Singapore is ramping up efforts to hold companies accountable for hazardous wildfires in neighboring Indonesia amid the city-state’s worst air pollution crisis in a decade. However, legal and diplomatic challenges have emerged as authorities confront the difficulty of prosecuting cross-border environmental offences.

Last week, Singapore’s government issued legal notices to 10 businesses, several with strong links to Singapore, ordering them to cease burning activities linked to fires that have generated thick haze across the region. The government has also indicated it may investigate additional companies listed on the Singapore Exchange to determine their involvement. Authorities have warned that failure to comply could lead to actions targeting companies’ profits, access to financing, and investor relations.

The wildfires, primarily attributed to slash-and-burn methods employed by paper and palm oil producers in Indonesia, have been intensified this year by a “super” El Niño, which has increased temperatures and reduced rainfall in the region. The prolonged smog has severely impacted Singapore’s air quality, which was classified as “very unhealthy” at times this month and occasionally ranked among the worst globally. The haze forced cancellation of outdoor activities, disrupted the Singapore Grand Prix, and prompted a rise in hospital admissions for respiratory problems.

Singapore introduced the Transboundary Haze Pollution Act in 2014 to prosecute companies contributing to transboundary pollution, with penalties including fines up to S$100,000 (approximately US$78,000) daily, capped at S$2 million (US$1.6 million) per conviction. Despite this, enforcement has struggled due to limited cooperation from Indonesian authorities and difficulties in gathering sufficient evidence, resulting in no fines being imposed since the law’s enactment.

Home Affairs Minister K. Shanmugam emphasized the government’s renewed resolve, stating that companies, whether or not they maintain a presence in Singapore, would face all available legal and regulatory measures if they fail to cooperate. Among the companies targeted in the latest action, at least four supply Asia Pulp and Paper (APP), which is headquartered in Singapore and is a subsidiary of Indonesian conglomerate Sinar Mas. Two others are operated by Singapore permanent residents.

Shanmugam also mentioned investigations into Singapore-listed firms including First Resources, Bumitama Agri, and First Borneo Plantations, whose operations appear linked to active fire or smoke sources. He noted that financial institutions lending to these businesses have asked questions about their practices, and that Singapore’s financial regulator, the Monetary Authority of Singapore, is closely monitoring related risk exposures.

First Resources has welcomed the investigation, expressing confidence that evidence will show it does not engage in land clearing through fire. APP, Bumitama Agri, and First Borneo Plantations have not responded to inquiries.

Singapore's stock exchange has separately questioned seven listed companies, including Golden-Agri Resources, Wilmar, and Kencana Agri, about potential connections to the haze issue.

The situation has raised tensions with Indonesia. Indonesian President Prabowo Subianto condemned what he described as foreign criticism while highlighting that companies operating under foreign jurisdictions, including Singapore, are involved. He said the government would release the names of implicated companies in due course but did not specify which countries they belong to. Indonesia’s police chief reported that authorities have identified 11 corporations, including three foreign firms, as suspects related to the fires.

Indonesia’s government communication agency underscored ongoing dialogue with Singapore on environmental matters and reaffirmed its focus on protecting affected communities, firefighting efforts, and enforcing environmental regulations.

As Singapore confronts the recurring haze problem, the challenge remains balancing enforcement of cross-border environmental laws with diplomatic sensitivities and the practical limits of jurisdiction when addressing pollution that originates beyond its borders.