Singapore’s stronger haze law could make non-compliant companies ‘corporate pariahs’

SINGAPORE – Singapore’s strengthened haze law passed on Nov 4 will make a difference, as companies handed legal notices will need to fully cooperate with the authorities or face severe business repercussions, said legal experts.

Changes to the Transboundary Haze Pollution Act (THPA) could also prompt firms in the agro-forestry and retail sectors here to audit their business ties for any unwitting links to companies involved in irresponsible burning.

“More significant than any fines is the Government’s ability to make errant companies a corporate pariah, which will have a chilling effect on their ability to do business here,” said Simon Tay, chairman of the Singapore Institute of International Affairs (SIIA).

In a key addition to the 12-year-old law, the authorities here will have additional levers to target a company’s business interests and revenue streams, opening up other punitive pathways apart from prosecution.

For one thing, the amended law will have powers to impose prohibitions or measures on companies or individuals that have been designated by the minister for sustainability and the environment.

For example, the Government can issue orders that restrict business dealings with designated entities, and prohibit the provision of goods and services to them, including financial services.

Sean Tseng, an adjunct senior research fellow at the Asia-Pacific Centre for Environmental Law at the National University of Singapore, noted that when an errant company is designated, it puts any person who has any business arrangements with the company at risk as well.

“With the repercussions so severe, it becomes in the interest of all these companies (handed legal notices) to demonstrate full compliance with the notices,” he added.

The Government first issued notices to 10 Indonesian firms under Section 9 of the law, which required them to take preventive action against the fires. The Indonesian firms have plantations on Sumatra and Kalimantan, mainly from the pulpwood and oil palm sectors.

Later, Singapore issued notices under Section 10 of the law to 10 Singapore-registered companies in the palm oil or forestry businesses, including Wilmar International, First Resources and subsidiaries of the Sinar Mas conglomerate including APP Company and Golden Agri International.

These notices require them to provide information needed for investigations.

Under the amended law, firms could be designated if they are convicted or suspected of offences, fail to comply with the legal notices, or are found with adverse assessment reports by external investigators.

Singapore Management University law academic Eugene Tan, said it would be unsurprising if the 20 companies served legal documents would “lawyer up to the hilt”.

Under the revised law, firms or individuals linked to designated companies can be put on notice to ensure that their supply chains and business arrangements are clean and free of haze-linked firms.

Firms that could be put on notice include corporations operating in the forestry and agricultural sectors, and retailers selling designated firms’ palm oil or paper products, among others.

Tan foresees that the prospect of being put on notice could trigger companies in the sector to conduct audits of their supply chains.

“It remains to be seen how effective such audits will be given the lack of reliable information on the ground, the lack of or problematic certification of supply chains,” he added.

Danielle Yeow, an adjunct senior research fellow at the NUS Centre for International Law, urged firms related to the agro-forestry industry, retailers and third parties such as financial firms and insurers to conduct internal audits and map their business relationships and dealings.

This will help to ascertain their potential exposure and take steps to mitigate regulatory and commercial risks, she added.

Acting before the smoke hits

Tseng, among other experts, said the law’s increased powers allowing Singapore to take action even before the pollutive smoke reaches its shores is another significant move.

This could allow for earlier pre-emptive action to fight the fires before haze reaches Singapore. For example, if a plantation firm were to receive a preventive-measures notice under Section 9, the firm can be prompted to ramp up firefighting or halt any burning activities before the blaze worsens.

Before the changes were passed, the Act targeted those responsible for causing or condoning fires. It could be triggered only if the haze causes the Pollutant Standards Index to stay in the unhealthy range in any part of the country for 24 hours or more.

Those found guilty under the Act then could be fined up to $100,000 a day, capped at a total of $2 million.

Changes to the law include raising the penalties to a fine of up to $1 million a day, capped at $20 million.

“The whole character of the law has changed with these amendments,” said Tseng.

“You’re looking at transforming an Act based on liability and established wrongful conduct to one that is aimed at preventative action, extensive investigative powers, and non-traditional measures at pre-empting and avoiding harm,” he added.

But the reality is that the law may not act as quickly as the wind carries smoke, he pointed out.

“So we may still be looking at several days of smoke before measures at errant companies are taken. The hope is that we do not face the kind of sustained periods of haze as we have experienced in 2026.”

Low Ying Hui, president of environmental organisation PM.Haze added that the law does not directly address the root cause of haze, which is the burning of peatlands in Indonesia that had been drained for plantation land. Slash-and-burn agriculture practices light up the dried habitats in infernos that are hard to put out.

He said: “For the companies, it always boils down to the numbers: If it is less costly for them to find ways to muddy their traceability links compared to cleaning up their act, they will continue to do so.

“If it is more profitable for them to create dry conditions resulting in fires, compared to maintaining the water table (of peatlands), they will continue to do so.”

Tan added that while a country has the sovereign right to exploit its natural resource within its borders, there is no legal excuse for Indonesia to cause environmental harms to its neighbours.

No magic bullet

Experts acknowledged that while the law has been strengthened to the full extent possible, it is not without its limitations.

The amended law does not, and cannot, get around the perennial challenge of holding overseas companies to account, particularly if they do not have any assets or business dealings in Singapore, said Tseng.

“(The law) cannot, by itself, empower the Singapore authorities to gather evidence or take enforcement action on foreign soil without regard to the laws of that jurisdiction,” he added.

But the enhanced law will significantly reduce hurdles previously faced with gathering evidence since it empowers assessors from the private sector to conduct cross-border inquiries, trace complex corporate relationships and examine supply chains of firms potentially linked to fires.

SIIA’s Tay said cooperation within the ASEAN framework and with Indonesia and neighbouring countries will remain essential to solving the recurring haze problem.

He added: “The THPA is a legal weapon that can be used against corporations. It is loaded and now has more bullets. But there is no magic bullet solution.”