By Rujun Shen

SINGAPORE (Reuters) - Indonesia's complex rules on land use and the difficulty in prosecuting foreign businesses mean Singapore has its work cut out bringing companies to book under its new cross-border air pollution law.

The bill, approved by parliament on Tuesday, has won praise from politicians and environmentalists as a bold move to tackle a decades-long problem of smoke from forest fires in neighboring Indonesia choking the city state.

Indonesia has failed to tackle the problem, despite repeated vows to do so, so Singapore decided to take matters into its own hands after acrid smoke blanketed the island last year, posing a danger to health and a worry to the tourist industry.

The law sets out the possibility of fines for companies that cause haze pollution regardless of whether they operate in Singapore. But making it work in practice will be tough.

"I am skeptical of whether there will ever be a successful prosecution when this law comes into force," Eugene Tan, a member of parliament and law professor, said during debate on the bill.

The haze is caused by forest clearing in Indonesia during the annual dry season, particularly when fires are set to clear undergrowth which then spark fires in layers of peat.

Some of the clearing is believed done by palm oil plantation companies with Singapore connections.

The bill makes those who cause haze both criminally and civilly liable, and it is written to provide law enforcers with a relatively low threshold to prove that a company outside Singapore has polluted the air.

Singapore authorities will be able to rely on a "causal link" such as satellite images or weather maps pin-pointing where smoke has come from.

Singapore can then impose fines of up to S$100,000 ($80,000) per day of smoke, up to a maximum of S$2 million, on companies or individuals that are found to cause Singapore's air pollutant standards index to rise to the "unhealthy" level.



But even with this low-proof burden, analysts say the often contradictory laws governing land use in Indonesia and the likely difficulty in getting the co-operation of government officials there will make prosecutions hard.

"There is some potential for conflict over the need for cooperation from local authorities (in Indonesia) in gathering evidence against violators," said Andrew Wood, senior analyst at Business Monitor International.

Singapore is hoping that just the threat of the new law preventing a company or its executives from doing business in the banking hub will be a strong enough deterrent without needing to make many prosecutions.

"This will have a salutary effect on key office holders and decision makers of the companies, even those companies with no assets or no physical presence in Singapore," Minister of Environment Vivian Balakrishnan said in the debate.

Officers or partners of foreign companies that have no presence or assets in Singapore will be served notice in person when they enter the country if they are accused under the law. They could be ordered to stay on the island to assist with the investigation and a failure to comply could lead to fines and even time in prison.

That is likely to alarm some company executives.

"I'd certainly be worried if I were in their position," said David Gaveau, a researcher at the Center for International Forestry Research.

But Gaveau said it will be very difficult to determine who is responsible for starting the fires.

"It's not just companies that do the burning, but also the communities, which could include a broad range of people from small farmers to mid-level investors. We don't know who they are," he said.

Gaveau said analysis by his organization showed the fires on the two largest burnt areas in Indonesia's Riau province on Sumatra island during February and March this year were either started outside concessions, or on land occupied by small-scale operators within concessions.

(1 US dollar = 1.2504 Singapore dollar)


(Editing by Rachel Armstrong and Robert Birsel)