By John O'Callaghan and Chris Nusatya
SINGAPORE/JAKARTA (Reuters) - Air quality in Singapore improved significantly to "moderate" pollution levels on Saturday, as Indonesian planes waterbombed raging forest fires and investigators scrambled to determine the cause of one of Southeast Asia's worst air pollution crises.
Indonesia's environment minister said eight domestic firms were suspected of being responsible for the blazes on Sumatra island that blanketed neighboring Singapore in record levels of hazardous smog. The parent companies of the Indonesian firms included Malaysia-listed Sime Darby and Singapore's Wilmar Group.
A senior presidential aide on Friday also blamed units of Jakarta-based PT Sinar Mas Agro Resources and Technology (SMART) and Asia Pacific Resources International (APRIL) for the fires.
"We will take legal action whoever they are," Environment Minister Balthasar Kambuaya told reporters. "Any companies from Indonesia, Malaysia or Singapore, they will be legally processed."
But Indonesia's Forestry Ministry, which is leading the investigation, warned about naming suspects and jumping to conclusions too soon.
"We have to be very careful in any legal action. We have to really find out what happened, why the fire happened, and so on. This could be due to negligence too," said Hadi Daryanto, the ministry's general secretary.
Under Indonesian law, any company or person proven to be involved in an illegal forest fire could face up to 10 years in prison and fines of up to 5 billion rupiah ($503,800).
Sime Darby and APRIL said there were no fires in any of their operating areas in Indonesia.
SMART and Wilmar said they both had a "zero burning" policy and that most, if not all, the fires raging in and near their concessions were caused by the local community.
"We have discovered a few smallholders with land near our plantations who have been burning to clear their land. We have reported these to the local authorities," said a Wilmar spokeswoman.
Singapore has warned the "haze" - which has fuelled fears about health problems and raised diplomatic tension in Singapore, Malaysia and Indonesia - could last for weeks, or even longer.
Indonesia has deployed military planes to fight the blazes on Sumatra island from illegal burning that typically takes place in the June to September dry season to clear space for palm oil plantations. The fires are unusually widespread this year and the smog was the heaviest in Singapore's history.
On the sixth day of the thick smoke, Singapore's pollution index eased to the "moderate" zone with readings as low as 77. It hit a record of 401 on Friday afternoon, a level considered potentially life-threatening for the ill and the elderly.
Despite the improving conditions, streets in the clean and green city-state were far less crowded than on a typical Saturday when people go out to shop, meet in outdoor cafes and have fun at the park.
The Ministry of Education advised public schools to cancel all activities planned for the holiday month of June.
StarHub Ltd, a cable television and Internet provider, said it was providing a free preview of more than 170 channels over the weekend "as we stay home to escape the unbearable haze".
The cost of the smog for Singapore, a major financial centre and tourist destination, could end up being hundreds of millions of dollars, brokerage CLSA said in a report.
In Malaysia, the haze spread north. Air quality in Kuala Lumpur, the capital, and in several surrounding areas worsened into the "unhealthy" zone. The air quality was now "unhealthy" in 17 areas of Malaysia and "very unhealthy" in one area. ($1=9,925 rupiah)
(Additional reporting by Randy Fabi, Fergus Jensen and Michael Taylor in JAKARTA, Eveline Danubrata and Kevin Lim in SINGAPORE, and Stuart Grudgings and Siva Sithraputhran in KUALA LUMPUR; Writing by Randy Fabi; Editing by Clarence Fernandez)