Plantation Industries and Commodities Minister Peter Chin said plantations would have to fall in line with both countries' laws which ban open burning, partly blamed for the latest haze choking parts of Indonesia, Malaysia and Thailand.

"Our Malaysian companies must strictly comply with Indonesian laws on open burning," Chin told reporters after returning from a July 18 meeting with his counterpart in Indonesia.

A ministry statement said the two countries had agreed to "strictly implement the policies of banning open burning in both countries in the effort to contain the fire and the haze occurrence."

Most of the fires are in Indonesia but Malaysian companies are venturing into their Southeast Asian neighbour, with more than 20 companies currently involved in oil palm planting there.

Last year, haze from fires on Indonesia's Sumatra island hit Kuala Lumpur and towns in Malaysia's north and its west coast, as well as parts of Thailand.

Malaysian firms operating in Sumatra were accused of contributing to the haze by conducting open burning.

Chin said the bilateral effort would see monitoring and enforcement in both countries, and information sharing which would lead to prosecutions.

Under Malaysian laws, plantations caught burning land to make way for oil palm crops can be stripped of their operating licenses and face hefty fines.

Indonesia introduced a similar law in 2004 which imposes a maximum 10-year jail term and 10 billion rupiah (1.09 million dollars) in fines on plantations that defy the regulation.

However, Chin said that Malaysian companies were not entirely responsible for burning on plantation land in Indonesia, and levelled blame on Indonesians living on the land.

"The land that is supposed to belong to their plantation companies are actually inhabited by some of the local people. So there is a land dispute of sorts," he said.

Haze caused by burning in Indonesia and some parts of Malaysia to make way for crops is an annual problem that afflicts countries in the region including Singapore and Thailand.

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