Singapore has launched legal action that could lead to massive fines against Indonesian companies blamed for farm and plantation fires spewing unhealthy levels of air pollution over the city-state.

Five Indonesian companies including multinational Asia Pulp and Paper (APP) have been served with legal notices, according to a Singapore government statement issued late Friday.

The move followed a bitter diplomatic spat over Indonesia's failure to stop a severe outbreak of smoky haze which has also affected Malaysia and persisted for years.

APP, part of Indonesia's Sinar Mas conglomerate, is one of the world's largest pulp and paper groups and publicly upholds "sustainability" and forest conservation as core principles. Its products include stationery and toilet paper.

APP was asked by Singapore's National Environment Agency to supply information on its subsidiaries operating in Singapore and Indonesia, as well as measures taken by its suppliers in Indonesia to put out fires in their concessions.

The group, which has paper mills in Indonesia and China, did not immediately reply when asked by AFP for comment.

Under a 2014 law called the Transboundary Haze Pollution Act, Singapore can impose a fine of Sg$100,000 ($70,000) for each day that a local or foreign company contributes to unhealthy levels of haze pollution in Singapore, subject to a maximum total of Sg$2.0 million.

Singapore is located near Indonesia's vast Sumatra island, where fires have traditionally been set off by farmers and plantations to clear land for cultivation.

Four other Indonesian companies -- Rimba Hutani Mas, Sebangun Bumi Andalas Wood Industries, Bumi Sriwijaya Sentosa and Wachyuni Mandira -- have been told to take measures to extinguish fires on their land, refrain from starting new ones, and submit action plans to prevent future fires.

Sinar Mas is also involved in palm oil production, an industry widely blamed for forest fires in Indonesia.

In its statement issued Friday, the Singapore government said it was "examining how to apply more economic pressure against errant companies," including a review of its own procurement policies.

Singapore's Minister for the Environment and Water Resources Vivian Balakrishnan said the haze problem has lasted "for far too long".

"This is not a natural disaster. Haze is a man-made problem that should not be tolerated. It has caused major impact on the health, society and economy of our region," he said in the statement.

Singapore declared emergency shutdowns of elementary and high schools on Friday after the air pollutant index hit "hazardous" levels.

It eased to "moderate" levels on Saturday but a shift in wind direction can quickly change the situation.

The current haze outbreak is the worst since mid-2013. The recurring crisis grips Southeast Asia nearly every year during the dry season.

Singapore officials have reacted with outrage to Indonesian Vice-President Jusuf Kalla's comments that Indonesia's neighbours should be grateful for good air quality most of the year, and that Jakarta need not apologise for the crisis.

Indonesia has previously said that Singapore-based companies were among those responsible for the blazes.

About 3,000 troops and police have been sent to Sumatra to fight the fires, with Indonesian authorities saying last week that it would take a month to bring them under control.