As Singapore Chokes on Indonesian Smog, the Losses Pile Up

Singapore's central business district is obscured by haze on June 21, 2013 Photograph by Joseph Nair/AP Photo

Singaporeans are choking on fire-induced haze from Indonesia and are increasingly upset with their giant neighbor. “There’s clearly a lot of frustration, a lot of anger here in Singapore,” Simon Tay, chairman of the Singapore Institute of International Affairs, told Bloomberg TV today. Making things worse is the report of a dismissive comment from the Indonesian official in charge of handling the crisis. “Singapore should not be behaving like a child and making all this noise,” the Jakarta Post reported minister Agung Laksono telling reporters in the Indonesian capital.

The fires come at a time when the Indonesian government had won praise from environmentalists for trying to limit the spread of the palm oil industry. Last month, Indonesia extended a ban on the clearing of primary rain forest for palm oil plantations, one of several initiatives that green groups considered moves in the right direction—toward protecting the country’s rain forests.

The problem is, what about those areas that are already palm oil plantations? While steps to preserve rain forests may help with the long-term impact on climate change, they’re not, for now, helping Singaporeans choking on emissions from fires in Sumatra. According to Indonesia’s forestry minister, Zulkifli Hasan, 80 percent of the fire hot spots in the Riau region of Sumatra are in farm and plantation areas and only 20 percent are in forest areas. Greenpeace disputes that figure, with the group telling Bloomberg News by e-mail that half of the fires detected between June 11 and June 18 were in areas that should have been protected by the moratorium.

While the two sides dispute the amount, it does seem that a significant number of the fires are in farm areas where there are large palm oil plantations. Indonesian policies protecting primary rain forests won’t have much impact on those existing plantations, where farmers need to clear their fields ahead of the new planting season. The easiest and cheapest way to get rid of the debris is to gather it together and set it aflame, says Tim Condon, the Singapore-based head of Asia for ING Investment Management.

Singaporeans are trying to avoid the outdoors, but as Condon told me today on the phone, staying inside doesn’t offer an escape. The smog has “managed to seep into the building,” he said from his office in the city-state’s financial district. “It’s not like you can see it in the building, but you can smell it. It smells like burning wood.” And there’s little sign of relief soon, since the rainy season in Sumatra doesn’t start till September or October. “We could be looking at two or three months of this,” he said.

Not the best way to attract tourists. Singapore has made a major push in developing itself as a tourist attraction, with Sheldon Adelson’s Las Vegas Sands operating one of two casinos and Universal Studios opening its first theme park in Southeast Asia. Thanks to the smog crisis, there won’t be many people flocking to those attractions for a while.

With the country’s exporters hurt by weak demand worldwide, Singapore had been relying on the tourist and service sectors to help maintain growth, which ING had expected to be 2.2 percent this year. Now, though, “you can just forget about tourism inflows in the rest of the year,” said Condon. He expects the smog to cut about half a percentage point from Singapore’s growth rate.

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