The haze would "almost certainly" have an impact on Singapore's economy, especially on the tourism industry here, Foreign Minister K. Shanmugam said yesterday.

One small but clear example of this already happening is a nuclear energy forum that was to be held on Tuesday, but has since been cancelled because of the haze, he said.

This after three prominent American speakers, all in their 80s, decided that it was better to cancel the trip.

The three were former Senator Sam Nunn, former Defence Secretary William Perry, and former Secretary of State George Shultz.

"There would be an impact to the image of Singapore. Because they think of Singapore now, during this period, many people will associate it with the haze. One small illustration is this cancellation," said Mr Shanmugam, at the sidelines of a community event yesterday.

He added that the tourism industry is likely to be hit and that would have other secondary effects on the rest of the economy.

Other business leaders and analysts agreed, noting that a prolonged period of haze could put Singapore's reputation as a leading international centre for business and talent at risk.

The Singapore Business Federation's chief operating officer, Mr Victor Tay, said that one of Singapore's key competitive strengths has always been the clean environment but this has come under threat with the haze.

" Companies move their regional headquarters here because their senior managers like the place. This prolonged haze exposure is certainly putting the country's reputation at risk," said Mr Tay.

The air quality deteriorated significantly last week, with the PSI level hitting 401, the highest ever in Singapore. But it improved over the weekend, after reports showed that Indonesia was water-bombing the hot spots.

The hit to Singapore's reputation could be worse if the haze worsens every year without a permanent solution to fix the problem, said Mr See Hong Pek, a partner at PricewaterhouseCoopers.

"If the haze is likely to continue worsening year after year without affirmative action, Singapore's reputation will be badly damaged," he added.

Surveys conducted by research outfits such as the Economist Intelligence Unit (EIU) looks at the country's environment when assessing its overall competitiveness.

The EIU projected earlier this month - before the onset of haze - that Singapore is expected to retain its position as the most competitive city in Asia in 2025, due to the Republic's top ranking in the environment and natural hazards category.

But Kelly Services country general manager Mark Hall said that Singapore will still retain its ability to attract talent.

"In Beijing, the air quality year-round is bad. But people still move there to live and work. Singapore, in comparison, is still a highly liveable city."