Economic toll of haze in Malaysia could hit RM1.5b a month as business and health costs mount, experts say

Malaysia is facing an economic crisis of up to RM1.5 billion monthly due to transboundary haze, according to experts. The prolonged pollution is straining business operations, healthcare systems, and worker productivity, with the cost rapidly escalating. Sunway University economics professor Dr Yeah Kim Leng predicts the economic impact could reach a staggering RM600 million to RM1.5 billion each month.

The tourism, aviation, and agriculture sectors are the most vulnerable, with tourism arrivals potentially decreasing by up to 8% and GDP losses reaching RM1.5 billion. Agriculture and plantation sectors are also suffering, with vegetable farmers reporting production declines, fruit yields halved, and palm oil facing a delayed impact.

Reduced visibility and hazardous air quality delay freight logistics, stall construction sites, and suppress retail footfall. Health costs are just a fraction of the crisis, with direct medical expenses rising from RM21 million in 1997 to RM410 million in 2013. However, this only covers respiratory illness, and haze also affects the heart and blood vessels, which have not been fully accounted for.

Indirect productivity losses include absenteeism, decreased work efficiency, and lost productivity. Experts urge cross-border collaboration with Indonesia to prevent fires at their source, emphasizing that prevention is more cost-effective than absorbing recurrent financial losses.