Police in the province of Riau, one of the areas usually hardest hit by the annual chocking haze, arrested a man identified only by his initials ADS and the head of a private palm oil firm on Saturday, the Kompas newspaper said.
The man is being questioned on suspicion of having ordered people to burn a total of 2,000 hectares (4,940 acres) of land to clear it for planting palm oil, the daily said.
"This is the first case of forest fire that we are handling in 2004 which we will further forward to prosecutors," a police official said.
The government has outlawed the use of fire for land clearing, blamed by many for the extensive smoke and fires that has hit parts of Indonesia during the dry seasons in recent years.
But enforcement has been lax because of lack of personnel and funds.
Senior officials could not be reached for comment on Sunday.
Riau province on Sumatra and West Kalimantan are the areas usually hardest hit by the choking haze -- an annual dry-season hazard in parts of Indonesia.
Forest and ground fires in Sumatra were blamed last week for blanketing the sky across the Malacca Strait in Malaysia and Singapore, disrupting flights.
Officials blame fires set by large forest and plantation concession-holders, as well as by small farmers, to clear land for cultivation. The practice is illegal but officials find it difficult to enforce the law.
In 1997, and to a lesser extent in 1998, haze from forest fires in Indonesia enveloped parts of Southeast Asia for months, causing serious health problems and traffic hazards.
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