hit from prolonged smog

Indonesian police on Monday arrested two farmers for illegally starting fires to clear land in Sumatra, the first detentions linked to blazes that have blanketed neighbouring Singapore and Malaysia with thick smog for days.

Police said the two farmers were not linked to any of the eight companies the government suspects are responsible for Southeast Asia’s worst air pollution crisis in years.

The parent companies of those firms included Malaysia-listed Sime Darby, which has denied wrongdoing.

“We arrested two farmers in Riau who were clearing their land by burning. They were not working for anyone but just clearing their own land,” said Agus Rianto, deputy spokesman for the national police.

Under Indonesian law, any company or person involved in an illegal forest fire faces up to 10 years in prison and fines of up to 5 billion rupiah ($503,800).

The smog has cleared in the financial centre of Singapore, with the pollution index remaining under “unhealthy levels” for the second consecutive day. It hit a record of 401 on Friday afternoon, a level considered potentially life-threatening for the ill and the elderly.

A conference on nuclear policy was postponed due to some participants unwilling to travel to Singapore because of the haze. The speakers included former US secretary of state George Shultz and former secretary of defence William Perry.

Singapore and Malaysia could face a bigger economic impact than from their worst air pollution crisis 16 years ago if slash-and-burn fires in Indonesia continue to rage in the coming weeks, turning off tourists and raising business costs.

Restaurants, tourist attractions and some other businesses are already feeling the pain as haze envelopes the Southeast Asian neighbours, from Singapore’s upscale shopping districts to Malaysia’s popular beach resorts.

The haze crisis in 1997 lasted about three months and cost Southeast Asia an estimated US$9 billion (HK$69.8 billion) from disruptions to air travel, health expenses and other business impacts. Economists and businesses say the costs are already mounting about a week since air pollution levels in the countries shot up to unhealthy and sometimes hazardous levels.

“The haze has definitely affected our business. Our sales fell around 40 per cent in the past week,” said Goo Wai Chien, who sells pizza and pasta at a hawker centre in Singapore’s business district. “But hopefully the situation is improving.”

Much depends on how long the haze lasts and which way the wind blows the smoke that is coming mostly from fires set on palm oil plantations on Indonesia’s Sumatra island. Singapore Prime Minister Lee Hsien Loong has said the haze, which eased over the weekend and on Monday in the city state, could last a few weeks or until the dry season ends in Sumatra in September or October.

Extinguishing the fires, which smoulder deep within peat, depends almost entirely on levels of rainfall.

Irvin Seah, DBS economist in Singapore, said the overall impact could be worse than in 1997 if the haze drags on.

“In 1997, the level of pollution was not this severe, and on the other hand the tourism industry’s contribution to the economy was relatively smaller back then.”

Tourism makes up 6.4 per cent of Malaysia’s economy and about 5 to 6 per cent of Singapore’s. Analysts see that sector taking an immediate knock, even if they cannot quantify the damage.

“The impact will be negative,” ANZ, a bank, said in a research report, referring to Singapore. “Shopping, restaurants, bars and outdoor entertainment will all suffer during this hazy period.”

Hotels, restaurants and other hospitality businesses also benefit from Singapore’s prominence as a centre for industry meetings and trade shows.

Perceptions of Singapore, which usually enjoys clear skies and relatively little pollution, could be the biggest casualty if the smoke hangs over the island through September.

A conference this week on global nuclear issues with dozens of high-profile experts, including former US secretary of state George Shultz and former secretary of defence William Perry, was postponed “due to increasingly hazardous weather conditions in Singapore”, the organisers said.

“It would create a very negative impression and also deter tourist inflows. It would deter people thinking about moving to work in Singapore,” said P.K. Basu, regional head of research and economics at Maybank Kim Eng.

Brokerage CLSA has estimated the damage to Singapore - a major financial centre, aviation hub and tourism destination - could end up being hundreds of millions of dollars. Other analysts said it could top $1 billion.

Singapore and its $271 billion economy cannot afford a big hit from a prolonged pollution crisis or any loss of confidence.

The economy - which is dominated by services, followed by manufacturing and construction - was stronger than expected in the first quarter due to a surge in the financial sector.

But exports have been weak, especially electronics, and economists now expect growth of 2.3 per cent this year, slower than the median estimate of 2.8 per cent in March, according to the central bank’s latest quarterly survey released this month.

Francis Tan, an economist at United Overseas Bank, said if the smog in Singapore extends until September, with pollution rising to unhealthy levels from time to time, it could shave 0.3 to 0.5 percentage points off his this year growth forecast of 3 per cent. That would mean up to $1.2 billion in economic losses.

Among the biggest costs that businesses face from the haze is illness.

Hospitals and clinics in areas badly affected by haze in recent days had recorded a rise of more than 100 per cent in asthma cases, Malaysia’s director-general of health Noor Hisham Abdullah was quoted as saying by the Bernama state news agency.

Patients reporting other respiratory problems and conjunctivitis had also jumped, he said.

The Malaysian capital, Kuala Lumpur, was veiled in thick smog on Monday, a day after parts of the southern state of Johor declared an emergency as pollution readings rose above the hazardous level.

Cheah Tuck Wing, the executive director of the Malaysia-Australia Business Council, said companies in Johor - which has attracted growing investment from neighbouring Singapore - were already seeing a rise in worker sickness.

“People are not well and it will definitely affect production, that goes without saying. It has definitely impacted business, especially factories where a huge number of people are working.”

Post