Indonesia haze cost Malaysia US$1.97 billion in losses: study

Transboundary haze is air pollution that crosses from the country where fires burn into neighbouring countries. In this case, forest and peatland fires in Indonesia created large amounts of smoke, which atmospheric conditions carried across the sea to Malaysia. It matters because pollution does not stop at political borders.

The fires were concentrated across Indonesia’s Sumatra and Kalimantan. Smoke from those areas reached both Peninsular Malaysia and Malaysian Borneo. The haze persisted intermittently from July 1 to October 22, and Malaysia’s air-pollution index repeatedly reached unhealthy levels from August. Satellite data, monitoring stations, and atmospheric modelling tracked the episode.

The skies cleared during the week covered by the report. By 5pm on Thursday, every Malaysian monitoring station recorded good or moderate air. Malaysia plans to introduce measures against recurring transboundary haze when it takes a regional ASEAN steering committee chairmanship next year, but the fires’ cross-border nature requires cooperation.

Malaysia’s estimated welfare loss was 8 billion ringgit, or US$1.97 billion. The report also estimated 1,700 premature deaths from short-term exposure to fine particles, with a 95 per cent uncertainty interval of 1,300 to 2,300. Around 1,600 deaths were attributed to smoke from outside Malaysia, although a lower-toxicity assumption reduced the estimate to roughly 600.

The health burden was valued at between 3 billion and 15 billion ringgit. This measures society’s willingness to pay to avoid mortality risks. It is a social-welfare measure, not lost production or gross domestic product, so it should not be added to other financial losses. School closures caused another major disruption.

Pollution-related closures wiped out an estimated 8.4 million to 13.4 million student-days. That means the total number of official attendance days missed across affected pupils. Together, the figures show the haze created health, educational, and economic disruption across Malaysia, not merely temporary inconvenience.

The haze disrupted both production and attendance. The study surveyed 86 Federation of Malaysian Manufacturers-affiliated facilities, including 81 industrial plants. Fifty-nine sites reported operational disruption, while 26 per cent described the impact as moderate or significant. The survey did not represent every Malaysian manufacturer.

Workers were affected through illness, absence, and childcare problems. Among disrupted sites, 81 per cent reported more sick leave and health-related absences. Sixty-three per cent said haze-related school closures reduced staff availability. Labour shortages caused shift disruptions, production delays, or delivery bottlenecks at a further 14 per cent of sites.

Among manufacturers reporting impacts, 37 per cent recorded lower output. Twenty-seven per cent temporarily closed at least one production line. Schools also closed because of polluted air, wiping out 8.4 million to 13.4 million student-days. The disruption therefore spread from factories to families and classrooms.

The estimated 1,700 deaths are modelled premature deaths, not individually confirmed fatalities. Researchers applied health-risk relationships to estimated fine-particle exposure during the haze. The report gave a 95 per cent uncertainty interval of 1,300 to 2,300, showing that the result depends on assumptions and available evidence.

The model also relied largely on studies of surface forest fires, even though much of the smoke came from smouldering peatland. It lacked localised health-risk data from Malaysian cities. When the researchers assumed fire smoke was less toxic than typical fine particles, the estimated death toll fell to roughly 600. That difference illustrates the role of assumptions.

The 3 billion-to-15 billion-ringgit health figure is society’s willingness to pay to avoid mortality risks. It represents broader welfare, not lost economic output or GDP. The report therefore says it should not be added to other financial losses, such as factory disruption.

Peatland fires can be unusually persistent because peat is a thick layer of partly decomposed, carbon-rich plant material. When it dries, it can burn slowly below the surface. This underground smouldering differs from a short-lived surface fire, which mainly consumes exposed vegetation and may end when that fuel is gone.

A smouldering peat fire can continue through the soil, producing smoke even when flames are limited or hard to see. It may also survive in deeper layers and restart when conditions become favourable. Because peat stores substantial fuel across broad areas, one fire can affect air quality over an extended period.

The smoke can then travel far with regional winds and atmospheric movement. The article links Malaysia’s haze to agricultural and peatland fires in Indonesia’s Sumatra and Kalimantan. It also notes an important uncertainty: the health coefficients used were based mainly on surface-forest-fire studies, not smouldering peatland fires.

Fine particles are very small solid or liquid pollutants suspended in air. They can be produced by fires and are small enough to travel deep into the lungs. Because of their size, they can reach sensitive lung tissue and make it harder for the body to remove them.

Breathing polluted air can irritate and inflame the respiratory system. Fine particles can worsen existing lung disease and place stress on the cardiovascular system. Short-term exposure can therefore increase the risk of serious illness, especially among vulnerable people. Over a population, these increased risks can produce additional premature deaths even when no single death can be assigned with certainty to one smoky day.

The report estimated 1,700 premature deaths from short-term fine-particle exposure, with a 95 per cent uncertainty interval of 1,300 to 2,300. It also warned that the underlying health coefficients mostly came from surface-fire studies and lacked localised Malaysian data.

Transboundary haze requires countries to act together because fires may begin in one nation while their health and economic effects spread into others. Malaysia can strengthen air-quality monitoring, share satellite and atmospheric data, and warn communities earlier. Neighbours can coordinate fire-risk information and emergency responses across the region.

Prevention should focus on reducing agricultural and peatland fires before they spread. Countries can improve land and peat management, enforce rules against illegal burning, and support safer alternatives for land clearing. Joint investigations and transparent reporting could also make responsibility clearer when smoke crosses borders. These measures address both the fires and the movement of pollution.

The article reports that Kuala Lumpur plans several measures when Malaysia assumes the rotating chairmanship of ASEAN’s Sub-Regional Ministerial Steering Committee on Transboundary Haze Pollution next year. Regional cooperation matters because the 2026 smoke originated largely in Indonesia but disrupted Malaysian health, factories, schools, and workers.