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Business Times
2 days ago
- Business
- Business Times
Rising palm oil prices, policy ambitions may increase haze risk in Asean: think tank
[SINGAPORE] Higher agricultural commodity prices, rising deforestation and shifting government policies may increase the risk of severe transboundary haze in South-east Asia this year, said the think tank Singapore Institute of International Affairs (SIIA) in its annual Haze Outlook report on Monday (Jul 28). Following a 'green' rating indicating low risk of such an event in 2024, SIIA raised its rating this year to 'amber', indicating a medium risk. Such a haze event – which could affect Singapore, Malaysia and Indonesia – was last observed in 2019, with less intense episodes in 2023 and July this year. 'Early in the year, many weather assessments projected a relatively benign haze season,' said chairman of SIIA, Associate Professor Simon Tay. 'However, as the situation evolved, it has become clear that regional fire and haze risks are rising – not just from weather, but from global economic and policy changes. Peatland fires in Sumatra spewed haze into Indonesian and Malaysian skies last week, with two regions in West Sumatra declaring a state of emergency as hot spots spiked. The institute's haze outlook drew attention to a growing demand-supply imbalance in the agricultural commodities sector – particularly palm oil in Asean. While declines in global palm plantation expansion and related deforestation have offered environmental reprieve, the report said, analysts have expressed concern over its economic consequences. A NEWSLETTER FOR YOU Friday, 8.30 am Asean Business Business insights centering on South-east Asia's fast-growing economies. Sign Up Sign Up Palm oil is typically the cheapest among vegetable oils, but its price in Indonesia and Malaysia rose to more than that of soybean oil from Latin America for nine straight months in the previous year, noted the report. 'Agricultural commodity prices have been elevated since the Covid-19 pandemic and remain at high levels, particularly for palm oil where supply is not keeping pace with international demand,' said Khor Yu-Leng, associate director for sustainability at SIIA. Rising agricultural commodity prices have historically been followed by spikes in deforestation, as planters seek to expand plantation areas to meet rising global demand, Khor told reporters on Monday (Jul 28) at a briefing for the launch of the report. While she said that current high prices have yet to trigger a major rise in deforestation in the region, there had been a slight uptick in deforestations between 2023 and 2024, particularly in Sumatra. Additionally, major political ambitions in Indonesia may further elevate demand for domestic production, increasing the need for plantation expansion – possibly through illegal deforestation. Indonesian President Prabowo Subianto has sought to emphasise the country's palm oil sector as a major part of its economic strategy in a drive towards self-sufficiency, SIIA wrote. This has involved intensifying downstreaming efforts in the agricultural commodities sector, seeking to strengthen processing and refining of palm oil into food and chemical products. The Indonesian leader has also stepped up efforts to encourage the use of biofuels, mandating an increase in the blend of vegetable oil to diesel from 35 per cent to 40 per cent in early 2025, with further plans to increase the mix to 50 per cent. These moves, the institute wrote, are expected to significantly increase pressure on domestic palm oil demand, with Indonesia's agricultural sector balancing the weight of export revenue, food security and the country's energy needs on its shoulders. Additionally, the report noted that further uncertainty could hit the industry in the coming months, with a move by the European Union to restrict imports of products linked to deforestation scheduled to take effect in Dec 2025. 'Indonesia has called for further delay to the regulation to 2028, as some smallholder farmers are not fully prepared for the compliance requirements,' said Associate Professor Tay. 'But the implications on trade and markets remains unclear.' Still, Khor emphasised that the region's overall deforestation remained far below 2015 levels – in part due to the efforts of Prabowo's predecessor Joko Widodo. The former president's administration oversaw 1.6 million hectares of peatland restorations and harsher crackdowns on companies liable for fires. 'For now, the weather is relatively benign and fires can be kept under control unless the situation changes,' the report said, noting that the intense periods of drought that have drawn previous haze incidents remain unlikely in 2025, as meteorological data suggests. 'The longer-term risk is whether rising global demand and new policy directions will drive expansion in ways that undermine environmental safeguards,' said Khor. 'Even if the weather conditions are not extreme, these could push actors to expand land use in ways that heighten fire and haze risks,' she added. This should ideally be done through sustainable expansion on non-forest areas, conversion of other croplands, yield increases and replanting of ageing areas, the institute wrote. 'Much will depend on Indonesia's governance of its plantation and commodities industry,' said Associate Professor Tay.
