Singapore cracks down on cross-border haze with economic sanctions on illicit funds

The Singaporean government announced a revision to the Transboundary Haze Pollution Act on the fourth of this month, for the first time combining criminal liability with economic sanctions to strengthen the deterrent effect against transboundary "slash-and-burn" practices. Since 2015, frequent forest fires in neighboring countries such as Indonesia have triggered transboundary haze, causing Singapore’s air quality to remain below international standards for extended periods and inflicting significant losses on public health and the tourism industry. In response, Singapore has repeatedly pressured the Indonesian government and signed cooperation agreements with its neighbors, though actual enforcement has remained limited.

The revised Act not only retains the existing mechanism for criminal prosecution but also introduces new "economic sanction provisions." The government will be empowered to restrict the business dealings of implicated companies with other corporations or individuals, as well as limit their access to loans and financial services. If a company is found to have participated in illegal logging or the burning of forest land, financial institutions will be required to cease transactions with it or, where necessary, proactively report the matter to regulatory authorities. This measure aims to sever the economic support for illegal activities by disrupting the relevant funding chains.

"Slash-and-burn" is a forest management practice commonly used in Southeast Asian countries such as Indonesia during seasonal droughts. While it can boost agricultural yields in the short term, the burning process releases large amounts of carbon dioxide and particulate matter, resulting in transboundary air pollution. Singapore’s legislation classifies "slash-and-burn" as an illegal act subject to legal liability and views it as a direct threat to public health and the environment. This move represents not only a firm stance on environmental protection but also a redefinition of corporate responsibility across borders.

Regarding enforcement mechanisms, financial institutions will be required to establish "environmental risk assessment" procedures to conduct credit reviews of companies involved in "slash-and-burn" activities. Companies placed on a blacklist will be unable to obtain loans, guarantees, or other financial services from local or international financial institutions in Singapore. This will also affect such companies’ investments, partnerships, and supply chain arrangements in Singapore, compelling them to reassess the compliance of their supply chains.

For multinational corporations, this Act will raise compliance costs in the Southeast Asian market. As a regional financial hub, a misstep in compliance by Singaporean financial institutions that results in a company being placed on a sanctions list could negatively impact the company’s global reputation. The measure may also prompt Indonesia and other neighboring countries to accelerate the development of stricter forest management regulations and strengthen regional cooperation, thereby forming a more comprehensive environmental governance framework. In the long term, effectively curbing "slash-and-burn" practices will help improve air quality across the entire Southeast Asian region and lay the foundation for the sustainable development of the regional economy.

(Source: Central News Agency)