THREE years ago, Indonesian farmer Jamaluddin bin Busri      bought a patch of forest on Sumatra island and put it to the torch. When the smoke cleared, he planted oil palms, betting prices would rise.

He was right. With palm oil up 20 per cent this year, farmers across Indonesia's archipelago are following his lead and burning vegetation to prepare for replanting.

They are burning so much that the ash and smoke from the fires have been threatening shipping in the Malacca Strait, the world's busiest maritime trade route, and closing local airports. The burning has also riled neighbours Malaysia and Singapore, as cities and tourist attractions disappeared beneath the haze.

"It is criminal negligence," says Lim Guan Eng, secretary-general of Malaysia's opposition Democratic Action Party, who protested to Indonesian diplomats in Kuala Lumpur on October 10. "They have threatened not only the lives of their own citizens, but the lives of innocent civilians in their neighbouring countries."

Satellite images this month showed at least 378 fires on Sumatra and Borneo, the worst since 1997-1998. Then, the Asian Development Bank estimated the regional cost of lost tourism and extra health-care costs at $US9 billion ($A11.7 billion).

An annual blight, the haze this year has been exacerbated by the El Nino weather pattern, which delays monsoons. The pattern will continue for six to eight months, says the National Ocean and Atmospheric Administration in Washington.

Lim is demanding that Indonesia pay compensation for not doing enough to control the smoke surge. Clearing agricultural land by lighting fires was outlawed in Indonesia in 1967.

"Pointing fingers will not do any good," said Malaysian Deputy Prime Minister Najib Tun Razak, proposing a regional fund to help prevent fires.

Malaysian clinics reported a 30 per cent increase in respiratory illnesses this month, according to the Health Ministry. In Singapore, air quality was "moderate" to "unhealthy" from October 2-24, when some rain arrived.

Singapore Prime Minister Lee Hsien Loong said Indonesia was risking investor confidence and the credibility of the 10-member Association of South-East Asian Nations.

Indonesia and the Philippines are the only ASEAN countries that have not ratified a 2002 agreement to co-operate in preventing and extinguishing bushfires.

"We appreciate Indonesia is a poor country," said Lim, 45. "But the least they can do is to seek help from neighbouring countries."