Daily Express
2 days ago
- Climate
- Daily Express
Singapore, Indonesia, Malaysia face medium risk of severe haze in 2025: Report
Published on: Monday, July 28, 2025 Published on: Mon, Jul 28, 2025 By: Bernama Text Size: Filepic by Bernama SINGAPORE: Singapore, Indonesia, and Malaysia face a moderate risk of a severe transboundary haze occurrence for the remainder of the year, according to an assessment released Monday by the Singapore Institute of International Affairs, reported Xinhua. The latest report marks an increase from the institute's 2024 assessment, which rated the risk as "low" on its three-tier scale of low, medium, and high. Hike in agricultural prices and the increased rate of deforestation have heightened the risk of fires and haze, the report stated, which in turn points towards a surge in hotspots and smoke haze across parts of Sumatra in mid-July this year. As a consequence, the transboundary haze is anticipated to drift from central Sumatra into parts of Peninsular Malaysia. Economic and policy shifts could also inadvertently drive deforestation and increase haze risk if fire continues to be used for land clearing, the report warned. Looking further ahead, climate trends suggest the possibility of another unusually dry season between 2027 and 2030, which could further exacerbate haze risks. * Follow us on our official WhatsApp channel and Telegram for breaking news alerts and key updates! * Do you have access to the Daily Express e-paper and online exclusive news? Check out subscription plans available. Stay up-to-date by following Daily Express's Telegram channel. Daily Express Malaysia
The Star
2 days ago
- Business
- The Star
'Medium risk' of severe haze as higher agricultural prices drive deforestation: Singapore researchers
SINGAPORE: There is a 'medium risk' of severe haze affecting Singapore, Malaysia and Indonesia for the rest of 2025, a local think-tank has assessed in its yearly haze outlook. But the assessment by the Singapore Institute of International Affairs (SIIA), released on July 28, noted that in the event of a haze, it should not be prolonged. In 2024, the SIIA had said there was a 'low risk' of transboundary haze. This was assessed based on developments in three areas: markets, weather and policies. The SIIA noted in its report, now in its seventh year, that agricultural commodity prices have been elevated. Agricultural commodities in the region include palm oil and pulp and paper. 'Prices this year are elevated, and estimates show some uptick in deforestation in Indonesia from 2023 to 2024,' the report said. Deforestation by slash-and-burn techniques can cause forest fires that belch out smoke haze. Elevated agricultural prices could be due to rising global and regional demand amid lagging supply, according to the report. Dry weather, and new food and energy projects announced by Indonesia, could also drive forest fires, the report noted. The SIIA assesses transboundary haze risk on a three-level scale of green, amber and red. Green refers to a low risk, and red denotes a high risk. The report said that the medium risk of transboundary haze in 2025 – up from the low risk assessment the year before – is a concerning shift. 'Early in the year, many weather assessments projected a relatively benign haze season,' said Associate Professor Simon Tay, chairman of the SIIA. 'However, as the situation evolved, it has become clear that regional fire and haze risks are rising — not just from weather, but from global economic and policy changes,' he said. 'If this had been assessed a month ago, we might have issued a green rating. But the fires and market conditions warrant caution,' Prof Tay added. The release of SIIA's annual haze outlook comes amid reports of an escalation in hot spots and smoke haze in parts of Sumatra in Indonesia in mid-July. Transboundary haze was observed to have drifted from central Sumatra into parts of Peninsular Malaysia, although Singapore has not been affected due to favourable wind direction. According to Indonesia's Meteorology, Climatology and Geophysics Agency, the number of hot spots – places with intense heat suggesting forest fires – in Sumatra has soared from 94 to more than 1,000 in 10 days in July. Haze pollution in the area has spread to Malaysia, which recorded unhealthy air pollution index readings in four locations on July 22. According to the National Environment Agency (NEA)'s website, dry conditions are forecast to persist over the southern Asean region over the next few days, except for some showers expected over parts of central and southern Sumatra, Java and the north-eastern parts of Borneo. The drier conditions, especially over Borneo, may result in an increase in hotspots and smoke haze, with a chance of transboundary smoke haze, according to NEA. As at July 28, the air quality in different parts of Singapore ranges from good to moderate. Other than commodity prices, the SIIA also assesses haze risk based on weather and governmental policies. Forest fires and the spread of haze can be made worse by dry weather, changes in wind direction, and low rainfall. For example, the last time the SIIA assessed haze risk as being 'red' was in 2023, mainly due to hotter and drier weather expected that year with the onset of El Nino conditions. El Nino is a climate phenomenon that drives warmer weather in South-east Asia. But even without El Nino conditions, South-East Asia typically experiences dry weather between May and September. The SIIA report noted that while there have been a spike in fires in Sumatra, Indonesia in mid-July, the remaining period of the dry season is expected to be milder and shorter than most dry seasons in the past. It added that the peak of the dry season is expected to be in August. 