Early estimates by the Joko Widodo administration indicate that the haze crisis could set Indonesia back by up to 475 trillion rupiah (US$35 billion) – no chump change to a government already grappling with a sliding rupiah and sluggish growth.

However, observers warned that economic pains aside, the country’s global standing will also take a hit if it does not resolve the decades-old issue, caused by illegal forest fires in Kalimantan and Sumatra.

… Researchers Tiola Javadi and David Han from the S. Rajaratnam School of International Studies (RSIS) said in a report last week that the crisis, if prolonged, could strain relations, particularly between Indonesia and its closest Asean neighbours, Singapore and Malaysia.

… While the economic impact of the haze in 2013 – when air pollution hit record levels in Singapore – and this year has yet to be quantified, it is likely to be more significant, said Associate Professor Mely Caballero-Anthony, who heads the Centre for Non–Traditional Security Studies at RSIS, and Associate Research Fellow Goh Tian, also from RSIS.