Campaigners say that illegal slash-and-burn clearance by large corporations is causing rampant deforestation but persists because of widespread corruption among local officials.
The dry season inaugurates a period of intense activity for Indonesia's fire investigators, as large corporations and smallholders allegedly begin illegally burning their forests, a cheaper way to clear the land than chopping down trees.
The burning leaves a choking haze over Riau province in Sumatra, a large island with nearly 50 million residents, and easterly winds take the stinging smog across the Strait of Malacca to Malaysia and Singapore.
But while open burning is illegal in Indonesia, authorities often turn a blind eye to fires started on land leased by big plantation companies, according to Bustar Maitar, the head of Greenpeace Indonesia's forest campaign.
|Indonesia forest fire smoke chokes Singapore
Foreign investors operating in Indonesia allegedly bribe local government officials to allow them to use slash-and-burn techniques on their land, Bustar says.
"A plantation will still make a profit if it spends money to chop down the trees rather than burning it. Large plantations just want to get bigger profits," he said.
The environmental organisation is warning of more forest fires to come as the country approaches the 2014 legislative and presidential elections, pointing out that local authorities are reported to give land concessions to individuals and corporations in exchange for campaign funds.
"This has happened in the past," said Bustar. "I ask the public to be aware of this, to make sure that our forests and peatland are not sacrificed for political deals."
In June, Riau governor Rusli Zainal was detained by anti-corruption officers for his suspected involvement in two separate corruption cases, one involving a forestry permit.
Memories of 1997
This year's smog has highlighted the limited progress made by authorities in tackling a recurrent problem - and has evoked memories of 1997, when large fires raged in Sumatra and on Borneo island, causing one of the worst-ever instances of forest fire pollution.
The fires burned for months before they were extinguished, causing economic losses estimated at $4bn from disrupted transport, lost production and tourism, damaged crops and fishery stocks - not to mention health problems.
In an effort to stop deforestation, Indonesia's central government imposed a two-year moratorium on the issuance of new land concessions in 2011 - but local authorities have yet to fall in line.
While the Forestry Ministry confirmed that it has not issued any new land permits since the ruling, it says some local authorities in rural districts are still doing so, because the regents who head them retain the power to do so.
Political reforms since autocratic president Suharto was ousted in 1998 gave local authorities autonomy, fuelling deforestation - as provincial governors and regents left in control of forests used their new powers to issue land permits at will.
In 1998, two million hectares were deforested, but between 2001 and 2003 this figure rose to an average of 3.5 million hectares per year, according to the Forestry Ministry.
"The euphoria of 1999-2003 over regional autonomy without governance resulted in the high rate of deforestation," said Hadi Daryanto, secretary-general of Indonesia's Forestry Ministry.
Currently, the central government holds authority over just 15 percent of forested areas, with the other 85 percent in the hands of local administrations, according to Daryanto. Parliament is now debating a bill to withdraw control over land matters from regents and give this to provincial governors.
Palm oil concessions
Greenpeace blamed the fires squarely on large palm oil concessions owned by Indonesian, Malaysian and Singaporean firms, after NASA hotspot imaging data revealed where the blazes are raging.
"Really cleaning up their act starts with adopting a zero-deforestation policy," says Bustar. He added that large Malaysian and Singaporean companies also need to ensure their suppliers - smallholders who account for 35-40 percent of Indonesia's total palm oil output - are not setting fires to clear land. "As plantation companies are large corporations with many resources, they must bear most responsibility for preventing fires."
We face all kinds of threats and intimidation. Some are explicit and vulgar which are essentially aimed at undermining us conducting a good, independent investigation.
In June, Indonesia's Environment Minister Balthasar Kambuaya said eight Malaysian palm oil companies were using illegal slash-and-burn methods to clear land for cultivation.
In July, national police announced they were going to charge PT Adei Plantation, a subsidiary of Malaysia's third-largest palm oil plantation company KLK, with environmental damage. They are also investigating four other companies for suspected involvement in the fires.
KLK has denied its Indonesian subsidiary has been involved in wrongdoing, saying it has a zero-burning policy and that the fires were outside its concessions.
But it is not the first time PT Adei has been accused: In 2002, the Indonesian Supreme Court upheld an eight-month jail term for its general manager and a $10,000 fine after ground fires in 1999.
However, Indonesian authorities face major difficulties investigating the fires - not least because there are only five fire investigators in the country, who face major challenges in carrying out their duties.
Investigator Bambang Hero Saharjo says he is regularly threatened - both by "thugs" and ordinary, "respectable" people - for investigating burning by powerful corporations.
"We face all kinds of threats and intimidation," he explained. "Some are explicit and vulgar which are essentially aimed at undermining us conducting a good, independent investigation."
Bambang said plantation companies also often try to prevent investigators from entering their land, or falsify maps - making it difficult to verify the location of fire origins.
Environmentalists and the Forestry Ministry insist that the only way to halt abuses by the large plantations and farmers is to enforce the law - a burning issue that experience shows is easier said than done.
"Tough sanctions also need to be imposed on plantation companies," said Bustar.
But Greenpeace media campaigner Zamzami concedes islanders have grown accustomed to the smog. "The people of Sumatra feel helpless, and just accept this as something which they cannot change or do anything about."
Follow Amy Chew on Twitter: @amyvoom