'For now, the weather is relatively benign, and fires can be kept under control unless the situation changes,' the report said. Indonesia's economic policies could also be a driver of smoke haze in the region. Former Indonesian president Joko 'Jokowi' Widodo had during his administration from 2014 to 2024 rolled out numerous policies to prevent forest fires, noted Prof Tay. For example, following the 2015 haze incident, the Indonesian government said that companies involved in burning would have their permits revoked and prosecutions of corporations liable for fires increased significantly, said the report. 'This is no coincidence that we have seen less of this haze problem over this last decade,' said Tay. He said that the current administration under Indonesian President Prabowo Subianto has promised to continue the previous administration's forest management policies. However, there are pressures from overall growth ambitions, Prof Tay said. Indonesia faces a triple challenge in meeting food security, energy and export imperatives, said the report. The growing conflict between using crops for food versus for fuel is rising, especially as the country plans to expand its biodiesel and bioethanol mandates, it added. Biodiesel and bioethanol mandates in Indonesia are government policies that require blending a certain percentage of biofuels into transportation fuels. Currently, Indonesia has a mandatory 35 per cent blend of palm oil-based fuel in biodiesel and is seeking to ramp up to biodiesel containing 40 per cent palm oil to cut its energy imports. This could lead to an increased demand for palm oil. The report added that the Prabowo administration has indicated that agricultural commodities production - and in particular palm oil - will remain a major part of Indonesia's economic strategy. Indonesia is the world's largest palm oil producer. It also noted that Indonesia's food and energy projects could result in more clearing of forests and peatlands, citing NGOs and environmental media organisations. 'Care is needed to ensure that efforts to create new plantations are sustainable, and to increase the efficiency of existing plantations,' it added. Since 2019, there have been no severe transboundary haze events impacting Indonesia, Malaysia, and Singapore, although milder episodes occurred in 2023 and more recently in July 2025, said the report. Singapore last experienced severe haze in September 2019, with air quality entering unhealthy levels on some days then. - The Straits Times/ANN
Bloomberg
2 days ago
- Business
- Bloomberg
Southeast Asia Haze Risk Grows as Forest-Clearing Fires Spike
A rise in forest-clearing fires could cause severe haze in Southeast Asia this year, according to a new report, as elevated agricultural commodity prices motivate companies to boost output from their plantations. Blazes on Indonesia's Sumatra island since mid-July have prompted the Singapore Institute of International Affairs to raise the risk of severe haze to medium in a report released on Monday, with the authors flagging a 'concerning shift' from last year's lowest reading.
The Sun
07-07-2025
- Business
- The Sun
Malaysia hosts 58th AMM with global powers in Kuala Lumpur
KUALA LUMPUR: As Malaysia gears up to host the 58th ASEAN Foreign Ministers' Meeting (AMM) and related meetings starting July 8, the city is alive with diplomatic energy. This year's event stands out not only for its extensive agenda but also for Malaysia's success in attracting participation from more than 35 countries, including major global powers. The four-day summit will feature 24 ministerial-level meetings, engaging ASEAN Dialogue Partners, Sectoral Dialogue Partners, and external stakeholders. Unlike forums such as the G20, which focus narrowly on economic governance, the AMM offers a broader platform centered on consensus-building, regional stability, and inclusive cooperation. Malaysia's ability to convene such a high-profile gathering amid rising geopolitical tensions highlights its credibility as a middle power. The country has long been active in global diplomacy, from peacekeeping missions to advocating for Palestinian rights and promoting South-South cooperation. Adding urgency to this year's discussions is the looming July 9 deadline for the U.S. cooling-off period on trade tariffs. A potential reimposition of tariffs on Chinese goods could destabilize regional economies, including Malaysia's. With both the U.S. and China attending, the AMM provides a crucial opportunity for ASEAN leaders to address these concerns collectively. Oh Ei Sun, Senior Fellow at the Singapore Institute of International Affairs, noted Malaysia's pivotal role in a divided world. 'We live in a very polarised world, and it is increasingly important for middle powers such as Malaysia to carefully balance its own national interests versus the greater good for the world,' he told Bernama. The Fourth Conference on Cooperation among East Asian Countries for Palestinian Development (CEAPAD IV), held alongside the AMM, further elevates the event's significance. Co-chaired with Japan and Palestine, the conference aims to support Gaza's reconstruction and build consensus against Israeli aggression. Datuk Seri Amran Mohamed Zin, Secretary General of Malaysia's Foreign Ministry, emphasized the high expectations for Malaysia's ASEAN Chairmanship. 'As soon as Malaysia assumed the ASEAN Chairmanship, there were high hopes among ASEAN partners that cooperation would strengthen,' he said. With key players like the U.S., China, Japan, and the EU in attendance, the AMM serves as a vital forum for tackling regional security, economic resilience, and sustainable development. Malaysia is not just hosting—it is shaping the regional agenda with an inclusive, balanced approach rooted in ASEAN centrality. As the world watches, the 58th AMM is more than a diplomatic event. It is Malaysia's opportunity to reaffirm its global relevance, bridge divides, and lead with purpose toward peace and shared prosperity.
