Oh hey. It’s the annual haze season again here in Malaysia. How are you doing?
The answer will probably be ‘not so great’, and honestly, that’s more of an understatement than anything. Ever since Indonesia started burning its forests to clear land for plantations, the people living in Malaysia and Singapore are wary of those few weeks (or even months) when a thick, toxic layer of smog descends upon them. In recent years, the haze situation in Malaysia has become increasingly severe, especially in the last 10 years. Schools have been forced to close, outdoor businesses suffer significant losses, and the overall health of residents in haze-affected areas are compromised when they step out the door.
Some of the more direct damages caused by the haze include damage to people’s short term health and regional tourism in the affected period. It also leads to industrial production losses, airline and airport losses, cancellations of major outdoor sporting events, fishing decline, and incurs costs on cloud seeding. In addition, severe haze conditions can lead to long-term health damages, reduced crop productivity, reduced visibility, decreased aesthetic value (of land and/or scenery), avertive expenditures, accidents, loss of life, evacuations, and loss of confidence by foreign investors.
That last factor is one that has many industry players worried, as Malaysia struggles with an already-weak property market as well as political and economic uncertainty. Besides posing a serious health risk to people who inhale the fumes, the haze also brings an economic concern to Malaysia. The persistent haze problem caused by illegal and out-of-control forest fires in Indonesia can cost a lot more than we think. In fact, the Penang MCA has called on the government to obtain compensation from Indonesia for losses incurred due to the transboundary haze. Meanwhile, across the Causeway, Singapore’s National Environment Agency (NEA) has served notices under the Asean Transboundary Haze Pollution Act 2014 (THPA) to four Indonesian firms with suspected to links to the cause of the haze.
In the current soft property market, even local investors are reluctant to purchase properties, what more foreign investors. Some may think that a weak ringgit will spur transactions from foreign investors, and while that may hold true in some cases, the uncertain situation in Malaysia, coupled with the haze that occurs each year without fail, will surely make investors think twice about putting their money here. Investors are being extremely cautious of the local property market, and honestly, can you blame them?
Yield percentage requires some time to pick up before investors can fully reap the benefits, which is looking rather sour, or slow to pick up at best. The Malaysia My Second Home (MM2H) programme, which encourages foreigners to invest in Malaysia as the preferred destination for a second home, could also be affected when they realise the haze is an annual affair and not just a one-off occurrence. With alternative options such as Thailand, Cambodia or Vietnam which are equally, if not more, affordable and with less concerns regarding health and economy, it can be argued that foreign investors might be tempted to look elsewhere.
Hence, something should be done by the Indonesian authorities to eradicate, or at least control, the forest fires each year in cooperation with its neighbours to ensure the health and safety of citizens in the region, as well as reduce political tensions and losses from unnecessary and illegal practices by irresponsible parties. The Asean Transboundary Haze Pollution Act is a start, but more drastic measures may have to be taken if the haze situation continues to worsen year by year.