Indonesia’s forest and peatland fires this year have caused an estimated US$1.97 billion (RM8 billion) in welfare losses in Malaysia, contributed to an estimated 1,700 premature deaths and severely disrupted the manufacturing sector, according to a report commissioned by a major Malaysian industry group.
The findings were highlighted in a report titled 2026 Fire Season and Transboundary Haze in Malaysia, prepared for the Federation of Malaysian Manufacturers (FMM), as reported by Malay Mail and cited by the South China Morning Post.
The report clarified that the US$1.97 billion figure represents broader social welfare losses rather than lost economic output or gross domestic product (GDP). It should therefore not be added to other financial loss estimates.
Using satellite data, air quality monitoring and atmospheric modelling, the study examined the effects of prolonged haze between July 1 and Oct 22 this year.
It estimated that short-term exposure to fine particles from forest and land fires contributed to approximately 1,700 premature deaths. However, the figure was derived from statistical modelling and does not represent individually confirmed deaths.
The study also surveyed 86 FMM member facilities, including 81 industrial factories, to assess the impact of haze on manufacturing operations.
Of these, 59 facilities reported operational disruptions, with 26% describing the impact as moderate or significant.
Among the affected facilities, 81% reported increased medical leave and health-related absenteeism, while 63% said school closures caused by haze reduced workforce availability.
Another 14% experienced shift disruptions, production delays or delivery bottlenecks due to labour shortages.
Among manufacturers reporting operational impacts, 37% recorded lower production, while 27% were forced to temporarily shut down at least one production line.
However, the report cautioned that its findings did not represent Malaysia’s entire manufacturing industry, as responses were concentrated in industrial hubs in Selangor and Penang, with only two facilities surveyed in Sarawak.
Beyond the industrial sector, haze-related school closures also resulted in an estimated 8.4 million to 13.4 million lost student-school days.
This figure represents the cumulative number of official school days missed by all students affected by the closures.
