Malaysia urged neighbouring Indonesia on Sunday to sign a regional agreement to fight pollution from forest fires, as a thick haze covered large parts of at least two Indonesian islands and forced the cancellation of flights.

The haze is an annual occurrence caused by illegal slash-and-burn methods used by some farmers and plantation owners to clear land in Indonesia.

Tourists take a boat for sightseeing in a lake covered by haze in Putrajaya, near Kuala Lumpur, Malaysia, on Sunday.
(Lai/Associated Press)

Although the pollution has been spreading across neighbouring countries for days, the air quality in Singapore and Malaysia had improved significantly by Sunday, according to environment officials.

But in Indonesia, visibility was reduced to 500 metres in Pekanbaru on the island of Sumatra while in central and western Kalimantan Island and on Indonesia's part of Borneo, it dropped to only 50 metres, news reports said.

Malaysian Environment Minister Azmi Khalid called on Indonesia to prosecute any plantation company or farmers found responsible for lighting brush fires.

"We implore Indonesia to impose the most severe penalties under their law to anyone found guilty," he said.

Indonesia is the only country among the 10-member Association of Southeast Asian Nations that has not ratified the ASEAN Agreement on Transboundary Haze Pollution, which was approved in 2002.

The acrid smoke was so bad in the capital of Central Kalimantan province ton Sunday hat it was inescapable for people in the capital, Palangka Raya, even indoors.

The Antara state news agency said the pollution monitoring index in the city stood at "dangerous," forcing many people to wear masks.

With files from the Associated Press