A Malaysian-owned plantation firm whose director was ordered jailed for causing smoke haze o­n Indonesia's Sumatra island has agreed to pay more than RM4.18 million in compensation, an official said Thursday.

"Following an agreement o­n April 23 with the company, PT Adei Plantation agreed to pay US$1.1 million in settlement money to the government," said Nixon Silalahi, an environment ministry official.

He said the government would drop a civil lawsuit against the firm following the agreement. The money would be used to finance reforestation programs.

Silalahi said the company was earlier taken to court o­n criminal charges of allowing fires to burn at its plantation in Riau province in 1999-2000, worsening the haze that blanketed the region during the dry season.

PT Adei's president, a Malaysian identified o­nly as Goby, was originally ordered jailed for two years. The Supreme Court cut the sentence to eight months plus a 100 million rupiah (US$11,300) fine, Silalahi said.

Use of fire outlawed

Environmental officials found that 17 fires burning o­n Adei's land had engulfed 3,000 hectares (7,410 acres), the Jakarta Post reported.

The government has outlawed the use of fire to clear land for cultivation in an attempt to combat smoke haze but prosecutions are rare.

The haze, an annual hazard for millions of Indonesians and sometimes for their neighbours, is largely from such fires.

In 1997, and to a lesser extent in 1998, choking haze from Indonesia blanketed parts of Southeast Asia for months and caused serious health and transport problems.

The Center for International Forestry Research, in a recent report, said 11.7 million hectares (29 million acres) of Indonesian forest and other land were destroyed by fire in those two years alone. - AFP