Singapore Air Pollution Hits All-Time High

Getty Images

Singapore city skyline shrouded with smog. The Pollution Standard Index (PSI) hit a record high of 400 on Friday, in the hazardous range.

The Singapore haze, a thick smog caused by crop burning in Indonesia which has local residents up in arms over the damaging impact on human health in recent days, has reached a record hazardous level on Friday.

The National Environment Agency's three-hour Pollutant Standard Index (PSI) reading hit a record 400 at 11 a.m. on Friday, after gradually building throughout the day from a reading of 96 at 5 a.m. in the morning.

The level is well above the unhealthy threshold of 100 and tops levels around 226 seen during Southeast Asia's prolonged haze crisis in 1997-1998.

(Read More: Smog In Singapore From Indonesia Fires Could Last for Weeks)

The haze in the city state is an annual weather phenomenon caused by Indonesian crop burning and normally arrives around August to September, but this year it has come early and is much worse than normal.

The deterioration in air quality follows a warning from Singapore's Prime Minister Lee Hsien Loong on Thursday that the hazardous haze could last for weeks.

The Ministry of Health this week advised Singaporeans to limit prolonged or heavy outdoor activities as a result of the haze.

PSI is a system for measuring pollution levels for the major air pollutants, based on a scale devised by the U.S. Environment Protection Agency (USEPA).

One commuter told CNBC he was growing frustrated that the government had yet to take concrete action to tackle the situation.

"The haze is horrible, it's bad for everyone's health and quite honestly, something needs to be done about it... I am still going to work. Everybody has to keep going to work. It probably might not be a bad idea for the companies to have people stay home to make a point," he said.

(Watch Now: Can Cloud Seeding Clear Singapore's Hazy Daze?)

Another commuter told CNBC half the staff in her office were away from work due to the smog.

"It really gets bad today in my office and we have almost like half the staff on Medical Certificate (MC) leave because of this haze. I think the government really needs to do something about this," she said.

The smoke from fires on the island of Sumatra, caused by "slash and burn" farming on or near vast palm oil plantations has drifted over 250 km east across Malaysia to Singapore in recent days.

On Thursday the Singaporean government sent a delegation to Indonesia to discuss the issue.

Relations between the two countries have been strained over the issue after Indonesia's social welfare minister accused Singapore of acting "like children" and its environment minister said Singaporeans had "lost patience" with the situation, the FT reported.

(Read More: Face Masks, Anyone? Singapore Struggles With Haze)

Singaporean stores have sold out of air purifiers and face masks as local residents scrambled to take precautionary measures.

CNBC reported on Thursday that a number of local businesses are suffering as a result of the haze, particularly outdoor-based eateries, shopping districts and tourist attractions. Meanwhile a number of corporations are giving employees the option to work at home.

The Singapore Retail Association told CNBC retail sales had declined between 8 and 12 percent.

Implications

Rajiv Biswas, Asia-Pacific chief economist at IHS Global Insight, warned that if the haze situation deteriorates for a prolonged period of time, the Singaporean economy will be negatively impacted.

"Singapore has been highly successful in creating its brand as a top class tourism destination, so it is particularly galling that these efforts are being eroded by the slash and burn techniques being used in Indonesia," said Biswas.

According to Biswas, tourism is a key contributor to the Singapore economy and generates 4 percent of gross domestic product growth directly, with around 14.4 million tourist visitors and S$23 billion ($18 billion) in tourism-related earnings in 2012.

"If the number of tourist visitors fall sharply for several months, this will hurt Singapore's GDP numbers for the third quarter of 2013, at a time when the manufacturing sector has already been adversely impacted by weak orders," he said.